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Arts organisations are awaiting the outcome of a key investment review by the Arts Council of Wales (ACW).

ACW will announce this month which of the 116 groups which have applied will be guaranteed backing through the next financial year.

ACW chief executive Nick Capaldi said the review had been "difficult" and some are bound to be disappointed.

The assembly government is due to announce the ACW's budget in December.

Some have welcomed the reorganisation, but others say the arts world is currently "in limbo".

The exercise started before the recession hit home but the squeeze on public finances will obviously make an impact, said Mr Capaldi.

In its current £24m porfolio are 97 Welsh arts organisations, ranging from small community projects to large organisations like Welsh National Opera.

For the next annual funding, groups were invited to provide ACW with their business plans to show how they intended to drive forward artistically.

Collectively, arts groups are asking for an additional £10m of funding at a time when many public sector bodies are facing cuts.

Mr Capaldi said ACW had to be realistic about what it can achieve.

"Our biggest challenge is to make sure that the arts are a relevant and important part of people's lives," he said.

"We are absolutely clear that the success of the arts at the moment depends on work being exceptionally challenging, being able to inspire and excite.

"We are not looking for the mediocre. We're looking for that work which sparks off and creates something that's going to excite audiences."

'In limbo'

Keeping arts groups informed during the review has meant a series of roadshows around Wales, and the final decisions will be known on 29 June.

For those groups whose support will end in March 2011, transition funding will be on offer.

For the others, it will mean more waiting until the council's own funding is confirmed in December.

Nicolas Young, director of the Riverfront in Newport, said the £60,000 the council-owned theatre current complex receives made a "huge difference to the nature of our programme".

He said many groups were "in limbo" and unable to make decisions and unable to commit to developmental projects until the review is made public.

But Martin Barlow, director of Mostyn art gallery in Llandudno, Conwy county, which opened last month after a £5.1m redevelopment, welcomed what he called ACW's move to "grasp the nettle" and "look seriously at the arts infrastructure in Wales".

Right way

"That process has to be gone through properly and professionally," he said.

Mr Capaldi arrived at ACW 21 months ago from a similar organisation in the south west of England.

A musician - he was a prize winner in the first ���˿��� Young Musician award in 1978 - he said he developed an eye for arts administration when he realised there was "no shortage of concert pianists out there".

He said: "I was very clear when I came here that I wanted to work within an organisation that was clear and confident about what it was doing and was also clear that it was spending public funds in the right way.

"I do feel very strongly that as a public body we must be offering a quality service that the people of Wales can be excited by and proud of."