When the United Way of Toronto announced in January a shortfall of $2.5 million in its 2008 fundraising campaign, Lynda Shaw had a sinking feeling.

“I just knew grants would take a hit,” said Shaw, executive director of Children’s Peace Theatre.

Yesterday her fears came true when the United Way of Toronto announced that while it is not pulling the plug on core member agencies, one-time grants — something the theatre relied upon — were being suspended for 2009.

One-time grants also provide seed money for programs such as community gardens, neighbourhood dinner programs or mother-and-tot drop-ins for immigrant women.

“United Way will invest $73 million in the community,” Frances Lankin, president of the charity, said at its annual general meeting at a downtown hotel. “We will maintain core funding for our agencies over 2008 at a time when they need help the most.”

While a major chunk of $107.5 million — $73 million — will go to the core agencies, $7.6 million is being given to other United Ways in the Greater Toronto area while $14.3 million is for other charities, as directed by donors.

But one-time grants for community development projects are being suspended for the year 2009. The charity did not invite applications for grants this year so agencies knew what was in store but despite that, yesterday’s announcements came as the final blow.