Equity said it was contacting more than 50 performers who came forward to say they were owed £70,000.
It said it would be distributing a percentage of unpaid fees to each artist, equating to about 20% of what they were owed.
They said the funding, coupled with a £12,500 crowdfund sum organised by Nathaniel Hall brought the total raised to £27,500, almost 40% of the money owed.
Equity North West official Karen Lockney said it was “great news for the many performers who were left high and dry last year when Manchester Pride went bust”.
Lockney added that they were grateful to the council and all those who donated.
Council leader Garry Bridges said the authority was pleased to have been able to work with Equity “to find a meaningful way to help those worst affected without using public money to meet the debts of a failed business”.
But Belinda Scandal said she was concerned about drag artists such as herself and a number of others who were still awaiting payment but could not afford to pay Equity membership fees.
“I’d just like to know how that money is going to be divvied out now they have got it and if it’s just going to be Equity members,” she said.
Scandal said she had got £370 out of £2,500 owed to her so far but she needed more to pay the other performers who worked with her.
She praised the organisers of this year’s event, however, saying performers had already been paid on time.