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Community grant funding worth more than £1m could be handed back to the Government unless more groups bid for a share of the cash.
The Suffolk Foundation said it has money to distribute through the government's Grass Roots programme.
However, it said a low number of community-based organisations have applied for grants and unless the money is spent, it will have to be returned.
The programme runs until March 2011 and grants can be worth up to £5,000 each.
'Sandwich boards'
Groups with an income of less than £20,000 a year, that require funding for new projects, are being asked to make applications for grants.
Sue Wright, grants and funding officer for the Suffolk Foundation, said applications had been slow although interest was growing.
She added: "It would be tragic really if it had to go back to the government.
"I certainly would hope that we don't do that. I would feel we have failed the people of Suffolk if that happened.
"I really think we will get the money out into the county and we'll just have to get out there with our sandwich boards if need be."
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