Dunedin Fringe Arts Trust director Gareth McMillan said it was consulting the community after its application to Creative New Zealand (CNZ) for a grant for next year’s festival was declined.
It was the first time in the festival’s 22-year history that CNZ had decided not to fund it, Mr McMillan said.
An email sent out to supporters outlined three possible options for addressing the $102,500 funding shortfall.
The trust could run a scaled-back event, which would likely incur a loss, or it could be postponed to winter, which would likely attract few international artists.
It could also be cancelled next year, which would mean a "substantial loss" for the trust.
Applying to the next Arts Grant round in October was not feasible due to the high number of the expected applicants and the December notification date, which would come too late for the March festival, the email said.
Arts on Tour NZ Trust (AOTNZ) artistic director Steve Thomas said the Christchurch based organisation was extremely surprised the organisation was declined in its application to the CNZ’s Toi Uru Kahikatea fund, which provides investment over a three year period.
He believed the call would increase divide between rural and urban communities.
The trust brought art performances to Otago and Southland communities on a regular basis and had helped make a film about Central Otago, which had also been funded by Central Lakes Trust and the Otago Community Trust.
"The regions and provinces deserve more than a kick in the guts like this," Mr Thomas said.
Regarding the AOTNZ decision, Arts Council chairwoman Caren Rangi said it had drawn on reserves throughout Covid-19 but had been "particularly challenged by our reduced financial capability" this year.
Organisations had been reminded when they applied that past investment did not guarantee a renewed funding offer.
New support had been extended to organisations in Gisborne and Northland in an effort to create greater engagement where there had traditionally been relatively low levels of public investment in the arts.
