Diversions Dance Company celebrated its 25th anniversary this year
Arts organisations in Wales should not always receive funding just because they have previously had it, the culture minister has said.
In a speech to the Arts Council of Wales (ACW), Rhodri Glyn Thomas said the government needed to move away from the "historic funding situation".
He said there was a "collective duty to encourage new growth and development".
He wants excellence in the arts rewarded, and for artists and the public to have a say in judging merit.
In his first address to the ACW's annual conference, Mr Thomas talked of a "thriving and dynamic" arts scene in Wales which was central to creating a national identity.
While maintaining the arms-length principle of funding, he believes there is a "clear role for politicians" to lead the process of encouraging artistic endeavour.
Mr Thomas wants more flexibility in the funding system, and does not believe any organisations should be sacred cows in funding terms.
"If we are to be truly creative and enterprising and recognise the importance of innovation and excellence as well as increase participation we must also encourage renewal," he told the conference.
"We must keep giving our cultural life fresh impetus, allowing space not only for new talent to grow but also to retain and develop the wealth of talent we already have.
"It is not enough for our pioneering arts companies to simply survive - they have to thrive".
He called for "renewed vigour" to ensure the arts did not "stagnate".
Mr Thomas said: "We cannot continue to keep funding organisations on a historic basis - where those who have always received funding continue to always receive it and at exactly the same level, simply because that's how we've done it year in year."
New criteria for funding will include:
• Recognising excellence in the arts, particularly in fields such as community arts of work with disabled people;
• Allowing the maximum participation of arts and the public in judging merit and excellence;
• Encouraging, and acknowledging in funding, work of Welsh origin that achieves international recognition;
• Giving certainty of funding when long-term investment is needed but does not fossilise funding at the expense of innovation;
• Giving a strong and accessible voice to people's experiences and realities.
ACW will now look at alternative funding models to enable quick response to new projects where necessary.
Mr Thomas said 2008 was being talked about as the year of Wales, with the Grand Slam victory, the success of TV comedy Gavin and Stacey and the chart-topping singer Duffy.
He added: "2008 has also been a good year for the arts - Diversions 25th birthday, Ruthin Craft Centre and Kyffin Williams gallery opening, the third Artes Mundi, the first performances of Sherman Cymru, and more than 400 entries into this year's Welsh Book of the Year."
His department is looking to place a statutory duty on local authorities to promote culture and the arts.
"It is not regulation for its own sake - it is a resolution by this government to provide high quality cultural experiences for all our communities in Wales."