Epic CIC was launched in 2014, taking on the running of youth services in Kensington and Chelsea Council.
The council, along with Knowsley, in Merseyside, was among first in England to “spin out” into "employee-led youth mutuals".
The move came partly in response to deepening government cuts to council budgets.
However, Epic CIC has announced its “extremely difficult decision to initiate an orderly wind-up”.
A statement posted on the organisation’s website says it had found itself in an “unsustainable financial position” following “the reduction in the overall level of funding for youth services since December 2018”.
The statement says: “Wanting to do what we can to try to minimise disruption to children and young people and their families, we have decided that an orderly wind-up was the appropriate course of action under the circumstances.
"Precise timings are to be confirmed, but over the coming few weeks, we will be working with the council and other partners to develop and communicate a transition plan for services going forward.
“In the short-term, we would like to thank our amazing staff for the commitment, dedication and passion they have brought to their work. They should all be proud of the difference they have made to the lives of the young people of RBKC.”
Latest analysis of official data shows English councils spent £398m on services for young people in 2018/19, a fall of six per cent from 2017/18’s total expenditure of £424m. In 2010/11, total council spending on services for young people was £1.18bn.
YMCA England and Wales’ Out of Service report suggests spending on youth services in England has reduced by £959m in real terms between 2010/11 and 2018/19.