SEATTLE'S Neighborhood Matching Fund is a terrific example of how government can stretch public money by helping communities help themselves.

The three-year-old program has won glowing praise from neighborhood activists, and now it's been named one of the 10 most innovative government programs by the Ford Foundation and Harvard University's Kennedy School of Government.

The recognition is well deserved. In the short time of its existence, the program, administered by the Department of Neighborhoods, has awarded money to 300 community projects. The city sets aside $1.5 million for the fund annually (the fund has escaped Mayor Rice's budget cuts), but the benefits far surpass that modest investment.

Groups that win a grant must match the city contribution dollar-for-dollar with neighborhood donations. The match requirement ensures that only projects with broad neighborhood support survive the application process.

Tenant organizing in low-income neighborhoods, playground renovation, street-tree planting, the Fremont Troll sculpture, a start-up project to deal with Asian youth gangs, training parents to be more involved in schools are just a few of the diverse, imaginative solutions to local problems that community groups have produced.

This is government from the bottom up, not top down. Scarce resources are going directly to places and people that need it, with a minimum of money being diverted to administrative costs.

The Ford Foundation award brings with it a $100,000 check. The city plans to use the money to promote the program and train neighborhood activists to plan and carry out improvement projects. In light of the program's track record, the Ford Foundation prize should have a big pay-off.