York City will still have a reserve team next season after receiving a donation which will fund them for another year.
The club's board are currently assessing their finances and considered scrapping the team to save money.
Manager Colin Walker told BBC Radio York the reserves are important for player development.
"I think the youth players that have done well on a Saturday have now kicked on to another level in the reserves."
If you're playing the likes of Barnsley and Leeds the players can only get better
York City manager Colin Walker
Walker, who was reserve-team coach before taking over as manager from Billy McEwan, added: "What you do need is a gap between the youth team and the first team.
"If you've got the reserves and you're playing the likes of Barnsley, Leeds, Sheffield Wednesday and Sheffield United the players can only get better and that's how you judge them.
"These youth players are going to be judged on whether they get contracts by how they play in the reserves, not how they play in the youth team, I think that's the way forward."
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