The Ford Foundation has decided to virtually eliminate future funding of "public interest" law firms, a move the foundation admits could bring that area of consumer advocacy to a halt. The Washington Post has learned.

Ford, which has been by far the largest financial backer of public interest law groups, is making "termination" grants to the 10 law firms it funds regularly, and is working with those groups to help try and make them self-sustaining, a foundation official confirmed yesterday.

Although it is traditional for foundations to limit the number of years they finance individual organizations, many consumer advocates say the decision by Ford to eliminate all such funding at the same time will have a dramatic impact.

"This is happening at a time when these groups are finally managing to have an impact," said Ralph Nader, whose groups do not receive Ford money. "These public interest law groups have helped advance justice and give millions of unrepresented people access to important decision-making processes in our country."

Nader said remarks made by Henry Ford II when he resigned as head of the foundation in 1977 are at the root of the recent decision. "Ford said that the public interest law groups the foundation was funding were biting the hand that fed them, because they were challenging the corporations funding them," Nader said. attributed to the fact that these groups' very successes have made them controversial in the corporate circles that make up part of the foundation world's culture," Nader said.

The groups that have or will be affected by the Ford action are frequent intervenors in the complex proceedings that lead to creation or enforcement of government regulations.

The 10 groups now directly funded by Ford are Center for Law in Public Interest, Environmental Defense Fund, Sierra Club Legal Defense, Natural Resources Defense Counsel, Institute for Public Interest Representation, Center for Law and Public Policy, Citizens Communication Center, Public Advocates, Education Law Center and Center for Law and Public Policy.

Most of the representatives of the 10 firms affected are quick to point out that the Ford Foundation has virtually carried public interest law funding by itself for the past decade.

"Ford has probably given grants and kept organizations like ours going longer than any other foundation," said Nolan Bowie of the Washington-based Citizen Communications Center. "The real tragedy is that public interest law has so little other funding."

Bowie's group receives what amounts to almost 90 percent of its $250,000 annual budget from Ford, and was told last week that the next grant will likely be the last, and that it will also probably be smaller than those of the past.

"We're needed more than ever before, and our future is dismal," Bowie said, pointing to several cases upcoming at the Federal Communication Commission that the CCC has plans to intervene in.

Ford official Sanford Jaffe said the foundation is trying "to work with all our grantees to revise ways in which they can be self-sustaining institutions, to develop financial plans and to depend on other fundraising."

Jaffe denied the claims of some consumer advocates that the action is being taken because of corporate pressures to grant money in less controversial areas like education and minority programs.

Herb Semmel of the Center for Law and Policy said his group for the past few years begun to diversity its funding to the point where Ford money now represents only 60 per cent of its budget.

"But the wonderful thing that will be lost, even if we do get funds from other sources, will be the ability to be innovative," he said. "Ford funding wasn't limited to specific projects, and didn't have to ask permission . . . to explore new areas."

"If no one else comes forward, Semmel said, public interest law will be nothing but a shadow of itself in two years."