Arts Council England (ACE) has committed to paying its staff at least the real Living Wage.
About 580 employees will be assured at least £10.75 per hour if they live in London or £9.30 in the rest of the UK.
Human Resources Director Ian Matthews said he was proud of the change: "We believe a hard day's work deserves a fair day's pay."
According to ACE's latest Equality and Diversity report, its gender pay gap grew in 2019. Female staff used to earn on average 10p more an hour than male staff; now male employees earn an average of 62p per hour more than females.
The funder has also asked its contractors and suppliers to commit to a longer term plan to pay third-party staff like cleaners the Living Wage, although it has no ability to enforce this.
Chair Nicholas Serota told ArtsProfessional its council would discuss the possibility of making payment of a Living Wage part of National Portfolio funding agreements.
"We know people who work in the arts are too lowly paid but we can't just wave a magic wand."