Publicly-funded cultural institutions such as theatre companies, symphony orchestras, museums, libraries and so on are increasingly engaging with new technologies as a means of improving their operational efficiency and extending the range of ways in which they pursue their cultural missions. For example, opera companies are broadcasting performances by satellite to cinemas, and art museums are using the Internet to show virtual exhibitions. These developments have implications for funding authorities who need to update their policy approaches to encompass a range of new technological phenomena. This paper provides a framework for assessing technological innovation in cultural institutions, and discusses the ramifications of such a framework for cultural policy. The paper is illustrated using the results of a recent research project that evaluated the UK National Theatre's NT Live experiment and the Tate Gallery's use of a web-based exhibition as strategies to expand their audience reach.