The University of Iowa Press, one of the most prestigious university presses in the country, has joined the ranks of institutions reacting against the anti-obscenity pledge that accompanies this year's grants from the National Endowment for the Arts. The press will notify the endowment next week that it is turning down a $12,000 grant.

The decision to reject the grant was made yesterday by Paul Zimmer, the director of the publishing house. "It's not that I plan to publish obscene material," Zimmer said. "But the money stinks under these conditions. It reeks."

Zimmer's decision makes the University of Iowa Press the first publishing house in the country to take a stand against the obscenity restriction. In April Joseph Papp, the producer of the New York Shakespeare Festival, turned down a $50,000 grant from the NEA rather than comply with the anti-obscenity pledge. Then last month, the New School for Social Research filed a suit in federal District Court in New York, asking that the NEA be stopped from requiring grant recipients to sign the anti-obscenity pledge.

The University of Iowa Press was notified a month ago that it had received the grant to help with production costs for the 20th annual Iowa Short Fiction Awards, the oldest series of short fiction published by a university press in America. The awards, which will go to two writers, will be made in about a month.

"As a publisher I am offended by this kind of restriction from a grant-offering organization," said Zimmer, speaking from his office in Iowa City. "I have been thinking about it for a month and always kind of knew I wouldn't take the money."

Told of Zimmer's plans yesterday, NEA Chairman John Frohnmayer had no comment, but press spokeswoman Virginia Falck described his response to the group of grant rejections. "The chairman's feelings are that he is sorry they have decided to turn down the grants, but they would certainly be worthy recipients. He feels that their time and energy would be better invested in efforts to communicate to Congress the difficulties this law is causing them."

Writer Frank Conroy, who is the director of the Iowa Writers Workshop and was director of the NEA literature program for 4 1/2 years in the early 1980s, yesterday described Zimmer's decision as "courageous." "I don't want to sound cynical," said Conroy, "but when Joseph Papp turns the money down, Papp can get the money elsewhere. Zimmer is not going to be able to do that. He can try. And maybe he'll be able to because of people's reaction to the NEA. But he'll probably have to limit the size of the {press} run fairly drastically. It's a very sad day."