Former cabinet minister Michael Portillo will chair a £55 million scheme to help arts organisations develop a long-term approach to funding, providing them with "world class financial resilience", it has been announced.
Groups will be able to bid for grants of up to £5 million, with around 50 organisations expected to benefit to the tune of £500,000 or more.
The money will be in the form of an endowment with the interest raised being used to pay groups' annual running costs, while organisations applying for the grants will be expected to raise double the amount from private sources.
Culture Secretary Jeremy Hunt made the announcement during a speech at the Whitechapel Gallery in east London.
He said: "It took the Met in New York over 100 years to build up their £2 billion endowment. I want our endowments century to start today. World class cultural organisations should have world class financial resilience. Michael Portillo is passionate about culture and will bring real wisdom to a process that will start a much-needed change in our approach to cultural fundraising."
The £55 million is part of a larger £100 million fund intended to encourage philanthropy in the arts. The money comes from Arts Council England (ACE), the Heritage Lottery Fund and the Department for Culture, Media and Sport.
ACE chief executive Alan Davey said on Monday: "Today's announcement by the Secretary of State is another important step in helping to make arts organisations more sustainable in the long term - one of the key objectives of achieving great art for everyone, our 10 year framework for the arts.
"Arts and heritage endowments will provide a range of opportunities for arts and cultural organisations to build their skills and capacity to fundraise, to match-fund using new ideas and to invest for their long-term health and creativity."
The fund will open for applications in October with decisions on awards expected in early 2012.
Mr Hunt also announced he will join Chancellor George Osborne in hosting a conference on fundraising in the arts later this year and launch a national campaign encouraging people to give to the arts.
Shadow culture secretary Ivan Lewis said the endowment fund risked becoming a "lost opportunity". He said: "The test of its success will be whether public funding triggers new private giving, which would not otherwise have been raised, and supports arts organisations which currently receive little or no philanthropic support to develop this source of funding.
"We are still waiting to see whether Jeremy Hunt's repeated promises of significant new tax incentives for philanthropists will actually be delivered by the Chancellor."
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