Seven hundred Prince Hall Masons and Shriners in their ceremonial finery marched through the streets of the Shaw neighborhood Sunday in a parade honoring patron SS. John the Baptist and John the Evangelist.

Led by the dashing Knights Templar, a Masonic honor guard in cutaway coats and plumed tricorn hats, the glittering procession wound at a majestic pace from 10th and N streets NW to the Vermont Avenue Baptist Church, where they heard an upbeat sermon and awarded $42,000 in college scholarships to 32 recent District high school graduates.

The parade and the subsequent church service illustrate the two-sidedness that characterizes Prince Hall Masonry in the District. In the parade, a largely unpublicized event, the Masons strutted the pomp and showiness that delight and mystify outsiders.

At the Vermont Avenue Baptist Church, they exhibited the other side: the organization's tradition of charitable and civic-minded good works.

In its more practical role, the organization attempts "to inculcate sound morality, to make men true to God and country and to teach men to better serve others," said Thomas L. Johnson, the Most Worshipful Grand Master of the Prince Hall Grand Lodge of the District of Columbia.

Nevertheless, the spectators' enjoyment of the annual parade was reflected in their broad smiles, eager applause and happy chatter, especially among the children.

"They look great," said 10-year-old Walter Ball, pointing to gold-collared, purple-velvet-aproned Master Masons. "Who is the man in the big hat?" asked the excited North Park Elementary School student, picking out Grand Master Johnson in a Lincoln top hat.

They kept time to traditional marching music from the McCollough Royal Knights Drum and Bugle Corps, the musical arm of Bishop Walter McCollough's United House of Prayer for All People. The National Arboretum Young Adult Society of Washington, an array of stylish orange-and-blue costumes, provided some high-stepping, double-time kicks that Ziegfield would have praised.

Bystanders whistled and cheered as the Sons of the Desert, the Shriners' gold-shirted drill team, passed by carrying silver scimitars and wearing the burgundy fez of Mecca Temple No. 10, their holy shrine.

"I do enjoy these Masons' parades," said Juanita Powell, a D.C. resident for 68 years. "My daddy was a Mason back in the '20s and I guess I started watching the parades then. They were spectacular."

At the church, the parade-weary Masons filed into middle-row pews to the dying strains of "This is My Country," and listened to pastor John R. Wheeler's sermon on the emphasis of good works instead of material possessions as a true measure of a good life. They were flanked on either side of the aisles by their white-dressed sister group, the Eastern Star.

Emory M. Levant, chairman of the Grand Lodge's scholarship committee, presenting the awards, praised each student and encouraged them to "continue the pursuit of excellence in all your scholarly endeavors." The scholarships were awarded on the basis of demonstrated academic ability and need.

"I am very grateful to the Masons," said Kimberly Kellogg, a Ballou High School graduate who received a $500 award. Kellogg said she will attend the University of the District of Columbia and plans to study journalism.

Prince Hall Masons is the oldest chartered black fraternal organization in the country. It was founded when Prince Hall, a black soapmaker and revolutionary soldier from Barbados, recieved a charter to form an African Masonic Lodge from England in 1787, after Hall had been denied a charter from white Masons in Massachusetts. Following Hall's death in 1807, the African Grand Lodge he founded in Boston changed its name to the Prince Hall Grand Lodge.

The Grand Lodge of the District of Columbia began in 1825 when about 10 free black men were granted a charter to form Social Lodge No. 7. Today, Prince Hall Masons in the District numbers more than 5,000 men in 23 lodges. About 3,000 women in the area make up 13 chapters of a sister organization, the Eastern Star.

Masonry dates from 1,600 years before the birth of Christ when stonemasons building King Solomon's temple formed a protective guild. Masonry is "a beautiful system of morality veiled in allegory and illustrated by symbols," said Roscoe Ayers, executive editor of the Prince Hall Masonic Digest, a local quarterly.

"Now," said Ayers, who has been a Mason for 26 years, "we have switched from building buildings to building lives."

The Grand Lodge in the District was the first black Masonic lodge to be chartered below the Mason-Dixon line. In those days, fraternal orders like the Prince Hall Masons helped free blacks adjust to a hostile urban environment.

"Over the years," said Ayers, "Prince Hall Masons has become increasingly involved in civic work. We are one of the largest charitable organizations in the District."

Johnson said the District's Prince Hall Masons contribute about $175,000 a year to sickle cell research and other causes. They give 600 to 700 pints of blood to the American Red Cross. They sponsor holiday meals for senior citizens and homeless people. They provide low-cost housing to welfare families. Two houses owned by the Grand Lodge at 10th and T streets NW that could rent for $400 a month are rented to low-income tenants for $175 a month, according to Johnson.

Johnson said the Masons plan to redevelop properties they own in the District to provide nursing homes, day-care centers and other facilities that are "important for community growth and a good life. This is what we want."

More than a civic group, Prince Hall Masons is "a fraternity of good men linked in an honorable society of trust and love with a bond of no more than our word," said Robert Owens, a luminary from the Pennsylvania Grand Lodge who was in town to pay tribute to Johnson Friday night.

Masons share a deep sense of camaraderie exhibited by the warmth of the customary handshake shared between any two brothers of the order when they meet.

"We are a family," said Norman Wilkinson, worshipful master of Harmony Lodge No. 22, "and as such we take care of each other. We bury our dead and serve as pallbearers at their funerals." The Masons also give a small stipend or "death benefit" to a dead member's family to help defray emergency expenses.

Though they disclaim any political involvement, the Masons are a potent political force.

"We do not engage in political activity nor advocate any political party," said Grand Master Johnson. He acknowledges, however, that "we could be influential."

Last Octoober a council of 42 grand masters and other officers from lodges around the country met in Jackson, Miss., for a strategy session on combating unemployment and gaining the extension of the recently passed Voting Rights Act.

"We represent a million votes nationwide," said Johnson. He said he did not think it contrary to their stated political neutrality to remind the president of their voting stength.

Historically, the Masons have packed a wallop in local politics. When the first District Commission was established as a means of local government in 1895, 13 of the 23 members were Masons, said Digest editor Ayers. Among the highly visible and influential Masons locally are Supreme Court Associate Justice Thurgood Marshall, Rep. Walter E. Fauntroy (D-D.C.) and Mayor Marion Barry.

Barry appeared last Friday at a tribute to Grand Master Johnson and pretended not to solicit votes.

"I am not here to ask any of you brother Masons to vote for me," said Barry to an amused audience. "But I would ask for your support if this were a different night." His brother Masons roared. After Barry was seated, Johnson, who had a day named in his honor by the mayor last year, stood up and said Barry had his vote.

Many outsiders view the Masons as a ritualistic, quasi-religious order. The titles, costumes, codes of behavior, courtly pomp and secret signs seem out of date, even absurd. "I think they're funny," said one onlooker as the parade passed, led by the befeathered Masonic honor guard, the Knights Templar.

The Masons insist that their strict adherence to the ancient traditions and rites of the order are necessary to preserve its integrity. "We are aware that we have a slight image problem," said Matthew Ellis Jr., deputy grand master of the District Lodge. "Much of what critics think is misinformed."

Ellis said that although many people believe the Masons are a clandestine organization, "We are not. We are an organization with secrets." He did not say whether their image problem explains the lack of membership growth over the last decade, a trend that has helped to loosen the Masonic tradition of nonrecruitment.

Johnson said the decline in new memberships is a result of increased competition from other organizations and clubs such as Greek letter fraternities and country clubs that once excluded blacks.

"Now, younger fellows can join the country clubs their fathers may have worked in. A lot of people who would have been potential Masons in the past want to identify with the mainstream. They see us as an organization of old men," Johnson said.

"We should not be afraid to ask worthy men to join our organization so long as we do so in a discreet manner," said Johnson in an address to the Grand Lodge last December, in which he set a goal of "increasing our membership by at least 50 percent in the next year."

Whatever their image problems, the Prince Hall Masons is a prosperous group. It owns the six-story marble and concrete Grand Masonic Lodge at 1000 U St. NW estimated to be worth more than $1 million. It also has a number of real estate holdings throughout the city, including the houses it rents to welfare families on T Street between 10th and 11th streets NW.

"You might say I'm the chief executive officer of a corporation," said Johnson, who declined to disclose the total value of Prince Hall holdings here. "We are," he said, "worth quite a bit."