ARTS companies across Scotland could lose their funding as cash for culture falls in the coming years, the nation's main cultural funder has warned.

A reduction in National Lottery money, as well as an expected standstill or reduced grant from the Scottish Government, has led to Iain Munro, deputy chief executive of Creative Scotland, to warn arts, theatre, dance, literature and music companies that some will lose out in looming spending round.

He admitted it is "unrealistic" to expect funding of companies to be the same from 2018 to 2021 as it is now, given the expected cut in lottery and, potentially, government funds.

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The Regularly Funded Organisations (RFOs) include the biggest names in Scottish culture - 118 companies including the Edinburgh Festival Fringe, the Glasgow Film Theatre, the Citizen's Theatre, the Royal Lyceum Theatre, the Edinburgh International Festival, among many others.

Mr Munro has sent a message to all the RFOs stating that lottery cash is in a downward spiral.

This affects the Open Funding projects for individual artist projects, which are funded by the lottery.

Allied to pressure on the Scottish Government funding, he said Creative Scotland will have a "lower overall budget and fewer organisations in the network."

Arts funding through the National Lottery was down by around £55m in the UK last year, following a year which saw total Lottery sales income fall by 8.8% and returns to "good causes" by 14.4%.

Arts companies across Scotland have already told Creative Scotland that their budgets and forward planning are under pressure because the arts budget will not be known until December this year.

Sources suggest Creative Scotland cannot know, at this time, how many or which companies will lose out in the RFO funding process.

The Scottish Government has recently promised funds to the film industries, to the Burrell Collection revamp, and to Paisley's culture bid, and Creative Scotland hopes this spending signals a willingness to invest in culture.

The Government is also in the process of creating a national cultural strategy, and observers suggest formulating that document at the same time as reducing funding could be politically awkward.

Mr Munro urged arts companies to "join us in underlining why Creativity Matters and to help us make the case for public funding for culture and the value it delivers, culturally, socially and economically for the people of Scotland."

National Lottery income for the arts has fluctuated in the last three years.

It has moved from £29.7m in 2013/14, rose to £34.9m, and then reduced to £34.4m and is expected to drop significantly again.

Scottish Government funding has moved from £53.2m to £50.7m in the same time.

The amount of companies applying for regular funding could outstrip the supply of money available.

In April, Creative Scotland received 184 eligible applications requesting a total of £153m for the three-year period.

Creative Scotland, led by chief executive Janet Archer, has yet to its final decisions for what it calls the RFO network, for 2018-21.

In August, in, the body told arts companies that "it is unlikely that there will be an uplift in funding to many RFOs, and overall the number of RFOs is likely to be reduced."

It also acknowledged that the later timing of the funding round had caused "issues".

Mr Munro writes: "In addition to continued pressure on Scottish Government budgets, we are also experiencing declining income from the National Lottery.

"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. This means we are having to budget very carefully for 2018/19 and subsequent years.

"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."