Caught in the middle of an accounting dispute between two federal offices, AmeriCorps (search) -- the national service organization hailed by President Bush -- is cutting funding for volunteer programs across the nation.

On Monday, the Corporation for National and Community Service (search), which oversees AmeriCorps, announced its first round of program grants for the coming months, and many nonprofit groups saw their funding scaled back or wiped out.

"This will be a difficult year for AmeriCorps," said Sandy Scott, spokesman for the federal agency. "Many good programs that deserve funding won't receive it."

The corporation approved 53 grant applications this year -- enough to support an estimated 3,000 AmeriCorps member positions. That's down drastically from the 255 "state competitive grants" awarded last year, which provided money for some 16,000 volunteer positions.

Scott pointed out that more grant announcements will be made this summer and the corporation remained hopeful that it will reach its goal of 50,000 volunteers.

But the groups that organize volunteers to mentor children, build homes for the poor or clean up polluted streams described the cuts as drastic, and said they will have a ruinous impact on their operations -- in some cases shutting down entire programs.

"This is the wrong time in America to be cutting national service," said Michael Brown, president of the Boston-based group, City Year (search) -- which helps recruit and train young volunteers in 14 cities nationwide.

The outcome for his group: 820 spots funded by AmeriCorps through state competitive grants have been slashed to 187 available slots for volunteers.

Paul Schmitz, CEO of Public Allies (search), said the cuts are "absolutely devastating not just to us but to the entire field." His group -- which is headquartered in Milwaukee -- also mobilizes young volunteers, and it receives about a third of its funding from AmeriCorps.

The corporation laid most of the blame for the cash shortfall on a dispute between the General Accounting Office (search) and the Office of Management and Budget (search) over how much money AmeriCorps must set aside in a trust, which goes to pay college scholarships for volunteers.

The corporation also has been saddled with questions from congressional investigators about its own business procedures for approving more volunteer positions than it had money for last year.

The "over-approval" means money from this year's budget will have to go to pay volunteers slated for service last year, further draining the pool of slots for potential volunteers this year, according to the agency.

Scott said he anticipates another round of the state competitive grants later in the year, which could restore some of the lost funding. That, however, will depend on how the GAO and OMB resolve their differences. And even then, the nonprofit groups said the overall funding would still be far below what was granted in previous years.

Bush has issued calls for more Americans to volunteer in their communities -- especially in the wake of the Sept. 11 attacks.

For next year, the president requested an increase of more than $150 million for AmeriCorps -- which was created by former President Clinton. That would allow for an expansion of the program to cover the enrollment of some 75,000 volunteers, and boost overall funding to $554 million.

It is not clear whether that funding will become a reality, though -- especially given that the GOP-led Congress voted to cap AmeriCorps enrollment at 50,000 volunteers this year.

The nonprofits that depend on AmeriCorps grants said they need help from Bush, in the form of a supplemental funding request to Congress for additional funds.

AmeriCorps volunteers usually spend about a year working full-time in community service projects. In return, they receive stipends of $9,300 a year and educational awards of $4,725 for college or graduate school.