Hospices and charities face losing thousands of pounds under council plans to scrap recycling credits.
County Hall chiefs believe they can save up to £280,000 next year by withdrawing money given to community groups to encourage recycling.
But charities say it is funding they cannot afford to lose in the current economic climate.
Beverley Taylor, income and communications manger at Cancer Help Preston, said the move would see the charity around £1,300 a year worse off.
She said: “Withdrawing these credits will have a big impact on Cancer Help and the local cancer patients, families and carers we support.
“We are only a small local charity and we rely on voluntary donations and the income from our four shops to provide much needed services.”
Clare Harris, business development manager at Age Concern Central Lancashire, which has four shops in Preston and South Ribble, said: “We will lose between £1,500 to £2,000 per annum. It’s not a huge amount, but it’s money we can ill afford to lose.”
Lancashire County Council paid out around £127,000 of credits in 2012/13 for waste like textiles, paper and books.
This included around £66,000 to 24 charity shops, £15,000 to five hospices and nearly £7,500 to 11 churches.
The rate of payment is now £51 per tonne. This increases annually by three per cent.
The cash-strapped authority, which needs to make £300m of cuts over the next four years, wants to end the existing scheme on April 1.
The ‘third party recycling credits’ were first introduced to help save the council money on waste disposal costs.
But over the last 10 years County Hall has supported Waste Collection Authorities (WCAs) and invested heavily in recycling facilities.
It now believes the principle is outdated, as waste collected by third parties would otherwise be collected by WCAs, and this would generate money for the council instead.
Labour’s deputy leader David Borrow said the council was unable to afford paying what could be seen as “a donation” to the charities.
He said: “In the early days when we were trying to encourage more recycling, one of the incentives was to pay firms and organisations an additional payment.
“That situation has now changed completely in the sense that the level of recycling has increased and the money that people get for recycling has gone up.
“In a way you could say it’s a donation to a range of charities from the county council. We’ve got to look in the end into how much we can do in this area.”
He added the proposals should be viewed in the context of a wider range of money saving measures, which if implemented would only save around £65m on top of other cuts - leaving the authority with £160m still to find.
He said a consultation had begun involving the council’s budget working group and the voluntary sector and the plans would come back to cabinet at the end of February.
Former council leader Geoff Driver said the Conservatives would oppose the plans.
He said: “If charities collect clothing or paper that has a value and they can sell it. They also get tax credits because it’s not going into landfill.
“We’ve been giving these tax credits and in effect what they’re doing is restricting the income to charities and voluntary bodies significantly.
“At an earlier meeting they also proposed taking half a million out of Gateway Grants and LIF grants, which are grants to voluntary bodies.
“The charities and voluntary bodies are going to suffer a double whammy.”