Not-for-profit community studio Circus Monoxide has missed out on vital CreateNSW funding.
But general manager Jonathan Christley said there was no need to panic just yet.
"We have funds to last at least this year, but we need to look at alternative sources of revenue," he said.
The Fairy Meadow-based studio aims to celebrate the arts in the Illawarra while promoting a socially inclusive environment.
Mr Christley said Circus Monoxide has received government grants to support their performances and provision of circus lessons to the disadvantaged.
In 2018, Circus Monoxide received $50,000 in government funding via Create NSW.
However they only received $30,000 in 2019 and were unsuccessful in first round funding this year.
"It is a new era in the way funding is dispersed which means we need to be independent of government funding," Mr Christley said.
"The good thing is we are pretty close. We can pretty much be self-sufficient is we can get a sponsor who wants to sponsor our youth troupe for example, or if we start a program and it goes well."
He added Circus Monoxide anticipated that the funding program changes would impact it.
"So late last year we indicated that this year our class prices would increase by an average of five per cent to make up some of this shortfall," Mr Christley said.
"But even with this increase, our budget still has a deficit of $25,000 in 2020."
He added there were several revenue options being explored.
"Our total income is over $400,000, so the $25,000 is only a small fraction of this, and we may be able to cover this by creating a new program, or increasing the capacity of our current programs," Mr Christley said.
"Alternately, we will be looking at the possibility of other funding programs to fill this gap, or, finding sponsors or community partners to help make up the shortfall.
"We've had a loss but we are going to survive and we are looking for like-minded organisations to work with, whether through sponsorship or combined programs."