It was announced last week 482 groups from around New Zealand had applied for a share of the NZ 2011 Festival Lottery Fund, but with applications totalling $70 million, it was heavily oversubscribed.
The fund aimed to support community groups organising events during next year's rugby tournament, and an announcement on successful applications was expected next month.
Dunedin Midwinter Celebrations Trust trustee Paul Smith said his organisation had drawn up plans for a spring celebration similar to the Midwinter Carnival, featuring "giant flower lanterns" and musicians in a Dunedin park or garden.
About 40 artists had confirmed they would be available for the two-day event, which would be held in the early evening on September 30 and October 1, ahead of the Italy v Ireland match in Dunedin on October 2, he said.
The trust had applied for $70,000 from the fund to stage the event, supported by a letter from the Dunedin City Council.
"If we don't receive the funding to do it, it will not go ahead. It's just a reality of the sort of event it is.
"If we receive partial funding then we will have to very carefully look at what we're trying to do and what other support we can get to actually make it happen," Mr Smith said.
Dunedin City Council marketing and communications agency manager Debra Simes said the lantern event would be "fantastic" if it secured lottery funding.
"If that event can secure funding it's a great thing for Dunedin and for the region actually because it would just be so appealing, both for the visitor but also from a media point of view."
It was one of at least 30 festivals and other events - some to be staged over several days - pencilled in across Otago and Southland during the tournament, she said.
Most were seeking lottery funding but at least 22 were expected to go ahead regardless, including the Dunedin Celtic Arts Festival and the Dunedin Rhododendron Festival, she said.
That number could rise, with some organisers possibly applying for lottery funding without talking to the council first, while others were still in the early stages of planning community events, she said.
"Communities throughout the region are thinking about how they can make the most of visitors and local residents travelling around the five games that are being held in this region.
"Some of the events are just great ways of showcasing communities of all sizes," she said.
Applications for the $9.48 million fund opened in July and closed late last month.
Mr Smith said the fund "sounded a lot to begin with", but arts funding was "a highly competitive environment".
"When you take that over the whole of New Zealand it certainly starts sounding a lot smaller."
The trust's spring celebration would see spectators promenading past the flower lanterns, while musicians beneath each played classical, world, ethnic, harp, improvised jazz or traditional maori music.
"It would be spectacular; it would be beautiful," he said.
