A New York artist, who signs his work simply Donald, recently had an exhibition of his drawings in New York. Because, he said, he used charcoal, the artist christened the show, "Nigger Drawings." This didn't fly with a lot of the New York art community.

In the resultant furor, art funders were charged with insensitivity and misuse of publicly supported space.

That controversy partly inspired the visual arts program director of the Endowment to call a meeting of minority artists before a policy planning panel in Washington yesterday for a face-to-face exchange on minorities and government arts policy.

"This had to do with our own education," said James Melchert, the NEA official. "We are, after all, set up for all living artists." Because the Endowment partially funds the gallery where "Nigger Drawings" was displayed, Melchert initiated the appearance of three minority artists before the panel.

The events that led up to yesterday's meeting started on Feb. 16 at the Artists Space, a gallery that provides exhibition space to young artists not affliated with an established gallery. The exhibition's title prompted a series of letters to the New York State Council, which along with the Endowment and other financial sources supports the gallery.

An interracial group of black and feminist artists, called the Emergency Coalition, led the protest. "The protest sprung up, not only from the well-known artists, but the grass roots," said Benny Andrews, a New York artist.

The Coalition organized two protests inside the gallery. Only one was held. A second was unsuccessful because the gallery locked the doors. The coalition also called several meetings to discuss arts policy issues raised by the controversy. The New York State Council decided not to formally attend the meetings, but Melchert of NEA did attend one. A spokesman for the State Council called the issue a "hot potato," but said nothing has been resolved. The exhibit closed a month ago but the controversy continues. One organizer, Howardena Pindell, said the primary result have been "a consciousness-raising that the art world is multi-racial."

"We deplore the insensitivity expressed toward a large segment of the population, in as much as the title has nothing to do with the content of the work." said Kitty Carlisle Hart, the Council chairperson. "We are not, however, goint to interfere with any artist's freedom of expression or practice any censorship. But I do think it had a lack of taste."

Helene Winer, the director of Artists Gallery, said she did question the artists, Donald Newman, 23, about the title. "But his answer satisfied me, he felt it had an esthetic complexity, it was metaphorical. I was surprised that everyone who was offended saw it only in the absolute, slur meaning."

Camille Billops, a sculptor who was one of the 30 artists who organized the Coalition, said the protesting underscored the need for an ongoing monitoring group of galleries' policy. "An apology for this insult is not enough. When we met with the gallery owners, we argued that freedom did exist in the studio but once you go into public space, it's different. If you submit a painting to the Guggenheim that doesn't agree with their policy, it doesn't go on the wall."

The need of a permanent dialogue, beyond the issue of "Drawings," prompted the artists to accept the invitation for yesterday's meeting.

Willis Bing Davis, president of the National Conference of Artists, the largest group of black artists in the country; Dana Chandler, associate professor of art at Simmons Collge; and Luis Jimenez, an artist from El Paso, Tex., spoke before the NEA's visual arts policy panel.

"We are seeking a policy, not just words, that recognizes the cultural contribution of Hispanic, black and Oriental artists," said Jimenez. "And not only recognition but support. If they don't support the minority artist now I can see them supporting a scholar later on to study this and that extinct culture."

In addition to the protest over the New York exhibit, Melchert called the meeting after a conservation with Chandler. "We are here because I raked Melchert over the coals a few weeks ago. I told him funds were not available, parity didn't exist in the makeup of the panels, and the grants, and the Endowment has to adopt a policy that all ethnocentric esthetics are valid, not just Euro-American," said Chandler.

After the meeting, whose tone was characterized as polite, Melchert said, "We feel much better informed. Some of the suggestions, such as better representation on the panels, we can start work on right away."

The Endowment, according to information it released last year, gave 2 percent of its money to minorities. "Around 1976, the Hispanic community was receiving 1.5 percent of the funding; recently there's been a big improvement to 1.6 percent," said Jimenez. Also, last September, the Endowment appointed a special representative for minority concerns, Gordon Braithwaite, who received none of the artists' criticism.