Arts bodies are warning they may struggle as the Arts Council of Wales (ACW) cuts their grant aid and asks them to apply for lottery cash instead.
Welsh Folk Dance Society is lobbying for support
In March ACW told 15 groups receiving less than £20,000 a year of the change.
They include the Pontardawe International Music Festival which is now warning it will be difficult to plans next year's event as a result.
The ACW said money had to be used most effectively and it was looking to offer the bodies three year lottery funding.
Festival director Emyr Morris said his event had been receiving a grant of around £12,000 a year but would now not know until March if it would be getting the lottery money.
He told BBC Wales the annual grant it had previously been receiving had been "a little comfort zone for the organisation" and funding uncertainty would make it more difficult to put on the festival.
He said: "Our event this year cost three times what it did two years ago therefore every single penny matters and it's going to be much more work for all events."
Another body involved, the Welsh Folk Dance Society, has written to all its members asking them to lobby their local politicians for help.
It argues it is being punished for not asking for enough money.
It was receiving a £7,000 annual revenue grant and, like the Pontardawe Festival, is instead being asked to apply for lottery cash.
Trac, the traditional music of Wales development agency, said the lottery funding suggestion was "vacuous" because "the maths don't add up" .
Director Sian Thomas said: "The Folk Dance Society, for instance, maintains a huge network throughout Wales and supports quite a lot of youth work, which quite often isn't appreciated.
"I think that if we in any way restrict the sort of work that they can do particularly arts in rural areas are going to suffer."
Arts Council of Wales chief executive Peter Tyndall said many arts organisations were struggling with staff "close to breakdown" because their funding had not been increased in line with inflation.
He said: "We're having to look at using the resources that we have in the best way possible to get the best result for the arts in Wales."
"We have made provision within our lottery budget for the amount of money required to offer three year funding to the organisations who are affected so we have made plans to ensure that there is continuity."