Muslim groups say that they want money from the Government but don’t like the strings attached which ask them to help root out extremism.
The Muslim Council of Britain (MCB) says that the grants which require them to stand against violent hard-liners are ‘intrusive’.
However, they say they do want the money which is designed to help local communities.
The MCB’s Deputy Secretary General, Dr Daud Abdullah, told the Guardian: “Experience has shown that very often funds are accompanied with intrusion and attempts to influence decision-making”.
He added Muslim groups were now turning away from Government funding.
Khalida Khan, Director of the An-Nisa Society, would welcome money but said: “There’s a lot of strings attached – the government stance is just terrorism driven”.
The funding comes from an initiative called Preventing Violent Extremism which has been allocated £70 million over three years.
The Government say it is particularly for helping “support local authorities and community groups in improving the capacity of local communities to resist violent extremism”.
A spokeswoman for the Department for Communities and Local Government said the effectiveness of the scheme was dependent on: “everyone involved playing a positive part in standing up to, isolating and challenging those that seek to spread hatred and violence”.
The Government spokeswoman added: “We have acknowledged that the Prevent label can isolate some groups and that is why funding going into communities will no longer be branded in this way”.
Earlier this year the Government suspended ties with the Muslim Council of Britain.
Hazel Blears, then Secretary of State for Communities and Local Government, raised concerns that Dr Abdullah had signed a document justifying attacks on the Royal Navy.
She said that until the matter was resolved, “I feel that it is only appropriate for us to suspend our engagement with the Muslim Council of Britain”.