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. Grants may be used to establish or enhance endowments or spend-down funds that generate expendable earnings to support and enhance 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.

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