A demonstrator outside the Uganda High Commission in London
The Welsh Assembly Government says it will still give aid to Uganda despite opposition to the African nation's plan for a "gay death penalty".
A new bill proposed by a Ugandan MP calls for gay people to be jailed for life or sentenced to death.
Sweden has said it would withdraw the £31m of aid it gives to Uganda each year if the proposal becomes law.
But the assembly government said its £75,000 is to help people in the region of Mbale, not the Ugandan government.
Western leaders, including Gordon Brown, are reported to have urged President Yoweri Museveni to consider the dangers the proposals could pose to Uganda's rights record.
Glenys Kinnock, the UK government's Africa minister, has also raised it with her Ugandan counterpart.
Protests and rallies have also been held against the proposals around the world.
But the assembly government insisted it was right to continue with its grant, which is part of a United Nations scheme to link parts of the developing world to rich nations.
Gay people in Uganda can already be jailed for 14 years for engaging in homosexual acts.
The new Anti-Homosexuality Bill, put forward by David Bahati of the ruling National Resistance Movement (NRM), wants to raise that to life imprisonment.
He is also calling for the death penalty to be introduced for offences such as engaging in homosexual acts with a disabled person or anyone aged under 18.
A death sentence is also proposed when the "offender" is HIV-positive.
David Bahati is the MP who proposed the death penalty for gay people
The Ugandan parliament is due to debate the bill early next year.
But President Museveni is coming under increasing pressure from international donors, who contribute a large portion of Uganda's budget.
Among those most strongly opposing the bill is Sweden, which is threatening to withdraw its funding.
The three-year Welsh Assembly Government scheme involving the Mbale region in Uganda will include projects to help coffee farmers to adapt to climate change.
The £75,000 from the assembly government will help volunteers from the Pont project in Pontypridd, which has been linked with Mbale for three years.
'Following proposals closely'
An assembly government spokesman said the project was to directly help the Mbale region and that withdrawing funding would affect the "ordinary" people there, rather than the Ugandan government, which does not receive the money.
"Our innovative climate change partnership is with the districts of Mbale not with the Uganda government," he said.
"It aims to help the people of that region adapt to their changing climate and is based on the people to people link initiated by Pont - a community group based in Rhondda Cynon Taf.
"The UK government is not withdrawing the £70m in aid that it gives every year to Uganda - we will take our lead from them."
He insisted the assembly government believed that "no-one should be denied opportunities because of their sexual orientation" and that it was following what happens with the proposals closely.
"This is a Ugandan private members bill not a government bill," he said.
"Just as the Welsh Assembly Government cannot be held responsible for matters discussed by the UK parliament, the Mbale region is not responsible for what goes on in the Ugandan parliament.
"We have discussed this issue with our regional government partners and the local community groups and will continue to take every opportunity to do so."