Coastguard says its ability to upgrade its vessels will be affected as a result of government funding cuts totalling more than $1 million every three years.

At the end of last year, funding from the Government's Search and Rescue Council was cut by $340,000 a year for Coastguard's three-year funding cycle, leaving the volunteer-based organisation to try to make up the shortfall elsewhere.

It costs $10 million a year to run the boating and sea safety operation.

The organisation survives almost completely on donations - the majority coming from the public, as well as lotteries grants and trust boards.

Making up the shortfall left by the cuts would be a difficult task, and was already having an effect, said chief executive Patrick Holmes.

"It's having an impact on us in so far as our ability to upgrade and replace rescue vessels.

"In the short term the fleet is at a good standard. But starting in July this year our ability to replace vessels in the next year has been severely affected,'' he said.

A replacement engine for one of the rescue vessels cost $30,000 to $40,000, he said.

However, people's safety would not be risked because of the cuts, Mr Holmes stressed.

Last year volunteers donated 348,356 hours of time to the organisation, and attended to an average of nine calls of help a day.

Fifty lives were saved by Coastguard in SAR operations last year, Mr Holmes said.

The 2500 volunteers would continue to do their work to keep waterways safe: "we just have to keep going''.

Mr Holmes said they were told by the Search and Rescue Council the cuts were made to Coastguard funding because it is a "well run, well managed organisation''.

"It's slightly incredulous if we're penalised for being proficient.''

Raising more money would be especially difficult in an already highly competitive charity market, he said.

"We didn't see the cut coming so we really didn't have time to plan for it.

"The New Zealand public are very generous, but it's competitive chasing the charity dollar. It's very hard.

To make up for the shortfall, the organisation would continue to make appeals to the public for donations and possibly to corporate sponsors, said Mr Holmes.

Anyone wanting to make a donation to Coastguard can call 0900 SOS SOS (0900 767 767).

- APNZ