The recent events here celebrating and promoting gay rights were inspiring in many aspects, but the moving Names Project was perhaps the high point and the most deeply felt artistic statement. Spread out over the Mall, the commemorative handmade quilt evoked emotions alternately sad, touching, angry and sweet. Mostly it was unforgettable. The 1,200 3-by-6-foot panels, each representing a victim of AIDS, were full of quirky reminders of lost lives. There were spangles, leather, gingham and plaid. Some panels were slick and arty; others homey and corny. There was a name for every life: Bill, Gary, Wayne, Baby Jessica. One in black just said: "In Memory of Everyone."

From here the quilt goes around the country for display. It will, sadly, get bigger as time goes on. It's "a bedcover for a generation," organizers say, and "you don't have to be gay or intravenously vulnerable to get under it."

More on Challenge

Though the American Film Institute is now based in Los Angeles, it still has a big presence in Washington at the Kennedy Center. Thus, it should be mentioned here that the AFI won a National Endowment for the Arts challenge grant last week along with two other D.C. groups -- D.C. Wheels and the Washington Project for the Arts. The film organization was given a $500,000 grant, the second largest awarded in California and the 10th largest nationwide. The funds will be used to support the AFI's campaign to develop its campus in Los Angeles and to establish a permanent endowment. As do other winners, the AFI has three years to match the grant by raising $3 for each dollar from the endowment.

The other winners in town were thrilled by the grants. A jubilant WPA Director Jock Reynolds said his $200,000 would be used to stabilize the arts organization in the incipient downtown arts district. "We can now economically afford to stay here and be a player in the revitalization of this area."

High hopes, indeed, because the other winner, D.C. Wheels, was forced out of its Adams-Morgan space by rising real estate prices. The troupe, including its central hub, Dance Place, will use its $100,000 to renovate new quarters near Catholic University. "This is a great honor, a miracle," said artistic director Carla Perlo. "Just last year we didn't know whether we were going to survive." They did. And, with this grant, will.

Design Awards

"We are the nation's largest builder, largest printer and largest user of design services," said National Endowment for the Arts Chairman Frank Hodsoll last week in describing the federal government. The purpose of this boast was to stress the importance of "Round Two" of the Presidential Design Awards, the government's quadrennial effort to stimulate and recognize excellence in the design professions, including architecture, landscape architecture, engineering, planning and interior design, graphic and industrial design. Thirteen such awards, culled from 630 entries and ranging from a prosthetic foot to a suspension bridge, were bestowed by President Reagan in 1984. For this round, Frank Stanton, chairman emeritus of CBS, succeeds architect I.M. Pei as head of the awards jury. Entries are open to federal employes, former federal employes, state and local governments, federal contractors and nonprofit groups that create design works for the government. Design projects must have been done between Jan. 1, 1977, and Jan. 1, 1987; applications are due Jan. 14, 1988. Winners of "Round Two" will be announced next summer.

Around Town

Two exhibits worth seeing end this week. At the Library of Congress, a constitutional exhibit, "The American Solution: Origins of the United States Constitution," closes Friday in the Great Hall of the Jefferson Building after an extended stay. Made up of maps, letters and other documents surrounding the Constitution as centerpiece, it is interesting and informative. And the Arts Club of Washington closes "The Art of Diplomacy" at the end of the week. More than 50 artists from 30 embassies have works in the show, including paintings by Ambassador Joseph Edsel Edmunds of St. Lucia and calligraphy by Madame Ge Qiyun, wife of the ambassador of China ...

If you liked the way he left his heart in San Francisco, you'll love the way he paints. Tony Bennett, under nom d'art Anthony Benedetto, will appear at the Georgetown Fine Art Gallery on Thursday from 7 to 9 p.m. His work -- oils, watercolors and lithographs -- will be on display all day. He'll also be performing at Wolf Trap tomorrow. Says Bennett, who started painting in high school, "There is a great similarity between art and music -- line, color, form, movement, tension -- these are the words that apply to both singing and painting."