Both new grants and existing commitments by The Diana, Princess of Wales Memorial Fund were frozen last week as a result of Franklin Mint's malicious prosecution suit.
The trustees of the fund and executors of the Princess' estate originally sued Franklin Mint to prevent it from producing Diana merchandise, but lost a 4m court battle in 2000. Franklin Mint launched a counter-suit in November.
Andrew Purkis, chief executive of the fund, announced that a rescue plan is in place to help find other ways of honouring existing grant commitments. "We are inviting our fellow grant-givers to come and replace any funding that we are forced to withhold," said Purkis.
The Community Fund is one of the grant-givers that has been asked to step in. The lottery distribution body said it was taking legal advice to see whether and how it could help.
The freeze is a blow for Action for Prisoners' Families, which is set to lose more than 100,000 - over a quarter of its income. Director Lucy Gampell said: "Staff are on reduced working hours and services will have to be cut. If the funds are not replaced, this will be catastrophic."
Volunteering charity CSV had been awarded 193,945 for a project to prevent young prisoners from re-offending.
And the Prince's Trust partnered with the fund in April to run pilot projects for young refugees. The trust is in conversation with the grant-maker regarding these projects.
Youth charity Fairbridge is also seeking a "stop-gap funder" to help it continue a project for young offenders in Scotland, though a spokeswoman said there "was no chance" it would be ended.
Mental health charity Young Minds is among other recipients.
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