sportscotland says it has yet to decide where the cuts will fall amid concerns that elite athletes could suffer.
The cuts are being blamed on reduced government spending and a drop in National Lottery ticket sales - a major contributor to sports backing.
Governing bodies are bracing themselves for potential job losses.
About 60% of funding is made up from Scottish Government money, with lottery sales making up the rest.
In the year ending 2015, total revenue was £65.1m, which is divided up and awarded to 52 sports.
By the end of next year, that figure will have fallen to £51.8m - a cut to the Scottish sporting budget of 20% in just three years.
sportscotland chairman Mel Young said: "It's heartbreaking to me because I know the effort the sport governing bodies and the community that's around it; the volunteers and the mums and dads.
"And, to have to say that we're having to cut some money back is, I believe, not the right way to go."
Former badminton player Susan Egelstaff, a double bronze medallist at the Commonwealth Games [in 2002 and 2006] and an Olympian, fears the cuts will have "a huge impact".
"What that means in the future is that Scotland will be constantly playing catch-up," she said. "It's almost impossible to catch up if you fall too far behind the leading nations."
The Scottish Government said sport and physical activity play a "key role" in a healthy Scotland and that "significant" investment would continue in those areas.
"Having successfully delivered the Commonwealth Games [in 2014] we are now focusing on protecting or raising investment in areas intended to decrease health inequality and improve life chances, and the small reduction in the sport budget allows us to support those priorities," Minister for Sport Aileen Campbell said.
"There is on-going support for active lifestyles through capital investment in cycling and walking, and over the last 10 years we have invested £168m in sport infrastructure - from grassroots to the elite performance which has increased the facilities and opportunities to get people active and achieve on the world stage at both the Olympics and Commonwealth Games."

First Minister Nicola Sturgeon said the Transition Training Fund should help keep expertise in the energy sector, or in related roles in manufacturing.
She said job losses were "distressing".
The fund will offer grants for individuals to acquire specialised skills or further training.
Ms Sturgeon was meeting industry leaders and attending an energy jobs task force in Aberdeen.
She said: "It is absolutely crucial that we take every possible action to retain the expertise that the industry has built up over decades so that it remains flexible enough to capitalise on exploration investment and future oil price rises."
Also announced was £12.5m of Scottish Enterprise funding aimed at helping oil and gas firms sustain growth and compete internationally by developing new innovative technologies.
The announcements - and plans for a £20m Aberdeen International Airport revamp - came just days after a £504m package was announced earlier by the UK and Scottish governments to improve infrastructure in Aberdeen and Aberdeenshire, and to attract new jobs.
North East Scotland Labour MSP Lewis Macdonald said: "The Scottish government's offer of extra money to train those made redundant by the oil and gas industry is a step in the right direction but a year later than it should have been.
"This is the kind of initiative which should have been put in place when the North Sea saw the first signs of a crisis, not after an estimated 65,000 people have already lost their jobs."
North East Scotland Lib Dem MSP Alison McInnes said: "This is welcome support for the tens of thousands of people who have lost their jobs because of the downturn in the oil and gas industry.
"They are incredibly skilled staff whose experience cannot be wasted and who need to know the opportunities and help they need to retrain is available.
"What we now need to know is how exactly this fund will be distributed, who can apply and clear details as they come in of how many people are actually benefiting."
The cost of a barrel of Brent crude oil has decreased from more than $100 in January 2014 to less than $30 in January of this year.
Tens of thousands of jobs are thought to have been lost.
Sport funding in Scotland is facing a 20% reduction over a three-year period, a move described as "heartbreaking" by the national agency.
[NEXT_CONCEPT]
A new £12m fund to help people who face losing their jobs in oil and gas to gain new skills and find new work is being set up by the Scottish government.