By Peter Aspden

Arts groups in United Kingdom are trying to armour themselves against looming public spending cuts through an aggressive pursuit of wealthy donors and increasingly sophisticated collaborations with both artistic rivals and the private sector.

Although a three-year public funding settlement that expires in 2011 has sheltered them from the worst effects of the crisis, arts luminaries acknowledge that government aid will never again reach the heights it did during the years of public spending largesse. That realisation has triggered the biggest rethink for at least two decades as practitioners grapple with the dilemma of maintaining an internationally competitive arts sector in an era of fiscal austerity.

Colin Tweedy - chief executive of Arts & Business, a consultancy that promotes links between commerce and culture - said the arts world was bracing itself for a drop in government funding, which is distributed through Arts Council grants.

“The subsidy generation is over, and it will never come back,” he warned. “If a Conservative government comes in, it will expect the arts to become more entrepreneurial.” But arts bodies are trying to pre-empt the predicted shortfall by a range of measures, including more artistic collaborations, spinning off subsidised productions into the private sector and more assiduous courting of private donors.

Latest figures from Arts & Business show that while corporate sponsorship has faltered in the past 12 months, especially outside London, donations from individuals have increased.

The Royal Opera House, traditionally one of the most attractive arts institutions for donors, has increased the value of individual donations from £6.7m in 2001 to just short of £20m this year.

Tony Hall, its chief executive, said individual philanthropy was the biggest growth area for revenue-raising. He told the Financial Times it was important to make donors feel “part of the family”.

“If you take someone backstage for a curtain call, they feel the excitement, they feel that something is being created. It is a very different relationship from that of 10 to 20 years ago,” he said. Hall said private money could not make up for cuts in public funding but was dependent on it. “People don’t want to fill in a gap - they want to put money into things that are successful, not into problems. Anyone who has fund-raised knows that.”

He praised the UK’s mixed funding system. “It is a robust system. Government funding allows us to take risks. But we are not grant junkies.”

The National Theatre has supplemented its income by transferring commercially successful plays such as War Horse, an adaptation of Michael Morpurgo’s first world war story. The play moved to the West End in March, where it has enjoyed full houses at the New London Theatre, and has extended its initial six-month run into 2010. The National recouped the £800,000 cost of transferring the play within 10 weeks, and has taken £1.2m in advance bookings.

Alan Davey, chief executive of Arts Council England, stressed the importance this week of encouraging private investment in the arts. He said in a speech at a Creative Industries conference in London: “I see us as a venture capital fund for the creative economy, using our learning, our experience and our networks to build longer-lasting partnerships with the commercial and voluntary sectors. Our investment is one of the reasons the UK is the world’s largest cultural goods exporter.”

In spite of optimism in the arts sector, Tweedy said it ought to brace itself for bad news in the spending round. “You can’t spare the arts if you are going to cut education and health,” he said. “It is simply inconceivable. But in the end, artists innovate to adapt to new environments.”

One of the biggest operatic successes on the London stage in recent years has been the production of Madam Butterfly by the film director Anthony Minghella at English National Opera. But the critically acclaimed show might never have made it to the stage had it not been for the company’s ground-breaking partnership with New York’s Metropolitan Opera, which enabled it to share production costs.

John Berry, artistic director of ENO, says the company’s emphasis on artistic collaboration over the past three years has enabled it to achieve its target of mounting up to 12 new productions a year. “The amount of public funding is simply not enough to sustain the amount of new work we are creating,” he says.

He adds that income from co-productions has more than quadrupled in the last three years. ENO is involved in transferring productions to 25 opera houses.