Declining Lottery receipts will mean less cash for RFOs, although final funding decisions will be made after the national funding body hears its budget settlement in mid-December.
Creative Scotland has warned arts organisations across the country that the number of Regularly Funded Organisations (RFOs) for 2018-21 will fall.
In an online statement, Deputy Chief Executive Iain Munro stresses the national funder will only be able to make final decisions once it finds out its budget settlement, which will be shortly after the Scottish Government publishes its draft budget on 14 December.
But he says that continued pressure on Scottish Government budgets and declining income from the National Lottery means Creative Scotland is having to budget “very carefully for 2018/19 and subsequent years”.
“Our income from National Lottery funds for the last financial year, 2016/17, was 15% down on the previous year and this downward trend has continued into 2017/18,” Munro said.
He continued: “National Lottery funds currently constitute 18% of the Regular Funding budget however, given the sharp decline in income that we are experiencing, it is unrealistic to allocate funds in a similar way in future.
“With this in mind, the overall budget available to support Regular Funding 2018-21 will be even more challenging than at first anticipated, resulting in a lower overall budget and fewer organisations in the Network.”
Munro urged everyone to help Creative Scotland make the case for public funding, and said the body recognised that the timing of the Regular Funding process “creates issues for many organisations”.
“Once we are in a position to make and communicate our decisions, we will discuss any transition needs individually with organisations as soon as possible thereafter,” he added.
The latest update follows a plea a month before the applications for Regular Funding closed for arts organisations to “budget realistically and focus on core need”. This was one of the factors influencing a significant drop in the number of arts organisations applying: 184 eligible applications requested a total of £153m for the three-year period.