A survey carried out by charity Groundwork of community groups across the UK found that 77 per cent said insufficient funding was their main challenge to sustain their community action work.
The report, Communities Taking Action, revealed 90 per cent of respondents felt they were expected and encouraged to do more as a result of cuts to local authority and other public services but without the necessary support.
Other factors preventing community groups from reaching their full potential include a need for wider community engagement (61 per cent), support with recruiting volunteers (58 per cent) and lack of public relations guidance (57 per cent).
Community groups also reported they would value other non-financial support such as involving young people in their projects.
Groundwork said understanding the experiences of younger people in community groups should be a "key priority" in light of their lower rates of volunteering compared to older age groups.
The investigation showed the majority (82 per cent) of community groups surveyed involved young people under the age of 25 in their activities in some capacity.
However, of these only 14 per cent had young people involved in leading the project, while 59 per cent involved young people as volunteers and 78 per cent involved them as beneficiaries.
Among the projects that had young leaders and volunteers, respondents reported a wide range of benefits, the most popular of which was the creation of friendships between people of different generations (79 per cent). This was followed by the contribution of different skills and perspectives (65 per cent).
For some groups that wanted to involve more young people in their activities, they reported that a lack of skills and resources was preventing them from doing so.
One respondent said: "We are very resource poor, and that involves not having the experience, time and funds to specifically target young people."
The report concludes: "Helping small grassroots community groups to access the expertise on the inclusion of young people that exists within civil society must therefore be part of the supportive social infrastructure on which community groups are able to draw."
The charity puts forward recommendations it hopes will "serve as impetus" to policymakers and businesses to increase investment in and support for community action.
It is calling on the government to assess the impact of loss of services and facilities, particularly at local authority level, on the capacity of community groups and set out plans for "the enhancement of social infrastructure" in areas that need it most.
There should also be investment in a network of "community enablers" to provide practical support to groups on subjects such as accessing funding, community engagement, involving young people and volunteer management, the charity said.