THE NATIONAL Endowment for Democracy is one of the less known but, in the foreign policy universe, one of the more appreciated aspects of the Ronald Reagan legacy. Congressionally funded but largely independent in its operations, it mainly gives grants to the two political parties and leading business and labor groups to spread the word of civil societies, party development and election procedures, and democratic and human rights advocacy. Recognized abroad, it is scrutinized closely at home, which is fine but a bit unnerving to its supporters all the same.

This week, for instance, Sen. Russell Feingold (D-Wis.), in an authorization bill, sought to strip the endowment of its favor for and reliance on the four "core" groups and to put the whole of the institution's $30 million budget up for competitive political bidding. It sounded like a reasonable, even democratic proposal, but three-quarters of the Senate wisely accepted the response that the endowment, with its support for the two parties and the AFL-CIO and Chamber of Commerce, already builds in a wholesome set of checks and balances true to the spirit of American democracy.

A lingering difficulty arises from Sen. Judd Gregg (R-N.H.). Making use of the deference enjoyed by Appropriations subcommittee chairmen, he has held up all funds sought for the endowment. He would prefer that the administration take the money out of the State Department, which, he points out, funds democracy promotion under its own budget.

Mr. Gregg is right that the Cold War is over. But considerations of strategy as well as sentiment require that the effort to sustain fledgling democratic societies and initiatives ought to be a permanent part of American policy. To tuck the endowment into the State Department, moreover, would deprive it of precisely the independence wherein its chief value lies. Can you imagine, for instance, the "engagement"-minded State Department sponsoring Chinese nongovernmental organizations?

In sum, the endowment is an experiment in exporting democracy that has been working, openly, for 15 years. It has been tested in heavy political weather, some of it churned up by its own early miscues. There is reason to believe the Senate would support the appropriation if Sen. Gregg were to let it register its judgment. That would be the democratic thing for him to do.