Stand Children's Services is proposing to close two of its children's villages at Otaki and Roxburgh.
Financial pressure was the main reason the organisation, which operated seven children's villages throughout the country, was seeking the closures.
Stand villages provide a treatment service for children, aged five to 12, who needed support to recover from trauma.
Nationwide, the Stand for Children Service delivered therapeutic care and education at children's villages as well as therapeutic social work in home-based and school-based settings.
Formerly known as Health Camps, the service also offered family therapy, and a holiday programme for caregivers, including grandparents and foster parents.
If the proposal to close went ahead, about 27 jobs at Otaki and 27 jobs at Roxburgh would be lost, and 380 children a year would miss out on the children's village trauma treatment programme.
A final decision would be made by chief executive Fiona Inkpen about May 15 after feedback from staff.
"If the proposal proceeds, we would be offering redundancy, or where there are vacancies, staff could apply to transfer.
"Oranga Tamariki has also offered to identify employment opportunities for staff to consider."
She said Stand hadn't had a funding increase since 2009 and had been meeting operating shortfalls from its own reserves.
Financial pressures increased last year following salary increases for the organisation's staff.
"Pay rises were a priority for us to retain our specialist staff who support some of the country's most vulnerable children and families but who've been among the lowest paid in the sector.
"Our people deserve recognition for their work and we needed to recruit and keep quality staff who make a a real difference to these children's lives."
The organisation had been able to top-up Government funding for many years with prudent financial management and the sale of unused land.
But its reserves had now been used up and it had made the difficult decision to consult with staff and the PSA about closing two of the villages.
"Our hope is this will be a temporary measure and we will be working with Oranga Tamariki and the Ministry of Education to rebuild services in both areas."
She said for the 2017/18 financial year, Stand and Oranga Tamariki split the increased operating costs 50/50, however Stand would need $3 million extra, an increase of 18 per cent, to cover the pay rises, compensate for nine years of inflation and added costs such as Kiwisaver, to keep the villages open.
Dr Inkpen said the government had told Stand the funding required could not be secured at this time because of restrictions on the government budget.
The organisation would continue to operate its intensive family wraparound services in the central and southern regions, but would stop providing the residential trauma focused treatment programme at the end of June.
"I want to reassure our children and families that Stand is not going anywhere.
"The villages are one aspect of the services we provide and while it would be very sad to close these two, our priority remains supporting children and families to be safe, healthy and functioning well."
Stand had been seeking to relocate its Otaki village, commonly referred as the Otaki Children's Health Camp, to a property in a residential street in Paraparaumu.
A house had been bought in Milne Drive but was now being rented out.
"We do believe in the trauma treatment programme for children that operates out of the villages, so we intend to work to try and restore that service for children in both regions."