The move will reduce the total number of education centres run by the charity, where professionals work to support young people who are not in education, employment or training (Neet), from 28 to 23.
The centres affected are in Brighton, Halifax, Huntingdon, Lambeth, and Reading.
Staff are currently being consulted on their futures but there are expected to be a number of redundancies.
Nacro confirmed that the decision was taken due to a shortfall in budgeted income from education centres, which receive funding on a payment-by-results basis for improving outcomes for young people, of £4m.
It said the centres being closed had been unable to identify and engage enough young people to make them financially viable.
Josh Coleman, education principal at Nacro, stressed that the charity is in sound financial health, pointing to the fact that the £4m shortfall was in projected income, as opposed to a budget cut.
“We had a very aspirational budget in place last year which assumed significant growth in the area [of working with Neet young people].
“But that didn’t necessarily materialise.
“It is very disappointing. Nobody joins a charity to make people redundant or close centres but in certain circumstances we need to manage resources effectively.
“Unfortunately, those centres were not getting enough students through the doors to make it financially viable.”
Coleman said young people who are Neet are hard to identify and engage.
“Nobody says it is easy but some centres are more successful at it.”
He added that resources are now being focused in areas where there is a demand for them.
“We continue to work hard with staff and local communities to ensure that we can achieve our aim to reduce crime and improve social inclusion,” he said.
The government has been keen on using payment-by-results as part of efforts to reduce numbers of young people who are Neet.
In 2012, as part of the £1bn Youth Contract, £126m funding on a payment-by-results basis was made available to organisations working with 16- and 17-year-olds Neet young people.
Meanwhile a £16m Youth Engagement Fund was launched last May with the aim of improving the job and education prospects of 18,000 14- to 17-year-olds at risk of becoming Neet.
