Chancellor George Osborne has announced big cuts in public spending
North East charities could lose up to £82m, as public spending is cut, according to the Association of Chief Executives of Voluntary Organisations.
The announcement came as the government was asking the voluntary sector to do more as part of its Big Society project.
ACEVO also warns that local charities will face extra demand from people left unemployed or affected by welfare cuts.
The Tees area is expected to be especially hard hit by the cuts.
Jenny Berry, Director of ACEVO North said, "Charities in the north are already tackling the difficulties of a greater demand for their services, while their funding is being squeezed.
"This situation has continued to worsen over the course of this year, as Local Authorities have been preparing for budget cuts."
The Big Society
The government says the Big Society's purpose is, "To give citizens, communities and local government the power and information they need to come together, solve the problems they face and build the Britain they want.
"We want society - the families, networks, neighbourhoods and communities that form the fabric of so much of our everyday lives - to be bigger and stronger than ever before."
Critics have accused it of being a scheme to get volunteers to provide, for free, some services previously paid for by the government.
Politics aside, charities agree there is an opportunity for them to operate more freely and to do more, but that they will have to do it with much less money.
The government will provide a transitional fund of £100m to support charities as funds are cut, but Voluntary Organisations Network North East says the vast majority of projects in the region do not know whether they will be funded beyond the end of March.
Plenty of Volunteers
Charities on Teesside have told BBC Tees that there is no shortage of people in the area who want to volunteer in their communities.
But they say the very organisations they may wish to work for are under threat.
Jill Dunbar is a community development worker at Evolution, who develop and support charities and voluntary groups.
She said: "Our volunteer bureau for example, has already seen a huge increase in comparison with last year on the number of people who want to volunteer."
She added that the task now, is to find new ways to provide the money needed to organise those groups: "We have learned that we need to generate income, as well as depend on other kinds of grants.
"It's a fine balance between, 'What's your traditional charity? What's your ethos? What's your culture? What's your mission?'
"How you can keep that balance of providing traditional charitable services, but it's about a reality check as well, having a more business-minded approach to generating income."
People connected with community development debate the future
The day after the chancellor announced the outcome of the comprehensive spending review, the Community Develolpment Exchange (CDX) held an event in Darlington for those involved in community development work in the North East.
Chief Executive Nick Beddow told BBC Tees: "The situation on the ground now is that a lot of people are worried about what will happen in April for a lot of people, because that'll be the cutting off point for funding.
"But people have already started losing their jobs. The cuts have been happening in advance of the declaration from George Osborne, because local authorities have already been making plans for the cuts.
"The problem is they've not really got their heads around, in local authorities, what workers and skills they'll need within a big society agenda.
"If they'd been given the time to think that through, they'd have found that a lot of the people they call community development workers are some of their key people."
Getting a business head on
One solution to the government's call for bringing business into the charity and voluntary sector - not traditionally comfortable bedfellows - could be community interest companies.
Established in 2004, community interest companies are registered companies that are able to demonstrate how they reinvest some or all of their profits to help the community.
Some such companies have been set up purely to help others and make no profit, with all proceeds invested in the community.
Katherine Banner is part of a community interest company, called Creative Communities.
The company has recently set up with six directors from business, education and social backgrounds.
Katherine says the company came together out of need: "We were actually part of an area partnership and we came along to those meetings and what we were finding was the frustration of working within a local authority framework, because it was very top down and we didn't have the mechanism to deliver.
"So by creating a community interest company, the business sector were able to say, 'We've got these commercial skills, how can we put them to use?' The social sector and the education sector were able to share each other's skills.
"And that's how we came about, through frustration at not being able to work in the framework that exists at the moment."
The company is involved in helping manage Spennymoor's Christmas parade and is looking at setting up a textiles project to help young women rediscover old skills and build a cottage industry to establish Spennymoor as a textiles brand.
It is also setting up a 'virtual gallery' to help local people sell art and media creations around Europe.
But she admits that community interest companies won't work in all cases.
"The reason the model seems to be very strong and fits the Big Society is because of the skill sets that we all have, the backgrounds we all have, and the relevance of the work that we do, so we've been able to bring that knowledge and experience to the table to create this company.
"My concern is that in other areas, there might not be people who have those skill sets, so how can they set up a community interest company?"