A major review of arts funding in Greater Manchester is set to take place, following the Spending Review.
The Association of Greater Manchester Authorities (AGMA) supports arts and charitable organisations with a £3.7m grants scheme.
It helps fund 38 organisations from the Halle Orchestra to youth drama groups.
Members of AGMA are being asked to approve the review - which could lead to significant cuts in funding - at a meeting on 29 October.
Councillors will be told the current scheme, established in 1986, is no longer sustainable.
If approved, the review will start later this year with recommendations expected to follow in the spring.
Meanwhile, it will write to all affected organisations to tell them of the review and warn them funding is likely to be significantly reduced or withdrawn completely.
Among the grants AGMA awarded for 2010/11 were £821,300 to the Halle, £70,000 to the Cornerhouse in Manchester and £108,300 to the Octagon Theatre in Bolton.
Sarah Perks, of the Cornerhouse arts cinema and gallery, told the BBC the cuts would do long term damage.
"Here at Cornerhouse we have half a million visitors a year from across Greater Manchester and beyond," she said.
"That's really important. It's important that they see the best in international contemporary art and film, that they have a place to see that in.
"I'd say it's very short-term thinking to just cut the arts in favour of other areas, it's (not) something that will pay off in the long run."
The AGMA funding has also helped fund smaller organisations, such as the M6 Youth Theatre Company in Rochdale, which received £5,900.
Chairman Lord Peter Smith said AGMA strongly believed in the importance of the arts in Greater Manchester, which act as a catalyst for investment.
"This proposed review will be detailed and comprehensive," he said.
"It will not be knee-jerk response to public sector cuts announced by the government last week, but rather a measured evaluation of how best we can continue to support the arts in Greater Manchester, while ensuring we secure the biggest contribution to economic growth from what funding we can afford."
A consultation with arts organisations, including those receiving funding, will be carried out before any decision is implemented, he added.