Earlier this year a party planned to celebrate the 75th anniversary of the Bristol Folk House looked like turning into a wake. But thanks to a number of donations, the party is still on.

In October last year the folk house, an adult education centre in the heart of the city, announced that unless it could raise Pounds 60,000 by the end of March, it would have to close. By January fundraising had failed to take off and the future looked bleak.

But an anonymous donation of Pounds 30,000 transformed the situation. According to Roger Cann, folk house director, "if we can retrieve the 600-plus students that we have lost over the past two years, we have a fighting chance of staying open.

"Our problem is that everyone now thinks we've shut - we've got to get out there and tell them we are still here," he says.

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The Pounds 30,000 has a sting in the tail. If the centre shuts in the next three years, the donor wants his or her money back. "That rather ups the stakes," Mr Cann acknowledged.

The Bristol Folk House began life as a Baptist mission, becoming a fully-fledged adult education centre in 1920. Mr Cann became director in 1975 and for the past 19 years has struggled to build up its educational programmes. In 1963/64 there were 66 classes, in 1992 the centre peaked at 313 classes.

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But the past couple of years have not been easy. Mr Cann blames the decline in fortunes on the 1992 Further and Higher Education Act, which split adult education into vocational and non-vocational.

Vocational education now comes within the remit of the Further Education Funding Council and receives what is called "schedule 2" funding. But non-vocational adult education has no such umbrella. Instead it is up to local authorities to provide funds for it - and over the past two years many have been forced to slash their budgets.

The Bristol Folk House is in the county of Avon. Following a review of adult education provision beginning in 1990, the county council divided its provision among local area steering groups - each given its own budget to promote adult education, most particularly for ethnic minorities and other disadvantaged groups.

Although the folk house attracts 200 pensioners and 290 claimants and runs a creche for 12 children - which costs their parents just Pounds 2.50 a term and the centre Pounds 2,500 a year - the folk house has seen the worth of its grant from Avon fall from about Pounds 60,000 to virtually nothing. The centre has had to put up its fees to just over Pounds 2.15 an hour. In a competitive market it is losing out to local further education colleges and this year enrolled 290 fewer students than in 1993/94.

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The idea behind the 1992 Act was to ensure that courses such as flower arranging and pottery, seen by the present government as recreational classes for a middle-class clientele who could and should pay more, were not to be subsidised by the taxpayer.

Some of the courses run by the house would certainly make Tory ministers squirm. There are "Healing herbs for the home", an "Introduction to astrology" and "Swedish massage". But what the act ignores is that many of these courses form a vital social, if not strictly educational, function - particularly for older people.

Next year Mr Cann will apply through a local sixth-form college to the Further Education Funding Council for money under schedule 2. He cannot apply directly, and has developed a healthy relationship with the college to overcome this. "Pre-Access courses" come under the schedule 2 heading, and are essentially those courses that lead people back onto the educational path.

Mr Cann argues that his "alternative therapy" courses such as "Basic reflexology" and "Introduction to art therapy" perform just this function.

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In the meantime he is planning to build up a society called "Friends of the Folk House" to raise funds on a voluntary basis, and has accepted a Pounds 5,000 pay cut to keep the centre open. "We may end up as a purely voluntary activity," he says. A shaky foundation for a vital social service for an ageing population.