PORTLAND — Terry, a former Girl Scout, wanted her 8-year-old son, Nicholas, to learn about hard work, honor and integrity. So she supported his decision to join Cub Scouts and signed herself up as a den mother.

But Terry was rejected because she is gay.

“I was told that I couldn’t hold any position in the Boy Scouts of America, right down to janitor,” she says. “I wasn’t going to let it rest.”

Terry (her full legal name) went to a gay advocacy group in Boston for legal help. She told her story to local reporters. Then she took her plight to the local United Way, which was giving money to the Boy Scouts. And she got action.

The United Way ultimately cut off funding for the Boy Scouts, making Portland’s United Way the second in the nation after San Francisco’s to battle the Boy Scouts over its national policy of excluding “known homosexuals.”

Local affiliates from across the country are watching Portland — considered a more mainstream city than San Francisco — to see if there’s an impact on fund raising, says Martin Scherr, spokesman for the United Way in Alexandria, Va.

Affiliates from Lebanon, N.H., to San Diego, Calif., are considering similar policies.

“We’re at the tip of a very big iceberg,” says Meg Baxter, executive director of the United Way of Greater Portland.

The United Way’s decision stopped the Pine Tree Council of the Boy Scouts from receiving about $77,000, or 6 percent of its budget. But the issue created deeper wounds in the community, and some have called for a donation boycott.

The funding cut hurts because the budget is already tight for the Pine Tree Council, which serves 20,000 Scouts in southern and western Maine, says spokesman Jeffrey Stanley. Nevertheless, the group does not plan to ask the 83-year-old national organization to lift its ban on gay Scouts or volunteers.

“Adult volunteers, as role models, play an integral role in scouting,” Stanley said. “We’re very concerned about what we put in front of our kids and say, `This is what we want you to pattern your lives after.”‘

But William Mueller of San Francisco, the grandson of Boy Scouts founder William Dixon Boyce, rebuts the notion that homosexuals provide poor role models.

“This is not an issue that my grandfather would approve of at all,” said Mueller, 41, a founder of Forgotten Scouts, a group of gay scouting alumni from across the country.

Scouts have plenty of backers. They have received an outpouring of support, including hundreds of letters that fill a binder on Stanley’s desk, and $20,000 in unsolicited donations.

The United Way lost $40,000 in donations in the same period.

The issue arose in September 1991 when Terry — a violinist and part-time waitress — joined other parents at an informational meeting for the local Scout troop.

A Boy Scout leader said that known homosexuals aren’t allowed to serve in any capacity, either as Scouts or adult volunteers.

“I said, `Well, I’m lesbian. Is that going to be a problem?”‘ says Terry, a former Girl Scout in Westchester County, N.Y. “I had no idea the Boy Scouts were homophobic. I didn’t know that was an issue.”

The Girl Scouts’ national policy prohibits discrimination based on sexual orientation.

Baxter says the United Way isn’t picking on the Boy Scouts, but it is requiring compliance with local United Way rules that bar funded organizations from discriminating on the basis of sexual orientation or other factors.

That policy was adopted in December, a month after city voters upheld the first gay rights law to be adopted in Maine.

Stanley says the Scouts are disappointed with the United Way’s decision to restrict funding in Portland, but, he said, “We’re not supposed to be everything for everybody.”

Terry’s son, Nicholas Westervelt, now 10, quit the Scouts. He doesn’t understand why the Scouts care if his mother is a lesbian when his friends at school could care less.

“I don’t know,” says Nicholas. “They’re just kind of what my mom would say — bigots.”