There has been a mixed reaction to Arts Council England’s (ACE) new funding model, which includes the introduction of an application system.

As part of the overhaul, all 850 existing regularly funded organisations (RFO) can apply for funding, but new organisations will also be eligible, with decisions made on the basis of strategic priorities.

But about 100 organisations are likely to lose out as a result of the new scheme, which will replace the current RFO system from April 2012.

ACE’s budget was cut from £449m in 2010-11 to £388m for 2011-12 in October’s comprehensive spending review, and will fall to £349m in 2014-15. But the Department for Culture, Media and Sport asked that funding for RFOs was not cut by more than 15% over the four-year period.

Michael Stanley, director of Modern Art Oxford, said: “Credit is due to ACE for the speed with which it announced its 6.9% cuts [for most arts organisations in 2011-12]. This is a bold opportunity to restructure a national portfolio that has so often been based on historical ties rather than a strategic consideration.

“The paradox, however, is ACE’s relentless encouragement for growth against an all-too-knowing backdrop of depleted resources. This, coupled with the staggeringly tight timescale in which these applications will be assessed, would suggest that a fair amount of strategic thinking has already taken place.”

Other major ACE developments include the introduction of flexible funding plans. Funds awarded will usually be for a fixed term of three years, but some agreements may last from two years up to six.

Most organisations will have tailor-made agreements based on specific objectives, while a handful of bodies will be encouraged to have a “strategic” relationship with ACE by offering advice on fundraising to smaller venues, for instance. 

Stephen Snoddy, director of the New Art Gallery Walsall, said: “It seems to be fairly straightforward, as long as ACE makes the tough choices on underperforming arts organisations and rewards those that have consistently delivered excellence.”

Meanwhile, Arts & Business, the charity that fosters links between the private and public sectors, will receive no core funding from ACE after 2012.