Scotland's national centre of design and architecture, The Lighthouse, could close within three months if it cannot raise enough funds to plug a projected shortfall of £300,000 (Charlene Sweeney writes).

A forecast carried out by the centre, in Glasgow, to assess how it will cope with the financial downturn has estimated that it will go into deficit after the Christmas period.

Managers are now seeking a £245,000 loan from Glasgow City Council to cover the potential funding gap, as well as a rise in its annual grant to £100,000 and a capital grant of £100,000. Councillors will vote on Friday on whether to approve the financial package sought by the centre.

“What we are doing is taking responsibility for what might happen in the next six months,” Nick Barley, director of the centre, said. “We are being prudent to avoid a crisis.”

The Lighthouse, which is housed in a building designed by Charles Rennie Mackintosh, is at the heart of Glasgow's ambitions to promote itself as a city of design and architecture. It also carries out work with schools and communities. Mr Barley said the expected shortfall has been caused by a complex combination of problems, including two major financial blows to its budget. Firstly, Scottish ministers informed Mr Barley this month that they would not be continuing to fund the Six Cities Design Festival, an event in which The Lighthouse had a major role, amounting to a loss of £2.25 million. The subsequent suspension of the event also means the centre have also lost another donation of £1 million that had been promised by the Design Council.

Secondly, the £250,000 cost of mounting Scotland's first appearance at the Venice Biennale of architecture this summer exceeded by £100,000 the amount the centre had received from the Scottish government and private sources to stage the high-profile event.

The losses have been compounded by delays in accessing traditional revenue streams. Mr Barley claims the centre has become a victim of the bureaucratic changes involved in establishing Creative Scotland. As well as taking over the functions of the Scottish Arts Council and Scottish Screen, the new organisation will also take on board some of the work to support the creative industries - including design - presently carried out by Scottish Enterprise. However, Creative Scotland is not expected to become a statutory body until 2010.

“With the reconfiguration of Scottish Enterprise and a temporary halt to some of its activities, and the wait for Creative Scotland to be set up The Lighthouse has uniquely fallen into a funding gap,” Mr Barley said.

Neil Baxter, president of the Royal Incorporation of Architects in Scotland, said The Lighthouse had helped to improve Scotland by encouraging debate about good architecture. “RIAS is keen to that role continue,” he said.

Councillor George Ryan, the executive member for development and regeneration services at Glasgow City Council, said the challenging economic conditions The Lighthouse has faced recently would be considered at Friday's decisive meeting.

“The Lighthouse has faced an unusual combination of financial difficulties this year, but we have been assured that it is taking steps to restructure and implement a new business model, which will make it more commercially viable.”

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