Cash-strapped arts sponsorship organisation Arts & Business is to merge with Business in the Community following significant funding cuts from the Arts Council.

The Prince of Wales, who is president of both Arts & Business and Business in the Community, is said to have backed the merger of the two organisations, which are the second and third largest organisations in the Prince’s 22 charities. The board of Arts & Business had been considering three options following a significant cut in Arts Council funding; to become a consultancy, to merge with another Prince of Wales charity or to shut down.

The Arts Council had funded Arts & Business to the tune of £4m in 2008/09 and 2009/10 and slightly less this financial year just passed (£3.84m), but the organisation which works to build links between private sponsors and art institutions was facing a halving of its Arts Council funding in 2011/12 down to £1.92m and had to consider all options.

The merge should be confirmed on Thursday at the annual general meeting of Business in the Community with an official announcement soon after. Arts & Business will remain an independent charity, but will share offices and have the same chief executive, Business in the Community’s Stephen Howard. Plans are already underway for the merger.

Colin Tweedy, chief executive of Arts & Business for 28 years, will step down from his post and take on what the spokesman described as an “ambassadorial role” for the organisation.

While working closely with Business in the Community, Arts & Business will retain its own brand and vision, a spokesman said.

He added said that reports of a slashing of staff where exaggerated, as Arts & Business is in the process of separating into Scottish, Welsh and English organisations with different funding streams. Of the 100 staff currently employed, however, the spokesman told civilsociety.co.uk that there would potentially be a net loss of three or four staff as a result of the merger of the English organisation into Business in the Community.