Federal funding of religious institutions

Both secular and religiously-affiliated entities have long received funding from the government to provide social services. Until the mid-1990s the constitutional rights of taxpayers and social service recipients were protected because entities receiving federal financial assistance had to abide by employment non-discrimination laws and constitutional religious liberty protections. Religiously-affiliated organizations like Catholic Charities, Jewish Federation, Lutheran Services of America, and Habitat for Humanity received funding to provide social services alongside secular entities without raising civil rights concerns or diminishing services.

At the time, religious organizations were required to secularize their services and facilities in order to be eligible for public funding, by

separating their social service functions from their sponsoring religious institutions
removing religious symbols from the facilities in which the social services were conducted
abiding by fair employment practices
satisfying professional licensing requirements, and
prohibiting religious activities and proselytizing in conjunction with the publicly funded services
Religious organizations that did not secularize their services and facilities were not eligible to receive public funding. As explained in a Congressional Research Service report, “As a concept, charitable choice challenges these restrictions and seeks to allow religious organizations to retain their religious character and to employ their faith in carrying out programs that are directly subsidized by government.”

Charitable choice was first included in the 1996 welfare reform measure “Personal Responsibility and Work Opportunities Reconciliation Act” (PRWORA) , which did include some protections — no use of direct funding (as opposed to vouchers) for inherently religious activities, no discrimination against beneficiaries based on their religion or beliefs, and the required availability of alternative service providers for beneficiaries who objected to the religious nature of faith-based organizations (FBOs). However, the legislation also provided an invitation for abuse because the religious organizations were permitted to

receive grants without segregating the funds from private sources
provide services in spaces replete with religious symbols, and
discriminate in hiring practices in favor of coreligionists
Subsequently, Congress considered charitable choice provisions for various social service programs, adopting variations on such rules for the TANF, Community Services Block Grants (CSBGs), and Substance Abuse and Mental Health Services. Opposition to charitable choice gained momentum and prevented adoption in legislation for juvenile delinquency prevention programs and job training programs.

In 2001, Congress also failed to adopt President Bush’s “Community Solutions Act” (H.R. 7), that would expand charitable choice provisions. Undeterred by Congress, President Bush issued executive orders to establish the White House Office of Faith-Based and Community Initiatives (WHOFBCI) and created the Centers for Faith-Based and Community Initiatives in executive departments. These “faith-based initiative” executive orders extended charitable choice, but with even fewer safeguards allowing FBOs to directly apply to federal agencies for government grants to perform social services in their communities.

Identifying Charitable Choice Provisions in Law

Generally, the enacted charitable choice provisions have the following characteristics:

The religious organization “shall retain … control over the definition, development, practice, and expression of its religious beliefs.”
The government is prevented from discriminating against an organization “on the basis that the organization has a religious character” by allowing the organization to maintain its form of internal governance and retain its religious art and symbols in the social service facilities.
The organization is allowed to retain its exemption under Title VII of the Civil Rights Act of 1964 to discriminate on religious grounds in its employment practices (originally designed to protect religious use of private funds).
An alternative service provider must be made available if a social service program beneficiary objects to the religious character of the service provider he or she is originally assigned.

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