Peterborough City Council has transferred its culture, leisure and sports into a charitable trust with a budget approaching £5m a year.
Councillors voted this week to pass non-statutory services to the new Peterborough Cultural and Leisure Trust from 1 May.
The council will contribute £4.51m to the trust's proposed £4.78m budget, although this amount is only guaranteed for a year.
The trust will immediately become one of the largest charities in Peterborough, running the city's Key Theatre, museum and art gallery, libraries and sports facilities. About 300 staff will transfer to the new organisation.
It is the latest local authority to transfer its culture, leisure and sports services to a charitable trust. Matthew Lee, deputy leader of the council, said 120 local authorities had already transferred their culture and leisure services into trusts.
"In contrast to many other local authorities that are expected to withdraw from providing culture, leisure and other discretionary services in an attempt to save cash over coming years, Peterborough City Council is determined to improve the services we deliver to local people," said Lee.
The move was passed unanimously, but some councillors have expressed concern that services could be "dumbed down" and no longer run by elected councillors.
Two councillors will sit on the trust's 11-strong board, but local solicitor Shelagh Smith, who will chair the organisation, said it would "absolutely not" be controlled by the town hall.
Smith said the council would enjoy financial benefits by no longer having to fund culture and leisure services at a time of tight financial constraints.
"This is a way of preserving what has been built up in the city and allowing it to fly and flourish," she said.