At least a fifth of the organisations which received support last year from the charitable arm of the embattled Lloyds Banking Group work with children and young people or provide education.

If the Lloyds TSB Foundation for Scotland winds down, losers will include the Royal Society of Edinburgh, which received almost pound;500,000 last year for research fellowships and PhD student placements; Inspiring Scotland, which received pound;96,000 and recently launched its new pound;4 million Go Play initiative for vulnerable children; and Project Scotland, which used its pound;20,000 grant to involve disadvantaged youngsters in Fife in volunteering.

But while the loss of funding would be a blow, these organisations would still survive.

Smaller community organisations dedicated to children may not fare so well, however, warned Mary Craig, chief executive of the foundation which hands out pound;6m a year.

Some 40 youth clubs and centres were funded by the foundation last year, with 10 playgroups and pre-school organisations, seven youth cafes and seven after-school clubs.

“The ethos of this organisation is that we fund grassroots organisations which provide services in local communities,” said Ms Craig. “Ninety per cent of that money goes on salaries and running costs. If that pound;6 million a year goes, there is likely to be an impact and it may be that some charities have to close or jobs are cut.”

The Royal Society of Edinburgh said “valuable research” would be at risk.

Inspiring Scotland, which started life as part of the Lloyds TSB Foundation and became an independent organisation in January, said the loss of funding would have an impact.

But the loss to Scotland, should the foundation go under, would be about more than money, said Helen Chambers, head of strategy and delivery. “As important as the money are the other things it does, particularly its relationships with the charities it funds,” she said.

Lloyds TSB Foundation is resisting signing a new covenant that would see its share of bank profits cut from 1 per cent to 0.5 per cent and allow the bank a say in where funds go. It is rapidly running out of cash, with Ms Craig predicting final awards will be made in December unless a settlement can be reached.

Other beneficiaries last year included Dunedin School, Donaldson’s, LGBT Youth Scotland and Children 1st.