This report describes how 20 states and Puerto Rico used $2.7 million awarded by the Gannett Foundation to build and expand adult literacy activities in a coordinated fashion statewide. Chapter 1 presents information on development of the Literacy Challenge grants program and brief descriptions of each project, including year funded, amount of awarded funds, and sponsoring agency. Chapter 2 provides an overview of the diversity, range, and magnitude of projects' efforts. Activities are generally grouped under information and referral, recruitment and training, resource and system expansion, evaluations, and unique project components. Chapter 3 discusses some complex and interesting aspects of the initiative, with specific attention to influencing variables: diversity of aspirations and achievements among the projects; real and perceived barriers; influence of unique individuals; difficulties encountered in fundraising; and issues associated with the cooperative/collaborative process. Environments within which the projects operated are discussed. Chapter 4 groups the projects into three major categories: likely, uncertain, or unlikely survival. Chapter 5 contains recommendations to the foundation regarding grant procedures, technical assistance, and monitoring. Appendixes include a list of goals and objectives of all projects and a list of all of the projects' activities and products. An attached products list presents products in alphabetical order by state. Products are classified according to their primary function in the state. (YLB)