The Board of Directors report that financial challenges have led to Gallery operations being almost entirely suspended with expenditures confined to insurance, sundry repairs, and the cost of a membership campaign. After a special campaign to secure 400 members to finance the operations of the Gallery had elicited only 125 responses, it was decided on August 17 that an art association should be formed to carry on the work of the Gallery.

While still bearing the formal title of Winnipeg Gallery and School of Art, the Gallery practically comes to an end, and in 1926 its collection is held in trust by the School of Art. Only the School of Art goes on in the old premises at Main and Water Streets. School Principals Gebhardt, and later FitzGerald, would take up the cause of acquiring works of art and mounting exhibitions in various locations around the city through the late 1920s and early 1930s.