The Challenge Grants program, like others at NEH, supports scholarship, education, public programming, and preservation in the humanities. It differs from other NEH programs in how activities are supported:
Challenge grants support long-term or permanent endeavors in the humanities, rather than limited-term projects as do many grants in other divisions. Direct expenditures for short-term projects (except as bridge support until endowment income becomes available) are ineligible in the Challenge Grants program;
The program supports the infrastructure of humanities institutions through endowments and capital expenditures.
Challenge grant funds may be invested in endowments, the income from which may support, over the long term, almost any kind of cost associated with humanities activities (e.g., salaries, fees, research costs, staff development, public programming). Funding for endowments is ineligible in all other NEH programs.
Challenge grant funds may be used for capital expenditures such as construction and renovation, acquisitions, purchase of equipment, fundraising (restricted to 10 percent of the grant), purchase of technology, hardware and software, etc. Few such expenses are supported by other NEH grants, although limited renovation costs may be supported through Preservation and Access grants, for example.
Challenge grants are all matching funds, as opposed to outright funds, and involve substantial fundraising on the part of the grantee. One of the purposes of an NEH challenge grant is to leverage nonfederal support for the humanities. Except in the case of some special initiatives, challenge awards must be matched three-to-one – that is, three nonfederal dollars must be raised for every federal dollar offered. Other NEH programs’ grants often include a one-to-one matching component, but the majority of other programs’ awards are made with outright funding.
Guidelines for NEH Challenge Grants may be found at the NEH website, at http://www.neh.gov/grants/challenge/challenge-grants