NEH challenge grants are capacity-building grants, intended to help institutions and organizations secure long-term improvements in and support for their humanities programs and resources. Through these awards, many organizations and institutions have been able to increase their humanities capacity and secure the permanent support of an endowment. Grants may be used to establish or enhance endowments or spend-down funds that generate expendable earnings to support ongoing program activities. Challenge grants may also provide capital directly supporting the procurement of long-lasting objects, such as acquisitions for archives and collections, the purchase of equipment, and the construction or renovation of facilities needed for humanities activities. Funds spent directly must be shown to bring long-term benefits to the institution and to the humanities more broadly. Grantee institutions may also expend up to 10 percent of grant funds to defray costs of fundraising to meet the NEH challenge.
Because of the matching requirement, these NEH grants also strengthen the humanities by encouraging nonfederal sources of support. Applications are welcome from colleges and universities, museums, public libraries, research institutions, historical societies and historic sites, scholarly associations, state humanities councils, and other nonprofit entities. Programs that involve collaboration among multiple institutions are eligible as well, but one institution must serve as the lead agent and formal applicant of record.