Middlesborough is flush with success after the praise heaped on it for Mima, the Middlesbrough Institute of Modern Art, which opened in January. But already it faces an uphill struggle.

Because, like the New Art Gallery Walsall, and the Baltic in Gateshead, it boasts a great building, but will have to raise substantial sums if it is to create a vibrant exhibition programme - which in the end is why most people visit galleries.

Mima cost more than £14m, but of the gallery's £1m revenue budget only £100,000 is earmarked for exhibitions: the price, director Godfrey Worsdale admits, of producing one a year.

Worsdale comes with a proven track record from Southampton City Art Gallery and is confident the money can be raised. But Walsall and the Baltic both suffered potentially life-threatening wobbles, thanks partly to unrealistically small revenue budgets, before they settled down under their current directors. And Mima opens at a time when there is disquiet among regional gallery directors about future direction and funding.

In one way, there has rarely been a better time to work in visual arts. Once considered a preserve of an ultra-educated elite, art has never been so popular. Last month Tate Modern became the second most visited attraction in Britain, according to the Association of Leading Visitor Attractions, with 4.9 million visitors in 2006, making it the most popular modern art gallery in the world.

More than 4,000 people a day visited Tate Britain's Turner, Whistler, Monet show in 2005. And research conducted for Turning Point, the ten-year visual arts strategy launched by Arts Council England (ACE) last year, found that 25 per cent of adults visit art galleries.

Meanwhile, thanks to the lottery money from ACE and the Heritage Lottery Fund (HLF), there has been an era of gallery refurbishment unprecedented since the 1970s, which saw the Arts Council establish exhibition spaces such as Arnolfini in Bristol and Ikon in Birmingham.

New galleries such as Mima, the Baltic and Fact in Liverpool (for video art), have opened in the past few years: others such as Manchester Art Gallery have been comprehensively refurbished. And many major regional art galleries, such as those in Bradford and Birmingham, are receiving hefty sums of money via the Museums, Libraries and Archives Council's (MLA) Renaissance in the Regions programme.

Yet start talking to directors and curators in the regions and the conversations are surprisingly downbeat. There are lots of references to the fact that the gallery world is organised in such a way that the present is separated from the past; with contemporary curators working in arts council-funded exhibition galleries, such as Ikon, and historical curators (who are supposed to cover contemporary as well) typically in local authority museums with 19th-century and early modern collections.

Meanwhile the big galleries, such as Tate and the National Gallery, are funded directly by central government: and despite the efforts of both nationals they do seem, with their big budgets and specialist research staff, still separate from the experience of the increasingly generalist staff in the regions.

'When we were researching Turning Point, we found a huge desire out there to link regional art museums with contemporary touring spaces and the national galleries, and for the funding bodies to work more closely together,' Marjorie Allthorpe-Guyton, a writer and former head of visual arts at ACE, says.

'There was a lot of interest among contemporary spaces about the way regional galleries undertake audience research and development; equally, regional galleries increasingly lack specialist curators and close connections to artists, and could benefit from the expertise of some of the contemporary galleries.'

The most immediate concern for most directors in the regions is the state of local authority funding and the feeling that local authorities understand galleries even less than they do museums. As non-statutory services, both are vulnerable: and the signals coming from civil servants about the next Comprehensive Spending Review are doing nothing to allay fears of spending cuts.

'Overall, local authority budgets are going up,' says Paul Bristow, local authority policy adviser at MLA. 'But our research shows that how that affects museums, which receive discretionary funding, is incredibly variable.'

With most of the increases going on schools and social services, galleries can easily be squeezed out. On one hand there are museums such as Manchester Art Gallery, which seems to be the pride and joy of its local authority (which gave it an extra £1m in funding a year when it reopened in 2002) and on the other you have the well-off Tory borough of Wandsworth threatening not only the existence of its museum, but the highly regarded Battersea Arts Centre.

'Where there is a high-profile museum, more people are likely to say they want it and local authorities listen to that,' Bristow says. 'But that's not a certainty: Bury [which sold a Lowry painting from its collection last year] shows quite clearly that even when there is local opposition, when councils want to fill a hole, all too often the gallery takes a hit.'

For some, it is not just about overall budget levels, it is about a complete clash of cultures. 'Take travel,' says Stephen Snoddy, the director of the New Art Gallery Walsall. 'The local authority seems to regard curators travelling as somehow not proper. Yet in the contemporary art world, networking is an essential part of a curator's work: for research, for sharing exhibitions and education programmes and developing curatorial practice.

The local authority doesn't understand that if we want to do an exhibition, and we can get a gallery in, say, Cologne, to work with us on it, we can share a range of transport costs, administration and research. So a £300 hop over to Germany can end up saving you £15,000, apart from the artists and curators it brings you into contact with.'

Lack of money also exacerbates the already difficult issue of collecting in an era when the art market is booming: dealers watched in amazement at Sotheby's contemporary art sale in February as a painting by British artist Peter Doig sold for £5.7m, almost five times his auction record of a year ago.

And if there is one thing that unites just about every director that has an art collection, it is the anxiety that the art of the present and very recent past has already slid through museums' fingers. It is an irony that the Young British Artists might have made art popular and sexy again, but you are more likely to get to see their work in the US and Germany than at home.

'It is vital to keep collecting,' says Virginia Tandy, the director of Manchester Art Gallery, which built up its collections in the 19th century, mostly thanks to local authority funding. 'It is wonderful when you see what previous generations have left us, and what the things that were chosen say about Manchester at that time. It is our responsibility to do the same for future generations.' But she says it is not easy.

While most galleries welcome the HLF's current consultation on a new collecting scheme and the work of the Art Fund, there is a general awareness that on their own they are not enough. Manchester is reinvigorating its patrons group, while in the North East a new network of curators and collectors has been set up under the auspices of the Contemporary Art Society, the former organiser of the much-missed Special Collection Scheme. Caroline Worthington, the curator of art at York Museums Trust, says about 300 people turned up to the first meeting.

'You find that collectors are going to the things that often we can't: they go to the Venice Biennale, or to Art Basel,' Worthington says. 'The idea is to link curators and collectors, to put on events and talks and to visit artists' studios.'

Of course, by itself, money for collecting is not the only issue. Curatorial expertise, and the fear that it is no longer regarded or supported, is once again becoming a burning issue.

Gill Hedley, an independent art expert and former head of the Contemporary Art Society, says that senior managers need to value curatorial expertise more, and to make sure that staff do get time to network, research and travel. 'We are talking very moderate sums of money, but there is a danger that staff are spending so much time on administration duties that they don't develop their professional curatorial practice.'

She points to the new, Renaissance-funded Subject Specialist Network for art as a way forward, but adds that directors in the regions have to take more responsibility for developing their staff's curatorial skills.

Of course it is not all doom and gloom. Mark Suggitt, the head of mu-seums, galleries and heritage at Bradford, says the combination of Renaissance and Arts Council Yorkshire funding has 'rescued' the museum and gallery service.

'We've had a £200,000 increase from Bradford Council, Renaissance funding will reach £500,000 in 2007/08 and we've had £230,000 from Arts Council Yorkshire over the past three years,' he says. The latter has been giving a number of Yorkshire's local authority-funded museums grants of £70,000 to £80,000 a year for contemporary programmes.

'Regional galleries need Renaissance and ACE to recover and develop,' he says. 'For MLA it means getting tough with councils who try to slash hub-funded museum budgets. For ACE it means developing the Yorkshire scheme nationwide.'

But with the London Olympics threatening to absorb great swathes of lottery funding, and the constant pressure on governments to pour money into health and education, the least the gallery world can do is to try to argue coherently. Or the irony will be that in an era when British art has never been so hot, publicly funded British galleries could be facing chilly times. mj

Jane Morris is an arts writer and editor

Middlesbrough Institute of Modern Art

The old Middlesbrough Art Gallery was in a converted doctor's surgery. The new one, the £14.2m Middlesbrough Institute of Modern Art (Mima), which opened at the end of January, is the centrepiece of an urban regeneration scheme designed to rebrand the town as a cultural destination. Mima has already attracted a lot of attention in the press.

According to the gallery's designer, the fashionable Dutch architect Erick van Egeraat, the project was a masterplan with a gallery attached. The gallery's director, Godfrey Worsdale, has an annual revenue budget of £1m, of which £100,000 is earmarked for exhibitions.

'But given that one, like our forthcoming Bauhaus exhibition, costs around £80,000, we have got to keep fundraising,' he says. The exhibition programme will use the strengths of the collection - including a fine prints and drawings collection - as well as a number of loans. Its first show, which ends on 22 April, is on the legacy of drawing.

Worsdale is uniformly positive about the lottery, ACE and the MLA, which he says have all been 'fantastic'. On the subject of curatorial expertise: 'It is up to directors to help their staff develop. I strongly believe that my staff should be going to Venice and Art Basel and taking part in events like the V&A's Collect.'

Sherborne House

Sherborne House in Dorset, a stately home built in 1720, was one of unlucky losers in the 2004 BBC series Restoration. Since 1995 it has been used as an arts centre, set up and run by a dedicated group of volunteers who put on exhibitions by the likes of Gavin Turk (right) and the Bloomsbury group as well as a schools and community education programme.

The nearest arts centres are in Bath and Bristol, around one-and-a-half hours' drive away, but despite this the project is struggling - and now faces the prospect of the house being sold by the council to a private buyer. That also endangers the chances of the house securing the archive of sculptor Elisabeth Frink, which her son is keen to donate to a Dorset-based gallery.

In 2006, part-time director Amanda Wallwork learned that they had also been unsuccessful in securing a Heritage Lottery Fund grant to restore the building, house the archive and increase gallery and education programmes.

'Despite that we had 20,000 visitors last year to the gallery and workshops even though the facilities are very limited,' Wallwork says. She and the chairman John Miller are now negotiating with the council in the hope of finding some way of keeping the gallery and education programmes alive.