The gulf between the National Endowment for the Arts and the artistic community has apparently deepened after a bruising three-day meeting of the NEA advisory council here over the weekend.

The final session yesterday did little to dissipate artists' fears raised Saturday when the council declined to fund grants for controversial performers Karen Finley and Holly Hughes. Overall the meeting left many many artists feeling betrayed and the endowment's staff in despair.

"I'd rather have been in Kuwait," said one NEA official as the council concluded its quarterly session.

The council serves only in an advisory capacity but the NEA chairman rarely is out of sync with its wishes.

Yesterday the council refused to support a resolution imposing restrictions on the type of art that the endowment may fund but supported a resolution introduced by Chairman John Frohnmayer reiterating the NEA's opposition to "obscenity."

That was typical of the Solomonic approach the council tried to take as it faced the dilemma of appeasing artists and its congressional critics. Whether that effort succeeds in Congress won't be apparent until the endowment's reauthorization comes to the House floor next month.

But the attempt to be evenhanded did not seem to soothe representatives of the artistic community who came to observe the proceedings. "They've diminished the respect that artists have for the endowment today, sadly," said Jock Reynolds, director of the Addison Gallery of American Art and former director of the Washington Project for the Arts.

After the meeting, Frohnmayer acknowledged that the endowment's image has taken a beating in the arts community. "I am obviously concerned about it and I think it's absolutely unfounded," he said. All sides in the controversy surrounding the endowment should recognize "that we are trying to work our way through a very difficult situation in very difficult times in which emotions are extremely tender," he said.

The council gave, and it took away. It reversed its opposition to two grants for Philadelphia's Institute of Contemporary Art, which originated the fateful Robert Mapplethorpe photography exhibit. At its last meeting in May, the council had voted against the grants, fearing that the awards would be seen as an act of defiance toward Congress. This time, approval was unanimous.

In another gesture to artists, the council voted overwhelmingly to rescind a controversial requirement that all grant recipients sign a pledge of compliance with a congressionally imposed ban on "obscene" work. Frohnmayer has not revealed whether he will rescind the certification requirement, which has led several major arts organizations to reject NEA funding. The pledge is being challenged in suits brought by the New School for Social Research and the Lewitzky Dance Company.

And yesterday the council voted down a content-restriction proposal by conservative member Jacob Neusner. His list of forbidden subject matter, similar to some proposals circulating in Congress, includes "work that denigrates the beliefs ... of a particular religion," work that "utilizes any part of an actual human embryo or fetus" and work that advocates "a particular program of social action or change."

While rebuffing Neusner, the council approved a motion offered by Frohnmayer, stating that it favors "responsibility, accountability and sensitivity to bring quality art to the American people; fair procedures; {and} a case-by-case careful analysis of each grant proposal." The resolution also states that "the council unequivocally opposes obscenity." The measure is consistent with Frohnmayer's argument that the endowment can prevent funding of potentially offensive art without legislative encouragement.

Frohnmayer's resolution may have raised some hackles in the arts community, but the council's refusal to fund grants for Finley and Hughes was a greater concern. Both artists are targets of endowment critics, and their applications in the performance-art category were rejected by Frohnmayer last month despite positive recommendations by an NEA panel. When they came up for different grants in the experimental category, the arts community watched with interest.

The council attributed its decision to deny funding to concern over the appearance of conflict-of-interest in NEA grant-making procedures. Frequently, members of NEA peer panels have applications of their own coming up for review. The usual practice is for those panel members to identify themselves and leave the room when their applications are considered. That was the case when a panel considered applications from the Kitchen, a New York organization that planned to spend part of the money on a collaborative work by Finley and musician Jerry Hunt, and from Downtown Arts for a performance piece by Hughes and Ellen Sebastian.

Sebastian and Hunt were on the panel, but M.K. Wegman, director of the panel and associate director of the Contemporary Art Center in New Orleans, said conflict-of-interest procedures were followed rigorously. Frohnmayer didn't dispute that point, but he contended that the endowment can't afford even the appearance of conflict. A majority of council members agreed, arguing that panelists Sebastian and Hunt stood to benefit in a particularly direct and personal way if the two grants were approved.

The moment Frohnmayer proposed his solution -- submitting all grants with possible conflict to a new panel -- the council meeting was disrupted by a shrill whistle and the angry calls of activists who had filed into the room. Frohnmayer banged his gavel and said the protest was "out of order."

"You're out of order, Chairman Frohnmayer," one of the protesters called back.

Frohnmayer leaned back in his chair and tried to wait the demonstrators out as they began a kind of filibuster of readings and chants ("We're here, we're queer, get used to it"). After a few minutes, police broke up the demonstration. The council got back to business and approved deferral of the grants even though a crowd of noisy protesters continued to chant beneath the windows of the meeting room.

Even conservative council member Neusner expressed sympathy for the protesters. "I was very moved," he said. "... If you watched their faces, you saw there was a real human dignity ... {But} it had nothing to do with us. The negative statement on their sexuality never came from the council or the endowment. We were the wrong address for such a demonstration."

Still, at least some segments of the arts community clearly felt that the council had betrayed them. Susan Wyatt, executive director of Artists Space in New York, called the conflict question "a bogus issue." Addison Gallery director Reynolds called for Frohnmayer's resignation. "The way he's handled this meeting ... has been devastating," he said angrily.

Frohnmayer was addressed directly during yesterday's session by David Chambers, a Yale drama professor who headed the endowment's theater overview panel. Chambers was supposed to be summarizing his panel's activities in the past quarter but turned to more general concerns instead. "Most of us have fondness for you, John, and we understand the strain you've been under," he said. "But precedents are being set. These are dangerous and scary precedents. I join my colleagues in asking you to exhibit a strong and courageous moral leadership in the future."

Chambers said panel meetings have become increasingly painful. "Many people are beginning to feel the possibility that cooperation with the agency puts them in a morally hypocritical position," he continued. "... My own fear is not that the endowment will explode, but will implode. ... People will feel forced to withdraw."

While Chambers said he considers himself to be a "relatively mainstream" theatrical artist, he continued, "I am only as free as Karen Finley is. I am only as free as Holly Hughes is. The proscription on their actions proscribes my imagination. It makes me do one of two things: retreat or rebel."

Most council members who voted against funding the grants insisted that they had acted purely out of concern over the potential conflict. But Neusner later portrayed the vote in bald political terms. Neusner, who opposes any support for performance art, said submitting the Finley and Hughes grants to a new panel was the only way to avoid the divisive question of funding potentially controversial grants.

The point of resubmitting the grants, he said, was to avoid the issue until after Congress deals with legislation to reauthorize the endowment. If the council had recommended funding for Finley and Hughes, Neusner said, Congress would have been incensed. "There was not a majority on the council to reject those grants, and had those grants been approved, there wouldn't have been an endowment in November," he said.

Before the council concluded its meeting, experimental-art panel director Wegman made an unsuccessful plea for reconsideration of the vote. Calling the council's decision "unnecessary and deplorable," Wegman said the perception that the council had yielded to endowment critics "will be far more damaging ... than the risk of unfounded allegations of conflict of interest." Last year seven applicants who had similar conflicts were approved by the council, she continued. "I am in other words citing precedent for this panel's actions," she said. "It is simply unfair to change the rules in the middle of the game."

"You know whose side we're on," responded council member Ardis Krainik, general director of the Lyric Opera of Chicago. "... This will come up in November and it will be fairly treated."