The result was announced by Jeremy Hunt, Secretary of State for Culture, Olympics, Media and Sport in a speech at the V&A this morning.

Designed to bring new money into the cultural sector, the Catalyst Endowment programme offers match-funding to help arts and heritage organisations secure their financial stability by building a new endowment fund or developing an existing one.

The grant is conditional on Pallant House Gallery matching it with funding from private giving over the next four years. The Gallery now has to raise £1m by 2016 through a targeted fundraising campaign in order to receive the grant.

The funds will go into the Gallery's existing Endowment Fund which was established in 2002 to generate an annual income from the interest and sustain the long-term future of the Gallery. The capital, which cannot be touched, currently stands at £6.3m.

The Catalyst decision rewards the Gallery's successful history of private fundraising, which currently comprises a key part of its annual income along with admission fees and other sources. Unlike other galleries of its size around the country, Pallant House Gallery receives no direct subsidies from central Government.

Establishing a secure funding base will ensure the Gallery is able to continue to deliver its successful exhibitions and award-winning Learning and Community programmes, and to conserve the nationally and internationally important Collections.

Stefan van Raay, Director of Pallant House Gallery says: "We are most grateful and excited to have been given the opportunity to increase our existing Endowment Fund with a potential £2m in the next four years. The yield of our current Endowment Fund is already a major source of our annual income and the Grant will seriously contribute to the future financial security of the Gallery."

Dame Jenny Abramsky, Chair of the Heritage Lottery Fund, says: "The Catalyst: Endowments programme is part of our response to helping boost private giving across the heritage sector. Alongside our plans to build the fundraising capacity of smaller groups, we expect the programme to form part of a shift in approach to philanthropic giving that will help build financial resilience and attract new money to heritage groups of every size."

Secretary of State for Culture, Olympics, Media and Sport, Jeremy Hunt says: "Boosting private giving for culture is key to putting arts and heritage organisations on the path to long-term financial stability. It is very gratifying to see that so many have already been successful in attracting match-funding and I am very grateful to all those companies and individuals who so very generously support our arts and heritage bodies."

Ends.

Notes to Editors:

Eighteen successful heritage organisations have been granted £27.5million of grants in total. These include: National Portrait Gallery (£1,000,000), Dulwich Picture Gallery (£2,000,000) and Victoria and Albert Museum (£5,000,000).

Since re-opening, Pallant House Gallery has won a number of accolades and awards including the largest single arts prize in the UK the Gulbenkian Prize in 2007, and the Royal Institute of British Architects (RIBA) award for exceptional architectural standards.