Students at Sussex University have warned that their union will go into the red in two years unless its block grant of £512,000 from the university is raised.
The union, a registered charity, relies on the grant to fund most of its sports, welfare and leisure activities. But it has also banked on receiving about £100,000 a year in profits from its trading company, Sussex University Students' Union Services Ltd.
In the past financial year the company, which runs bars and shops, made no profit on a turnover of about £2 million.
University registrar Neil Gershon said: "This was presented to the university's finance committee in June and the student union was asked to take appropriate measures to balance the books."
The students, however, have been reluctant to cut jobs and services, particularly childcare provision, and they do not want to dip into their reserves.
Sussex is trying to reduce expenditure by £3 million so it kept the student block grant at the same level as last year, leaving it with a 3 per cent cut in real-terms. Other budgets, such as the library's, have suffered cuts of up to 6 per cent in real terms.
Part of the financial problem is linked to SUSUS's takeover of two bars from the university in 2000, which it refurbished with a £210,000 loan from the university. The trading company pays £45,000 a year in rent and the university receives 2.75 per cent of the turnover. Students have complained that the rent is too high and that the business plan was too optimistic.
Vice-chancellor Alasdair Smith wants to avoid a confrontation at the student union annual general meeting on November 7. The university has already agreed to underwrite some childcare provision.