Museums and galleries across the UK are lobbying the government for more funding. BBC News Online looks at an example of how one museum in Stirling, central Scotland, is coping.
By Ian Youngs
BBC News Online entertainment staff
When the Stirling Smith Art Gallery and Museum bought a portrait of local hero William Wallace for £20,000 earlier this year, it had to rely on the local community to rally around and help raise the cash.
The museum raised £20,000 for the William Wallace portrait
Even schoolchildren chipped in, with one class raising £304 because "they said they wouldn't sit around waiting for the adults" to bring the money in, according to museum director Elspeth King.
But The Smith, as it is known, also has a fiercely committed group of adult fund-raisers - and would not be able to operate without them, Ms King told BBC News Online.
Of the £20,000 used to buy the Wallace painting, three quarters came from funds raised by its Friends, plus donations from other members of the public, local history societies and businesses.
The remaining £5,000 came from the National Art Collections Fund, a charity that helps galleries buy new items.
"It was a marvellous effort," Ms King said. "That was a great experience for us and we've found so many more Friends that feel that they've invested in the future of this place."
The museum had 42,000 visitors last year
The 130-year-old museum prides itself on being the centre of local history and culture, showing history, fine art and archaeology as well as temporary exhibitions.
But it only survives "on a hand-to-mouth basis" - relying on its fund-raisers to make up for dwindling local authority grants, according to Ms King.
When she joined in 1994, it received £220,000 from the local authority - but that has dropped to £186,000 per year.
Last year, the grant was supplemented by £69,000 from other sources - mainly the Friends and their plant sales, charity shop takings, bring-and-buy sales and other appeals.
"But I need much more than that to be able to operate the place. It's like sticking a plaster on a cancer," Ms King said.
"It's hard to keep up appearances every time the grant is significantly going down - to deliver more for less on every occasion."
She has tried to keep any cuts she has been forced to make hidden from visitors - 42,000 of whom came through its doors in 2003, she said.
"We don't have nicely printed leaflets, we don't have beautifully produced exhibitions any longer," she said.
"I can't get a postcard done or an exhibition brought here without somebody else sponsoring it."
The museum has always had free entry - and would not consider charging visitors, no matter what happens to its funding, Ms King said.
"People are paying for it anyway and the Friends have raised heaven and earth to keep it that way," she said.
"Everybody else in Stirling is charging admission - however I don't feel we are in the same category as the traditional tourist attraction whose aim is just to bring people in and get so much money.
"We don't operate on a naked commercial basis like that. No museum is free - they all come at a cost and I just don't want anybody to feel barred or inhibited by paying money when they come across the threshold."
Ms King said the museum had coped "pretty well" with the new funding climate - thanks to its army of fund-raisers - and was "solid and robust enough to withstand the cuts".
"But whether that can be kept up in the long term, when nothing is certain and you've got to argue for every single bit of cash that comes in... that makes it extremely difficult to operate."