Creative New Zealand insists it does not "hate Shakespeare" after the Prime Minister stepped in to save a secondary-school Shakespeare programme.
The funding agency received fiery backlash for not renewing its funding of the Sheilah Winn festival.
The centre is behind the annual Sheilah Winn Shakespeare Festival, where high schools around Aotearoa perform scenes from the Bard's plays.
Shakespeare Globe Centre New Zealand's application for $31,000 was declined by Creative New Zealand, which said "the proposal did not demonstrate the relevance to the contemporary art context of Aotearoa in this time and place and landscape."
The Ministry of Education will now pick up the tab for the Shakespeare Globe Centre to continue running the programme.
The Arts Council of New Zealand Toi Aotearoa operates as Creative New Zealand's governing body, its chair Caren Rangi told Morning Report she was pleased the Ministry of Education had come to the party.
"At the end of the day ... it was about our ability to fund organisations and we just can't fund everybody," Rangi said.
The Arts Council used external assessors to gain the perspectives of a variety of voices and the view of Shakespeare as falling in the "canon of imperialism" was just one view of a single assessor, she said.
"That's one of the views of one of the people who were involved in a process that involves external assessors, our staff, our chief executive and the final decision gets made by the Arts Council.
There were other comments made in support of the Festival throughout the assessment of the funding application, she said.
"The decision wasn't actually about not funding the festival, the decision was about not funding Shakespeare Globe Centre New Zealand for a further three years.
"They're part of a contestable funding process, we've only got so much money to go around we had people apply for $81 million worth of support and we only had $51m so unfortunately they were one of the organisations that missed out."
Rangi said the Arts Council had been concerned by the "cruel" backlash regarding the decision which was often targeted towards Māori and Pacific organisations who did receive funding and also the council's frontline staff who received "hate mail".
"I'm worried at the level of toxicity at one end and I'm worried that at what point are we mature as a country to have these debates around what our artistic identity is.
Rangi said she had been heartened by the "non-toxic discussion" around what defines New Zealand art.
"In one sense, it's great to see the amount of people who have come out in support of one of our longstanding organisations ... I'm glad to see people get passionate about the arts, it tells me it's still important to people."
The Arts Council would continue to fund the New Zealand Shakespeare Globe Centre for a further six months and would assist its applications for funding from other organisations, she said.
The Shakespeare Globe Centre has been welcomed to apply for other funding grants through the Arts Council but it has not yet chosen to do so, Rangi said.