In an interview with Radio Australia, Fanalei Honiara Association chairman Atkin Fakaia said villagers had acted in retaliation for underpayment.
"The issue of them going back fishing ... and killing dolphins was on the understanding that Earth Island has been reluctant to pay the agreed amount that was due to the community," he said. "So they just felt ... disappointed and dissatisfied over the attitude of Earth Island."
But institute director Lawrence Makili called the act "evil" and that it had put them off providing any more money to the village.
Mr Makili said the institute had kept its side of the bargain, by paying out the money in small grants to various groups within the community over two years. It had also helped set up a number of projects that would help generate money for the village, he said.
"Earth Island has stood this straight on the table ... [but] this one community thought that they would do whatever they want, in order for us to come back to the table.
"But I think I'm not coming back to the table because of the evil thing that they've done."