At a time of constricted public spending, a bid by the Association of Scottish Community Councils (ASCC) for £80,000 from the Scottish Government looks, in restrospect, something like a suicide note.

The organisation was asking for almost double the amount it had previously been afforded to help run a support network for more than 1500 community councils across Scotland.

Finance Secretary John Swinney gave the proposal short shrift and said the ASCC could have £40,000 for 2011/12. The ASCC's president Vincent Waters responded abruptly. His organisation could not function with such a limited budget and would close in April 2012, he said.

With some already expressing concern about the state of community councils – described in some quarters as moribund -–this looked like a potential death-knell.

Mr Waters himself seemed to agree, bemoaning the fact that young people did not want to get involved in community councils and commenting that the model might be dead with 10 years.

However many in the movement disagree – seeing this as not the end, but a chance for a fresh start.

A new network of community councils, driven by the efforts of members in three Edinburgh bodies, is seeking new ideas for the movement, while a meeting to be held at Edinburgh University on January 26, Scottish community councils: Local Democracy at Stake, will explore the future of the lowest tier of Scottish local democracy.

Community councils were established in 1973 after local government reorganisation. They are – or should be – democratic statutory bodies of elected volunteers, able to represent the views of local communities to planning and licensing boards, and many other public agencies.

However, according to some figures, only around 80% of Scotland's councils are active, with the full complement working in only eight Scottish council areas. Meanwhile 90% of those that do function never hold elections.

Critics say too many community councils have become chummy clubs, with elections uncontested and little attempt made to ensure the local views are genuinely being represented. Instead they can become a forum for members to simply represent their own opinions, or can become a hostage to local politics, even though community councils are intended to be apolitical.

Some of those criticisms surfaced after the Scottish Government commissioned a survey of the effectiveness of ASCC in 2010.

ASCC responded with fury, accusing the report's authors of prejudice and complaining that ministers had reneged on an agreement to discuss the findings with members before it published the report last year.

However Scottish Government ministers insist they remain supportive of Community Councils. Reassuring MSPs about the war of words regarding the future of the ASCC, Mr Swinney said last summer: "In the last few months we have consistently offered to work with the ASCC to help it strengthen its financial viability... and improve its overall efficiency and effectiveness."

He accepted the decision of the ASCC to close, he said, but remained "committed to growing and strengthening the role of community councils".

Last month new Minister for Local Government Derek Mackay launched a working group charged with finding a way of increasing the diversity of those represented on community councils and exploring ways to help them work together and play a more active role in their communities.

The group includes representatives from five community councils as well as five local authorities and Cosla.

"Community councils do important work representing the views and needs of communities to local councils and other public agencies," Mr Mackay said. "Their work is vital and often complex and they rely upon the work of volunteers." The group is due to report in the summer of 2012.

The fledgling Network of Community Councils has been co-founded by three Edinburgh activists – Leith community councillor Jenny Mackenzie; Tony Harris, vice-chairman of Grange and Prestonfield Community Council, and Terry Tweed, of Craigmillar Community Council. Ms Mackenzie said the network – currently unconstituted – was not intended to replace the ASCC, but added: "It is an informal response at this point, to conversations we've had with lots of community councillors who want a forum for debate. If members want to create a formal body, we will help to facilitate it. But only if community councils want it.

"Without some kind of support, community councils won't be able to lobby very well."

Ms Mackenzie said she would welcome a new body which offered democratic elections, accountability and access to the Scottish Government and Scottish local authorities, and called for people to join the debate.

The founders of the network – which has its online base at www.nationalnetworkcc.com – are far from downhearted about the future for community councils, Ms Mackenzie says. Far from dying out for lack of younger members, the engagement of older members of the community can be a strength, she argues. "Older people want to put something back. They are grateful for having had a good climate to raise families. I'm one of them – I want to share my experience and professional expertise."

Edinburgh University researcher Oliver Escobar, along with the Citizen Participation Network, is behind the meeting later this month. Mr Escobar has issued a challenge to community councillors to get involved in the debate.

"Some of their critics argue that community councils are not always capable of fulfilling their potential as a mechanism for direct citizen participation at local level," he said. "This event seeks to stimulate an open dialogue about the challenges currently faced by community councils, and the ways in which those challenges may be overcome."