Dunedin Budget Advisory Service (DBAS) has reduced its help to about half its previous provision and the charity’s future is described by its manager Andrew Henderson as "uncertain".
Mr Henderson said the Ministry of Social Development’s decision to end DBAS funding was "unbelievable and devastating".
"There was no way we could make up the shortfall and carry on as we were."
MSD gave $228,000 to DBAS for the year July 2023 to June 2024 and slightly more in the previous two years.
The charity’s total income is about $300,000 a year.
The charity, which has been running more than 50 years, provides a free and confidential budgeting advice service to people with money worries due to the cost of living and other factors, such as mental health and loss of income.
It has 570 cases on its books and has helped in a further 422 cases in the 10-month period July 1, 2023 to April 12, 2024.
Two out of five DBAS financial mentors have left already. One of the remaining three is Mr Henderson, who has limited time to mentor people due to management responsibilities.
Mr Henderson said he had spread the word among local charities that DBAS’ capacity to take referrals was affected by the end of MSD funding.
This had included telling Work and Income, which are part of MSD, but they were still trying to refer clients to DBAS despite it telling them not to, he said.
The news of the funding end was given to Mr Henderson by email after he applied for funding continuation through a tender process for the MSD-funded programme Building Financial Capability (BFC).
All 140 providers of the BFC programme across New Zealand, including DBAS, were asked to reapply for a total $19.5m funding.
Successful bidders are yet to be announced, but an email from MSD sent to DBAS said a procurement panel decided not to shortlist DBAS as its application score did not reach the required level.
MSD appreciated the interest in providing BFC services and offered its "best wishes for your ongoing work", the email said.
Mr Henderson said he felt the news was unprofessionally delivered and was "callous".
He had approached the Dunedin City Council for help but the hole was "too big", he said.
The council provides about $15,000 to DBAS per year to administer grants that help people with their power bills.
A council spokesperson described DBAS as providing important support.
Mr Henderson said DBAS had extensive expertise and was well-respected, including nationally and within MSD.
"We know what we are doing and serve the community well.
"People think anyone can be a budget adviser but it takes years of training and supervision to become an expert financial mentor. It would be a momentous ask for any organisation to do this by July and I don’t think possible, in my opinion."
He blamed a procurement process that he thought was "inherently flawed" and, he said, took no consideration of previous work or relationships.
The procurement team likely had "no insight into who we are and what we do", he said.
General manager of Safe Strong Families and Communities at MSD, Mark Henderson, said the procurement process was open and competitive and for "reasons of commercial confidentiality" MSD was unable to provide further details until the procurement process was complete.
Providers funded would be advised of the outcome in coming weeks.
There was hope DBAS could be merged with another charity with similar goals, Mr Henderson said.
Presbyterian Support Otago (PSO) is thought to be the only other Dunedin provider of financial help which is funded by the BFC.
Its Family Works practice manager Deb Gelling said PSO had a "long history" of working alongside DBAS and was "very sad" to hear about the DBAS funding cut.
"There are very real financial pressures being experienced by whanau due to the economic climate and high cost of living."
Former MP and co-general manager of suicide prevention charity Life Matters Clare Curran described the funding slash as "very disappointing — DBAS’s work is an essential part of the safety net of support for people in really difficult circumstances".
Chair of the Night Shelter Jenny Turnbull said a lot of homeless people need financial advice to get back on their feet.
"It is critical there is continuity of budget advice services in Dunedin."
