(1) Grant proposals must be for the purpose of protecting works of art in the state capitol or other cultural and aesthetic projects, including but not limited to the visual, performing, literary and media arts, history, archaeology, folk-lore, archives, libraries, historical preservation and the renovation of cultural facilities. Applicants may apply for funds in one or more of the following categories:

(a) Special projects: Specific activities, services or events of limited duration and the expansion of on-going programs to meet defined needs and support for grants which generate new sources of revenue.

(i) Generally each dollar in project grants should be matched with one dollar in cash or in-kind goods and services.

(ii) Benefitting organizations will be required to submit a project budget and an organizational operations budget for the grant period. If grant funds are being requested for a project which has been conducted in prior years, financial statements of the project from the most recent two full years must be provided.

(b) Operational support for cultural institutions that have been in existence for at least two years.

(i) It is not the intention for operational support grants to reduce the applicant's fund raising efforts or to support program expansion.

(ii) In special circumstances, applications for operational support may be considered.

(iii) The benefitting organization will be required to demonstrate a need which may include:

(A) the development of emerging cultural institutions;

(I) An emerging cultural institution is in the early stages of development, i.e., formally organized for at least two years with an on-going program and generally with paid professional staff.

(B) organizations with unusually high expenses without available local funding sources;

(C) organizations which serve the entire state or a significant sub-state region;

(D) well managed and established organizations in confronting emergency situations;

(E) organizations which are recognized as essential to Montana's cultural life because of their excellence of programming and longevity of service to the state;

(F) organizations which provide a high ratio of cash match to grant request.

(iv) Generally each dollar in general support grants should be matched with one dollar in cash or in-kind goods and services.

(v) Benefitting organizations will be required to submit financial statements for:

(A) the prior two fiscal years,

(B) actual and budgeted expenses and income for the current year, and

(C) budgets for the grant period.

(vi) For applications of $20,000 or more in operational support, submission of a current audit of the benefitting organization is required. If none exists, an unaudited financial review signed by an independent accountant will suffice. Where the benefitting organization is an agency of state or local government and the audit performed includes the entire agency, a copy of such audit will suffice.

(A) A financial review consists principally of inquiries of organization personnel and analytic procedures applied to financial data. It is substantially less in scope than in audit and thereby no opinion is expressed.

(B) The accompanying report should state that the accountant is not aware of any material modifications that should be made to the financial statements in order for them to be in conformance with generally accepted principles, other than those modifications, if any, indicated in the report.

(c) Capital expenditure projects for additions to a collection or acquisition of works of art, artifacts or historical documents; historic preservation or the construction or renovation of cultural facilities.

(i) Any application for funds which may in any way affect prehistoric or historic properties must document cooperation with the state historic preservation office in evaluating the possible impact on these properties and the appropriateness of plans for project activity.

(ii) A letter from the state historic preservation office, stating their recommendations and any agreements reached with the benefitting organization is necessary. No funds will be released until such a letter is received by the Montana arts council.

(iii) Benefitting organizations will be required to provide three dollars in cash or in-kind donations of goods and services specifically for the capital expenditure project for each grant dollar.

(iv) Applications requesting funds for facility acquisition, construction or renovation will need to include:

(A) a financial statement of the operational costs of the facility from the most recently completed fiscal year prior to the date of application deadline;

(B) operational budgets of the facility for the first full year after the completion of the project;

(C) information about sources and amounts of funds already committed and anticipated to be received;

(E) plans for obtaining the balance of funds based on prior fund raising efforts;

(F) the expected duration of the facility renovation or construction.

(d) Challenge grants for permanent endowment development to benefit cultural nonprofit grant applicants may be recommended for funding.