Its members voted for a cap of £1m on donations this year, down from £1.2m previously. And bosses could choose not to give anything to the party, as the group works to improve its financial position.
The Co-op Group is losing majority control of the bank under a recapitalisation deal designed to plug a £1.5bn capital hole.
It is also closing around 15 per cent of its branches, shedding staff and keeping costs down as it attempts to shore up its finances as a first step on the road to recovery.
As well as cutting Labour party donations, the group is considering its other non-essential costs.
For instance it is understood the group could cut its subscriptions paid to bodies like the International Co-operative Alliance, the worldwide organisation representing the co-operative movement.
Meanwhile the Co-op will not pay a Christmas dividend to members, again in a bid to save money. Last year it paid £64m in dividends.
Instead it will offer members a voucher. Between 18 November and 15 December, when members shop in its food stores they will receive a voucher worth 10 per cent of their spend.
They can then spend the voucher up until 24 December. The scheme applies up to a maximum £10 voucher, which could be obtained by spending £100 in store.
The group has around 7m members, meaning it is offering up to £70m of vouchers.
“We understand that Christmas is a particularly costly period for our members and their families, many of whom are under increased financial pressure,” said group chief executive Euan Sutherland. “Technology now allows us to offer these more immediate rewards which we are confident our members will appreciate in the run-up to festive period.”