The COVID-19 pandemic and the uncertainty it brings with it has forced the hand of folk festival organisers, who have had to call off the iconic event for 2021.

While the Port Fairy and District community has worked hard to enjoy the spoils of what is one of the country's most successful festivals, everyone will now share in the effects of it not going ahead.

The festival has become a major fundraiser for schools and an important cultural event for the town's next generation.

St Patrick's Primary School Port Fairy holds a barbecue over the four days of the festival, as well as opening its school grounds for camping.

The barbecue is done in partnership with St Patrick's Primary School Koroit.

St Patrick's Primary School Port Fairy principal Peter Sanderson said the loss of the festival for 2021 was a blow.

"The festival is fantastic for the town and we love being a part of it," Mr Sanderson said.

"Our barbecue is there in the thick of the action and it's nice to work in partnership with Koroit.

"The festival weekend is a major fundraiser and allows us to run extra programs we may not be able to without this revenue."

Port Fairy Consolidated Primary School principal Kath Tanner said the folk festival was the school's biggest annual fundraiser, accounting for over half of all money gathered through fundraising.

These funds are collected from the school converting classrooms into accommodation for the festival weekend each year.

For the past two years, the school has also operated a tent city on its oval.

"it will certainly have an impact on us financially," Ms Tanner said.

"This funding helps provide extra resources, particularly from a cultural point of view. The folk festival has presented us with some great opportunities through their school programs in the past few years."

Mr Sanderson also praised the festival for its support of his school's performing and visual arts program.