The freeze on funding from the Diana, Princess of Wales Memorial Fund could prove crippling to many of the 120 organisations it helps.
Princess Diana spearheaded work against Landmines
The fund has pledged £50m to good causes - many of which will struggle to find money unless a solution to the crisis is found.
One beneficiary, the Refugees Arrival Project, told BBC News Online it could lose a dedicated support worker for children arriving unaccompanied at Heathrow.
It said: "We had a letter [from the fund] this morning saying that 'we're sorry, but there's a real risk we may not be able to pay'."
The project's Elizabeth Little added: "Basically it means there would be nobody there and the children would have to fend for themselves until somebody makes contact with them.
"Sometimes they have been abused and anybody could find them."
Trustees of the fund use Diana's name to campaign on a range of issues also including landmines, palliative care and prisoners' families.
The fund has supported projects for young offenders
The fund says its work "marks it out from more conventional grant-giving trusts" and that it wants to speak out, as Diana did, and so become a fitting memorial to her.
Among those to be awarded grants last year were seven refugee projects in the UK, including the Roma Support Group and Ethiopian community centres.
More than £115,000 was awarded to a group looking at attitudes to mental illness among young black people.
And a Middlesbrough based group was earmarked £15,000 to help young offenders develop their communication skills.
Community Service Volunteers (CSV), the UK's largest volunteering charity, said it had been expecting a £190,000 grant to use on a project to stop young prisoners re-offending.
Its executive director, Elisabeth Hoodless, said: "Prisoners are not a very popular cause. We will work hard to replace the support, but we greatly hope that the fortunes of the Diana Memorial Fund can be turned around.
"Two hundred young offenders risk losing the chance of changing their lives to become productive citizens."
ARC - an umbrella charity for people with learning disabilities - said the freezing of its £250,000 grant would interrupt a three-year programme the charity has just embarked upon.
"I hope that the Franklin Mint Corporation is aware of the damage that their action is causing to groups of vulnerable young people all over the world," said its chief executive, James Churchill.
"It does not do them credit and when the public realises what is happening their actions may well adversely affect their sales."
Landmine Action's Richard Lloyd said funding would have to be quickly found elsewhere if the memorial fund is unable to meet its commitment.
He said: "The fund has been one of the biggest supporters of our work. We very much hope that this is a temporary problem and the fund's good work with us will be back on track very soon."
Lucy Gampell, director of Action for Prisoners' Families, said the effect on her charity could be "catastrophic".
She said it received £100,000 from the fund every year, of which £60,000 was used to cover staff, rent and administration costs.
Following the fund's announcement, staff have been forced to agree shorter working hours, in order to avoid one of them being made redundant.
Derek Bodell, chief executive of the National Aids Trust said the freeze on payments was "very worrying".
He said: "The Diana fund has become a major supporter of charitable causes and, particularly, unpopular ones which don't find it easy to get funding from the usual trusts and foundations."