The basic purpose of Sport England as stated on their website -
http://www.sportengland.org/about_us.aspx
"We invest National Lottery and Exchequer funding in organisations and projects that will grow and sustain participation in grassroots sport and create opportunities for people to excel at their chosen sport."
They have pledged 15% of their investment to get 1 million more people to take part in sport - this funding would seem to be in line with their stated purpose irrespective of the sexuality of the group organisers (who state that they are trying to get everyone involved not just lesbians) so I can't see the problem with this ... and even if it was just for lesbians to play sport they are just a section of the community like everyone else so provided other groups were also getting funding then its really still not a problem is it?