The trust would meet later this month to discuss the next steps, chairman Eric Swinbourn said.
The trust wanted to reuse a luge from Coronet Peak in Naseby to complement the village's ice luge, making luging available all year round.
This would make Naseby the ``luge capital of New Zealand'', Mr Swinbourn said.
Only $45,000 of funding had been secured, consisting of $30,000 from the Otago Community Trust and $15,000 from the Southern Victorian Trust.
A Givealittle page to raise $15,000 for the project opened in June and will close at the end of March. As of Friday, it had raised only $2625.
Mr Swinbourn said if they did not reach the $15,000 target, they would get nothing from Givealittle.
Four options would be discussed at the meeting: whether to ``pull the pin'', give it back to those who gave it to the Naseby community so they could run it commercially, shorten the track and extend it when they could secure more funding, or look at other funding grants.
Mr Swinbourn said the Lottery Community Facilities Fund Committee declined the application because it saw the summer luge as a single-purpose facility, not a multipurpose one.
Priority was given to multipurpose facilities that would encourage varied use for the wider community.
``Certainly the luge, in its own right, is a single-purpose thing, just like a football field or a hockey pitch,'' Mr Swinbourn said.
``[But] this facility will sit alongside an ice luge, an ice skating rink, an ice hockey rink and an indoor curling rink - they're all a one-shed complex, so it's part of a multi-use complex.''
The total cost of building the track was estimated to be $150,000.
Mr Swinbourn estimated donated goods and services and labour totalled $50,000, so the trust was looking to fundraise $100,000.
Now that the Lotteries funding application had been declined, Mr Swinbourn said they would need to boost local promotion, revisit some costings and, possibly, trim the project back.
Work on the luge had started. Mr Swinbourn said the actual track was cleared but the road and drainage would need a ``serious upgrade''.
Without money, very little of the work could be done.
The trust would like to open the luge as soon as possible.
``Three to four months of reasonable weather will see it operational,'' he said.
The Coronet Peak stainless steel luge, valued at about $500,000, was given to the Naseby community several years ago by Erna and Tonnie Spijkerbosch, of Queenstown, and David and Jenny Proctor, of Melbourne, who have holiday homes in Naseby.
The project has the support of the New Zealand Olympic Luge Association.
