The D.C. Commission on the Arts and Humanities, which has been criticized for not supporting programs around the city, spends nearly half of its $1.5 million budget to subsidize individual artists and arts groups such as the Source Theater, Folger Library and Capitol Children's Museum.

About 5 percent of the commission's budget goes directly to arts programs designed for city residents who are not artists.

Two years ago the commission, reacting to City Council criticism that arts money was not being spent in wards 6, 7 and 8 in Northeast and Southeast, created a program to fund the arts in those areas. The program received $180,000 this year, but none of it has been spent.

Subsidizing individuals is controversial for a city arts commission. Nineteen states and U.S. territories bar direct funding to individuals, according to the National Assembly of State Arts Agencies, a private group that monitors arts budgets nationwide.

"Many states do not permit their [arts] agency to fund individual artists because they feel the taxpayer doesn't benefit from that type of funding," said Ronya McMillen, information services coordinator for the arts group.

"However many of those states that don't allow funding to individual artists give money to private foundations which give out money to individual artists," she added.

About 5 percent of Maryland's art budget and less than 2 percent of Virginia's go to individual artists.

D.C. arts officials argue that giving money to artists to spend however they wish benefits the city by giving it an artistic community.

"I think it's a very good thing; I think that other states should be giving much more assistance to individual artists," said James Backas, executive director of the commission. "I would argue to the death that giving a grant to a writer, to a composer, to a sculptor is a good investment of the public money."

He added, " . . . It has been my contention for years that the individual artists probably require assistance much more than the entire arts community because corporations don't fund individual artists. They independent artists have really no place to go. They're out there really alone."

The commission spends 32 percent of its budget on salaries for its 13-member staff and administration, nearly double the amount spent by Maryland, at 17 percent, and Virginia, at 12 percent.

The commission, which was organized 10 years ago to promote arts programs in the city, has seen its budget grow from $287,000 in 1975 to $1.5 million for this fiscal year.

About one-fourth of the 1985 budget comes from the National Endowment for the Arts, and the rest is from city taxpayers.

"I think they're doing a very good job," said D.C. City Council member Polly Shackleton (D-Ward 3), who heads the council's Committee on Human Services, which oversees the commission.

Council Member H.R. Crawford (D-Ward 7), whose ward was to be served by the program targeting certain areas, said, "I think that the commission has moved along at a good pace in making sure the money is distributed in those areas, particularly in my area, in Southeast . . . one of the problems is finding these organizations . . . There are a lot of excellent artists in the Southeast area; it's just a matter of identifying the artists that would be eligible for those grants."

The commission, at 420 Seventh St. NW, funds two of the programs, totaling $630,000, that directly subsidize individuals and groups. The 50 artists and 50 arts organizations receiving grants can spend the money to pay rent, buy food, purchase supplies, take trips or whatever they want.

The commission's geographic development program, targeted for Northeast and Southeast, has spent no money this fiscal year, which began last Oct. 1.

Another program, totaling $175,000, which directly benefits mostly artists, funds the mayor's arts awards, the Larry Neal Writers Conference and organizations that serve the arts community such as the Washington Lawyers for the Arts, which offers low-cost legal advice to artists. The program also funds public arts festivals.

Two programs totaling $72,000 directly benefit the public. The special constituencies program conducts art programs for prisoners, the mentally and physically handicapped and senior citizens, while the dance touring program gives money to city dance troupes to invite out-of-town dance groups to perform in Washington.

Two programs totaling $115,000 serve the arts community and the general public. They include a summer youth employment program in which 100 D.C. youths work for 10 city arts organizations, including the D.C. Youth Orchestra. The commission requires the groups to offer free public performances and to open their workshops to the public.

Under the artists-in-education program, nine artists teach in 14 city public schools for eight weeks to a year. The artists receive stipends and free studio space at the schools.

The grants-in-aid are the most popular among artists because there are no strings, but they are also the most difficult to apply for.

"It takes one person about five full days of work to complete the application," said Bart Whiteman, director of the Source Theatre Company. "It's even more complicated than applying for money from the National Endowment for the Arts, which takes half that time."

The theater recently received $10,000 because its $250,000 budget was insufficient to pay its bills. The grant was the first from the commission in five years, said Whiteman, although he had applied for money each year since 1980.

"Despite any money that small groups are getting from the D.C. government, it's still having very little effect on the development of an arts community in Washington," he said. About one out of three applicants receives funding, Backas said.

The geographical development program, designed for the arts in Ward 5, which includes Brookland, and wards 7 and 8 east of the Anacostia River, was created after some City Council members said that the commission was not spending its money citywide.

"We found these areas wards 5, 7 and 8 were not faring well in our grant cycle," said Barbara Nicholson, commission deputy director. "I think there was an intimidation about writing a grant for those who lived there . . . . We felt we had to be more visible in those areas."