West Lafayette is seeing its Community Development Block Grant funds reduced by 5%.
A letter from the US Department of Housing and Urban Development explained the cuts are necessary because of the federal Congressional sequester.
CDBG money funds various non-profits in the area, including Food Finders Food Bank and Lafayette Urban Ministry.
Officials say the money will not be restored even if a budget deal is reached soon.
And they say further cuts are possible if the sequester lasts a long time.