Casa Esperanza said it can no longer afford to serve some meals or offer a place to hang out for those who are not staying at the homeless shelter.
The last five years have been difficult for getting sustainable funding, but the shelter has tried to make do.
"It's really been a safe refuge for any homeless person -- people who are looking for jobs, people who are really in need to begin the process of trying to heal and go from homelessness to housing," said Michael Foley, the executive director.
One of those people is Joseph Cuff. He is a Casa resident and in two weeks will know if he got a one-bedroom apartment.
"I'll go in and lock myself in and lay down and breathe a sigh of relief when I get in there and say, 'You made it.' So I'm fired up," said Cuff.
Every day, up to 200 people can get lunch at the shelter.
"The average is 177 hot meals per day. Those were 177 meals that were not panhandled for, that were not stolen for," said Foley.
But the day center is shutting down effective Sept. 3. That means the homeless who do not reside at the shelter won't be able to shower, eat or meet with social service workers.
"What happens on a rainy day if there's no day center? Where do they go? Restaurants? Businesses? The library?" asked Foley.
"As incredibly difficulty, heart-wrenching and gut-wrenching as it's been to make a decision that we just can't afford to continue our day center services, we made the decision that we had to make that cut," he said.
With the lack of funding, Casa is focusing on its shelter care, which provides up to 200 beds per night in the winter. But even that program needs cash.
"The critical issue for us moving forward is needing to raise $300,000 from a variety of sources by Oct. 1," said Rev. Mark Asman, the Casa Esperanza board president.
Many of the homeless at the shelter are concerned about the budget troubles, like Armando Reyes who is recovering from a motorcycle accident.
"I feel like Casa saved my life. I had nowhere else to go, I didn't have any family, I didn't have insurance, and I was crippled pretty badly," said Reyes.
Foley knows the day center loss will have a big impact on the program, but is hoping for a miracle for the residents.
"If we lose shelter, then we have a huge problem," he said.
For more information on how you can help the shelter, click here or send donations to Casa Esperanza at P.O. Box 24116, Santa Barbara, CA 93121.