The money will be awarded to selected land trusts in the next three years, and can be used only for property in what is known collectively as the Northern Forest, a 26-million- acre stretch of wilderness that takes roughly the shape of a barbell stretching from New York to Maine.

About 4 million acres of that is already included in state and federal parks, the single biggest chunk being New York State's 2.6-million-acre stake in the Adirondack Park.

This week, the institute announced that the first $1.4 million of that money would be used to help three groups buy a total of 62,854 acres of privately owned land in the Northern Forest. The grants include $400,000 to the Nature Conservancy for 26,500 acres in the central Adirondacks, and another $400,000 grant to the Trust for Public Land for 13,910 acres in northern New Hampshire that will link two sections of the White Mountain National Forest.

The institute's focus on the Northern Forest comes when many financially struggling paper and pulp companies are closing aging mills in the Northeast, consolidating their holdings, and selling off vast tracts of forestland that they have owned for decades. In the past four years, these companies have sold nearly one-fifth of the land in the Northern Forest to financial investors and other timber companies, and to a much lesser extent, conservation groups, according to the institute's statistics.

But conservation groups have increasingly sought to acquire these lands, or the development rights to them, to prevent the new owners from chipping away at the Northern Forest. These groups say they want to protect wildlife habitats and public access to recreational areas, and just as important, to ensure that working forestland continues to be used for commercial timber harvests. Though the timber industry has steadily declined in the Northeast, it remains a vital part of the economy in many rural towns and villages.

"This is a one-time opportunity," said Joe Martens, president of the Open Space Institute. "The land is for sale now and a lot of these transactions are going to determine the fate of the Northern Forest for a long time to come."

David M. Smith, a professor emeritus at the Yale University School of Forestry and Environmental Studies, said that conservation efforts were especially needed in areas near rivers and lakes in the Northern Forest. He said developers and second- home owners have been drawn to waterfront property, carving out private refuges that displace the wildlife. "There is a need to protect those lands," he said. "It's important to keep some of the tall pine trees as nesting sites for bald eagles and ospreys."

The Open Space Institute, a nonprofit group endowed with money from the Reader's Digest fortune, raised the $12 million from two New York City philanthropies, the Doris Duke Charitable Foundation and the Surdna Foundation, and plans to supplement that with money from private donors. It has formed an advisory board of forestry experts and conservationists to review and select proposals from land trusts.

The institute's director of the Northern Forest Protection Fund, Denise Schlener, said the goal was not to acquire all the private property in the Northern Forest but to protect pieces that would link together adjoining forest areas to preserve the larger landscape. She estimated that as many as 5 million acres could be protected with money from the institute's program.

The $400,000 grant to the Nature Conservancy's Adirondack chapter will be used to repay part of the loan used to buy three large tracts of land that it recently acquired from the International Paper Company for $10.5 million. The properties, which are near the town of Long Lake in the central Adirondacks, include a pristine 800-acre lake that has not been open to the public.

The Adirondack chapter's director of land protection, Todd Dunham, said the group borrowed money to buy the land and plans to eventually resell it to New York State, or to private owners who will promise not to develop it. "The property was available, and we had to move on it as quickly as we could," he said. "These kinds of resources don't come up for sale very often."

The Northern Forest covers about 14 million acres in Maine, 8 million acres in New York and 2 million acres each in Vermont and New Hampshire.