Some of the projects funded by the Overseas Aid and Development Commission will be cut next year because of the Covid-19 pandemic.
It's revised its support for charities next year, and as a consequence small grants and new multi-year large grants programmes for 2021 have been suspended.
It's returned the funding to General Revenue, and the money will be used on local initiatives.
Commission president Deputy Chris Blin says the decision was made with regret, but they understand the pandemic has put enormous pressure on the public sector.
"One million pounds of the Commission's fund was returned back to the Guernsey pot, it was to help with Covid. A lot of committees had to re-look at it.
"This was also strategic, it's very important that we look after our home, charity starts at home."
Deputy Chris Blin says it's hoped that this is a temporary measure and that funding may be able to increase in future.
"That is one of the targets, when this was all discussed with the State commitment for providing aid and support in the long-term. We are still aiming to get it up to 0.2% by 2029.
But for all the good work we are doing, we have to take into account as well the situation that is happening here. It's a balance and everyone is having to adjust."
Guernsey "largely unscathed" by Storm Austen
Commodore Clipper breaks mooring ropes in Storm Austen
70 mph winds batter Guernsey
Haut Du Mont: Jury fails to reach verdict on third gas worker
Schools in Guernsey to close for Storm Austen
States of Guernsey 'carefully monitoring' forecasts for Storm Austen
Haut du Mont: Gas workers convicted of manslaughter
Guernsey government websites go offline amid security concerns
