Birmingham-based music charity Sound It Out is to close at the end of the month after losing annual funding of £100,000 from the Arts Council.

The charity, which ran music programmes in deprived communities for the last 20 years, had explored alternative avenues for core funding since the loss of its Arts Council England grant last March. However, despite staff restructures and the launch of a new trading arm, it struggled to fill the gap.

The trustees have decided that the charity will cease trading on the 31st August. A statement on the charity's website, penned by chief executive Matt Daniels, says: "As with many other small and medium-scale cultural organisations, Sound It Out has been grappling with a funding climate where many funders are focussed primarily on project funding rather than organisational support and sustainability through core, or unrestricted grant funding."

He adds: "We have worked very hard to turn this situation around but given the economic climate, the very tight timescales since April 2011 and the significant funding gap we needed to replace we were faced with a near impossible challenge.

"We feel that while Sound It Out’s time has now come to an end, we have made a significant difference to many, many people’s lives and of that we are incredibly proud."

Sound It Out worked with a wide range of marginalised individuals and communities, including ex-young offenders and Neets, mental health service users, vulnerable adults and people with a physical disability.

The charity employed eight people.