Late last week was a nervous time for New South Wales arts organisations awaiting triennial funding decisions. As the letters went out on Thursday and Friday, reports started to come in of companies that had lost funding.

Two prominent regional companies received significant funding cuts: Albury-Wodonga’s HotHouse Theatre and Newcastle’s Renew Newcastle. What happened next is a lesson in the politics of arts funding.

The background to the cuts were ordinary enough. A normal round of organisational funding asked applicants to apply in a series of categories, meeting a series of criteria. Some organisations succeeded, some failed.

The manner in which these decisions are made are inherently political, even if they are dressed up with the language of “arms length” independent committees. In the case of HotHouse Theatre, Arts NSW told Crikey last week that:

“HotHouse Theatre in Albury-Wodonga applied for funding for 2013-15 through the multi-year funding program, which is part of the 2013 Arts Funding Program. They received three three-year funding contracts from 2003-2011 and a one-year contract in 2012. The theatre applied again for funding in 2013. Their application was assessed by an independent panel of industry peers against published criteria. The independent panel did not recommend funding. Arts NSW is discussing the impact of this decision with the HotHouse Theatre.”

Of course, the background is a little more interesting. HotHouse had been told they scored successfully in its three-year application in 2011, but were bumped down to one year only after Arts NSW learnt the Australia Council had placed the company “on notice”. It meant HotHouse had to rework its business plan and justify to the Australia Council why they should continue to receive organisational funding. The company did this, satisfying the Council’s Theatre Board that they were making progress towards sustainability.

The Australia Council renewed its funding — Arts NSW did not. The irony, of course, is if Arts NSW had simply awarded HotHouse its three-year funding in 2011, which it arguably should have given HotHouse’s score, then HotHouse would not have had to worry about its Arts NSW funding this year — it would have been locked in for three years. Instead, because it was up for application again, HotHouse fell victim to a cut.

Renew Newcastle’s issues were similar. The urban renewal project has been garnering plenty of publicity lately for its innovative use of empty retail and warehouse space for arts and cultural businesses in Newcastle’s rundown CBD. The organisation recently achieved its holy grail of re-opening the long-shuttered David Jones department store, renamed The Emporium.

But, as so often happens in arts funding, Renew Newcastle “fell through the cracks” of a rigid criteria-based marking system for arts applications. Perhaps Renew was not quite “artistic” enough, or perhaps it didn’t foster enough new work — whatever the reason, Renew received a significant funding cut of $30,000.

What happened next shows the power of social media to reverse unpopular arts funding decisions.

Renew embarked on a massive social media campaign, tweeting and Facebooking the decision and mobilising a groundswell of popular support against the cuts. At one stage, the topic was even trending nationally on Twitter. The social media traffic was picked up by Newcastle’s old media, with the Newcastle Herald and regional TV prominently covering the decision.

Almost by accident, HotHouse also mobilised a social media campaign, after artistic director Jon Halpin posted about it on his personal page. Prominent members of the arts community took the issue up, posting and tweeting about it, some even writing emails and letters to state Arts Minister George Souris.

The outcry appeared to blindside Souris and his department. Both companies were prominent regional organisations, and Souris and the department had been making much of the commitment to regional arts funding. Local members also got involved — in both cases, conservatives on Barry O’Farrell’s backbench. Newcastle MP Tim Owen, a no-nonsense ex-army officer, was particularly strident, criticising Arts NSW on the local television news. Crikey understands the blowback was such the Premier decided to intervene over the weekend.

By this morning, Renew Newcastle and HotHouse had clawed funding back, with HotHouse offered a transitional sum at the full rate of $150,000 for 2013, and Renew Newcastle’s funding restored to its previous level of $50,000.

It was a graphic demonstration of the power of social media to mobilise protest against arts funding cuts. Esther Anatolitis of Regional Arts Victoria tweeted it was “a momentous few days for the collective power of social media arts advocacy to drive change”. Traditional media and local political support was important, but the firestorm on social media appears to have been the catalyst.

In the long-term, however, all is not necessarily good. As I’ve argued before, the parlous condition of state government finances means further cuts to arts funding by the states and territories are almost inevitable.