The theatre group has been running for 35 years and operates four youth theatres across the capital. It also works in 20 primary schools and 13 secondary schools.
The group has five weeks to respond to the Arts Council's proposals, and is appealing against the recommendation.
The Arts Council has reviewed the organisations it funds following its Comprehensive Spending Review settlement from the government.
A spokeswoman said the settlement of inflation plus 1.1 per cent will mean an increase for the majority of groups funded by the council. However some will still face cuts.
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