Organisations working with children and young people in Bourne will soon be able to apply for grants from the town council.
The people who previously ran Bourne Youth Centre approached the council with its remaining funds of about £5,000 after handing over control of the facility to Not All Bad in April.
Bourne Town Council unanimously voted in favour of creating a fund, earmarked for the youth of the town, at a meeting of the full council on Tuesday.
Bourne Town Clerk Nelly Jacobs said: “The Bourne Youth Centre Management Committee did not feel it wanted to hand over all its money to what is essentially a commercial operation.
“They wanted to make sure the money would stay for the youth of Bourne.
“By voting on this the council has ensured the money will continue to help the youth of Bourne.”
Chairman of the youth centre management committee Dorothy Alexander said it was sad they no longer ran the centre but were glad that people would continue to benefit from the money which was raised by holding fundraising events and the cost of attending sessions.
Mrs Alexander said despite putting on special trips before handing over the centre committee still had funds available which could be put to good use.
Bourne Town Council has asked the youth centre management committee for a breakdown of the ages of young people the centre used to serve so the new fund will be able to help the same group of people.
Applications to the funds will only be available to organisations.