Order Code RL32736
CRS Report for Congress
Received through the CRS Web
Charitable Choice Rules
and Faith-Based Organizations
Updated January 26, 2006
Joe Richardson
Specialist in Social Legislation
Domestic Social Policy Division
Congressional Research Service ˜ The Library of Congress

Charitable Choice Rules and
Faith-Based Organizations
Summary
President Bush’s administration has advanced a “Charitable Choice” agenda
aimed at expanding the ability of faith-based organizations to provide federally
funded social services. Charitable Choice rules are intended to ensure that faith-
based organizations participate more fully in federally funded social service programs
and offer services without abandoning their religious character or infringing on the
religious freedom of applicant/recipients. They deal with issues such as faith-based
organizations’ ability to remain independent of governmental controls, to
discriminate in their hiring practices, and to conduct “inherently religious” activities.
Prior to the Administration’s initiative, Congress enacted Charitable Choice
rules for Temporary Assistance for Needy Families (TANF), the Community
Services Block Grant (CSBG), and substance abuse prevention and treatment
programs. But, after Congress failed to enact Charitable Choice rules for more
programs, the Bush Administration issued an executive order (EO 13279) that
directed that most rules covered under the Charitable Choice rubric be followed by
a wide range of social service programs, unless otherwise directed by law. In
addition, the Administration and Congress have provided money for a range of
specific grants/projects in which faith-based organizations play a substantial role.
Charitable Choice rules represent a shift in how government treats religious
organizations applying for social service grants. They effectively deny aid for
“inherently religious” activities — as opposed to the preexisting rule that generally
barred assistance to organizations that are “pervasively sectarian.” State and federal
courts are currently reviewing aspects of Charitable Choice rules.
For Congress, there is a continuing debate over whether to accept the existing
situation — where the executive order has effectively put in place most, but not all,
Charitable Choice principles for the bulk of social service programs, except where
barred by law — or challenge it, or enact the provisions of the executive order (and
possibly added rules) and cover more programs. Proponents of congressional action
are concerned that an executive order may not be “enough” to support the policy in
the longer term and would like to see some rules and programs not included in the
order added. Opponents of the executive order or writing Charitable Choice rules
into law are primarily worried over their implications for hiring discrimination and
the prospect that religious content may be infused into federally funded programs.
Most recently, proposed amendments to the Workforce Investment Act (WIA)
and Head Start law would exempt grantees that are religious organizations from
employment discrimination rules relating to religion.
This report will be updated as events warrant.

Contents
What Are Charitable Choice Rules? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
The Original 1996 Charitable Choice Rules . . . . . . . . . . . . . . . . . . . . . 2
Community Services Block Grant (CSBG)
Charitable Choice Rules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Substance Abuse Prevention and Treatment Program
Charitable Choice Rules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
H.R. 7 Charitable Choice Rules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
EO 13279 Charitable Choice Principles/Regulations:
Expansion of Charitable Choice by Executive Order . . . . . . . . . . 4
What Is the “Faith-Based Initiative”? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
How Do Charitable Choice Rules Differ from Preexisting Practices? . . . . . 8
Why Are Charitable Choice Rules Controversial? . . . . . . . . . . . . . . . . . . . . 9
Are Faith-Based Programs More Effective than Others? . . . . . . . . . . . . . . 10
Are Charitable Choice Rules Being Litigated? . . . . . . . . . . . . . . . . . . . . . . 11
What Are States Doing? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
2005 Gulf Coast Hurricane Rules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Additional Resources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Recent Legislative Developments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Workforce Investment Act (WIA) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Community Services Block Grants (CSBG) . . . . . . . . . . . . . . . . . . . . 13
Head Start . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Putting Executive Order 13279 into Law . . . . . . . . . . . . . . . . . . . . . . 14


Charitable Choice Rules and
Faith-Based Organizations
“Charitable Choice” refers to a set of rules, established by legislation or
regulation, intended to enhance the ability of faith-based organizations to provide
federally funded services without impairing their religious character or the religious
freedom of beneficiaries/applicants.1 These rules have been strongly supported by
the Bush Administration. At present, only three federal program areas have specific
Charitable Choice rules stipulated in law: Temporary Assistance for Needy Families
(TANF), the Community Services Block Grant (CSBG), and substance abuse
prevention and treatment grants administered by the Substance Abuse and Mental
Health Services Administration (SAMHSA) under the Public Health Service Act.
Perhaps the broadest example of Charitable Choice rules are those established,
primarily for TANF, by the 1996 welfare reform law (P.L. 104-193).
After the 107th Congress took up, but did not approve, legislation to extend
Charitable Choice rules to cover many more programs (Title II of H.R. 7, the
Charitable Choice Expansion Act of 2001), the Bush Administration issued an
executive order that directed that most, but not all, rules covered under the Charitable
Choice rubric be followed by a wide range of social service programs — Executive
Order (EO) 13279, December 12, 2002. Attempts to expand the coverage of
Charitable Choice rules by law also failed in the 108th Congress.
The second session of the 109th Congress faces a continuing debate over whether
to accept the existing situation — where the EO has by regulation effectively put in
place most, but not all, Charitable Choice principles for the bulk of social service
programs, except where barred by law — or challenge it, or enact the provisions of
the EO (and possibly other rules it does not include) and cover more programs than
now are covered by law.
Other items of related interest in the Charitable Choice arena include the role
of states/localities (which actually administer many social service grants involving
federal money), litigation over the constitutionality of Charitable Choice rules
(whether set by law or regulation), and the status of, and funding for, the Compassion
Capital Fund (a program providing direct grants to faith- and community-based
organizations to help them expand their services).
1 Throughout this report, the terms “religious organization” and “faith-based organization”
are used interchangeably. When asked for a definition of “faith-based” by one commentor
on its Charitable Choice regulations, the Department of Health and Human Services (HHS)
said that it used the terms “religious organization” and “faith-based organization”
interchangeably and added that neither the U.S. Constitution nor relevant Supreme Court
precedents contain a comprehensive definition of religion or religious organization.

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What Are Charitable Choice Rules?
Charitable Choice rules are aimed at ensuring that faith-based organizations can
participate in federally funded social service programs “on the same footing” as other
nongovernmental providers and can offer services without abandoning their religious
character or infringing on the religious freedom of recipients.2 So far, they have
taken five different forms: (1) the original rules established by the 1996 welfare
reform law; (2) the rules enacted for the CSBG in 1998; (3) the rules legislated for
Public Health Service Act substance abuse prevention and treatment programs in
2000; (4) the provisions in H.R. 7 of the 107th Congress; and (5) the principles set
forth (and implemented by regulation) under the Bush Administration’s EO 13279.
The Original 1996 Charitable Choice Rules. Charitable Choice rules
were first laid out in the 1996 welfare reform law — Section 104 of the Personal
Responsibility and Work Opportunity Reconciliation Act, P.L. 104-193 — and cover
all states’ TANF activities, and, to a lesser degree (i.e., where services are provided),
states’ administration of food stamps, Medicaid, and the Supplemental Security
Income (SSI) program.
The provisions of the 1996 law are probably the most far-ranging set of rules so
far set out and have been a basic model for Charitable Choice provisions since
enacted, proposed, or established by regulation. The law’s major Charitable Choice
provision bars government from discriminating against an organization applying to
provide publicly funded services on the basis of its religious character, so long as the
program is implemented in a manner consistent with the Establishment (of religion)
Clause of the First Amendment to the U.S. Constitution. Moreover, it stipulates the
following rules with regard to faith-based organizations applying for or receiving
public funds and applicants for/recipients of services —
! Religious organizations remain independent of government and
retain control over the definition, development, practice, and
expression of their religious belief.
! Government may not require religious organizations to change their
form of internal governance or to remove religious art and other
symbols as a condition of participation.
! Faith-based organizations may discriminate on religious grounds in
their employment practices, regardless of their receipt of public
funds
.
2 For details as to how the various Charitable Choice laws, proposals, and regulations differ
see (1) CRS Report RL31043, Public Aid to Faith-Based Organizations (Charitable Choice)
in the 107th Congress: Background and Selected Issues
, by David Ackerman; (2) CRS
Report RL31042, Charitable Choice: House-Passed Version of H.R. 7 Compared with
Existing Charitable Choice Laws
, by Vee Burke; (3) CRS Report RS21924, Charitable
Choice: Expansion by Executive Action
, by Joe Richardson; and (4) CRS Report RL31030,
Comparison of Proposed Charitable Choice Act of 2001 with Current Charitable Choice
Law
, by Vee Burke.

CRS-3
! Like other grantees/contractors, religious organizations’ use of
public funds is subject to audit — except that, when government
funds are segregated, only those moneys are subject to audit.
! Any party seeking to enforce its rights under Charitable Choice
provisions of law can assert a civil court action for relief against the
entity/agency allegedly committing a violation.
! No funds provided directly (as opposed to indirectly through
vouchers) may be spent for sectarian worship, instruction, or
proselytization.3
! Federal Charitable Choice rules are not to be construed as
preempting any provision of a state’s constitution or laws regarding
aid to or through religious organizations.
! Faith-based organizations may not discriminate against beneficiaries
or potential beneficiaries on the basis of religion or religious belief.
! Government must provide accessible alternative providers where
individuals have an objection to the religious character of the
organization/institution from which they receive or would receive
services.
Community Services Block Grant (CSBG) Charitable Choice Rules.
In 1998, the 105th Congress enacted Charitable Choice language covering the CSBG
— Section 201 of P.L. 105-285. This law generally follows the provisions of the
1996 welfare reform act but does not include its authority for civil actions for relief
in cases of violations, its stipulation that federal Charitable Choice rules do not
preempt state constitutions/laws, its requirement for alternative providers, or its
prohibition on discrimination against applicants/recipients based on religion or
religious beliefs. Efforts to reauthorize the CSBG during the 108th Congress failed,
in part due to disagreement over provisions that would have amended the program’s
Charitable Choice rules.
Substance Abuse Prevention and Treatment Program Charitable
Choice Rules. In 2000, the 106th Congress enacted two measures adding
Charitable Choice amendments to the law governing substance abuse prevention and
treatment services under Titles V and XIX of the Public Health Service Act —
Section 3305 of P.L. 106-310 and Section 1 of P.L. 106-554. These provisions
generally track those of the 1996 welfare reform law, except that it is unclear to what
extent their federal Charitable Choice rules would preempt state constitutions/laws
and to what degree basic Public Health Service Act employment nondiscrimination
provisions apply.
H.R. 7 Charitable Choice Rules. On July 19, 2001, the House passed the
Charitable Choice Expansion Act of 2001, Title II of H.R. 7 of the 107th Congress,
but it died in the Senate. This is the most recent comprehensive congressional action
on Charitable Choice rules.4
3 Provision of indirect aid in the form of vouchers means that a faith-based organization that
redeems a voucher may avoid this prohibition.
4 In other action, the House voted to eliminate provisions in Head Start law and the
(continued...)

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As with earlier laws, this measure generally followed the Charitable Choice
provisions of the 1996 welfare reform act, with some significant differences. It
would have extended coverage of Charitable Choice rules to a list of new programs:
e.g., juvenile delinquency/justice programs, crime prevention and aid to crime
victims’ and offenders’ families, housing programs, Workforce Investment Act
(WIA) programs, Older Americans Act (OAA) programs, programs dealing with
domestic violence, hunger relief activities, assistance for students obtaining
secondary school diploma equivalents and activities relating to outside-of- school-
hour programs. But it included no language regarding federal preemption of state
constitutions/laws and added provisions (1) stating that organizations getting direct
public funds must offer any religious activities on a voluntary basis and separate from
the assisted program and (2) when consistent with the purpose of a covered program,
allowing the federal government to require that some or all of the funds in a given
program be in the form of indirect aid like vouchers (aimed at permitting a faith-
based organization redeeming vouchers to avoid the general prohibition on using
funds for worship, instruction, or proselytization).
EO 13279 Charitable Choice Principles/Regulations: Expansion of
Charitable Choice by Executive Order. After the Senate failed to approve the
House-passed bill (H.R. 7 of the 107th Congress) to extend Charitable Choice rules
on new terms to a wider range of programs, President Bush issued an Executive
Order (EO) directing most cabinet departments and the Agency for International
Development to adopt what he identified as Charitable Choice “principles” in the
regulations governing their social service programs, except where barred by law.5
With some notable exceptions, these principles (and the regulations implementing
them) largely follow the rules set out in H.R. 7 as passed by the House in 2001.
4 (...continued)
Workforce Investment Act (WIA) that forbid religious service providers to discriminate on
religious grounds in their employment practices; votes were taken on May 8, 2003 (H.R.
1261, WIA) and July 25, 2003 (H.R. 2210, Head Start). On Apr. 3, 2003, the Senate passed
S. 476 (the CARE Act) without provisions that Senator Santorum had sought for “equal
treatment” of religious organizations as providers of federally funded social services. To
win passage of the CARE Act, which contained provisions that would have expanded tax
incentives for charitable giving, increased funding for the Social Services Block Grant, and
established new tax-credit-financed Individual Development Accounts, Senator Santorum
agreed to a compromise version that added technical assistance (a “Compassion Capital
Fund”) and funding for maternity group homes, but lacked an equal treatment (Charitable
Choice) title. On Sept. 17, 2003, a new version of H.R. 7, entitled the Charitable Giving
Act, was passed by the House. It provided for tax incentives for charitable donations, would
have authorized Compassion Capital Fund grants and funding for maternity group homes,
and would have extended expiring provisions for Individual Development Accounts.
However, it did not include Charitable Choice language or more funding for the Social
Services Block Grant.
5 It appears that the Departments of Commerce, Defense, and State may not necessarily be
covered by the EO’s directive. But the Commerce Department and the Small Business
Administration are covered by another EO setting up Centers for Faith-Based and
Community Initiatives (see later discussion of the Administration’s Faith-Based Initiative).

CRS-5
The EO says that faith-based organizations “should be eligible” to compete for
federal financial assistance used to support social service programs without impairing
their independence, autonomy, and religious expression/character, and that no
organization “should be discriminated against” as a provider of federally funded
services on the basis of religion or religious belief. Social service programs are
defined broadly to cover all programs administered by the federal government, or by
a state/local government using federal financial assistance, that provide services
directed at reducing poverty, improving opportunities for low-income children,
revitalizing low-income communities, helping low-income families and individuals
to become self-sufficient, or otherwise aiding people in need.6
The principles set forth in EO13279 bar faith-based organizations from using
direct federal financial assistance to support any “inherently religious” activity (such
as worship, religious instruction, or proselytization) and specify that organizations
that engage in inherently religious activities must offer them to beneficiaries
separately in time and location from programs/services supported with direct federal
funds. Participation in religious activities must be voluntary for service recipients.
On the other hand, faith-based organizations may use their facilities to provide
federally funded social services without removing or altering religious symbols or
changing religious terms in their name, select board members on a religious basis,
and include religious references in mission statements and other chartering/governing
documents. As with most earlier Charitable Choice initiatives, the EO forbids a
religious organization from discriminating against beneficiaries or potential
beneficiaries on the basis of religion, religious belief, or lack of religious belief.
Absent from EO 13279 are three major provisions of H.R. 7 as passed by the
House in 2001: (1) authority to convert assistance into vouchers (or some other form
of indirect aid),7 (2) a provision dealing with a faith-based organization’s right to
discriminate on religious grounds in their employment practices,8 and (3) language
6 Examples given in the EO include child care services, protective services for children and
adults, foster care and adoption services, services to meet special needs, transportation
assistance, job training and employment services, information/referral/counseling services,
services related to soup kitchens and food banks, health support services, literacy promotion
activities, mentoring services to prevent and treat juvenile delinquency and substance abuse,
services related to domestic violence, and housing assistance. Expansion under the EO is
covered in somewhat more detail by CRS Report RS21924, Charitable Choice: Expansion
by Executive Action
, by Joe Richardson.
7 As noted earlier, indirect aid may be used for religious activities because organizations
would receive funds only as a result of private choices of beneficiaries.
8 The EO does not include language on employment discrimination. But two publications
of the White House Office of Faith-Based and Community Initiatives make clear the
Administration’s stance that, barring contrary provisions of law (like the laws governing the
Head Start program and Workforce Investment Act programs), faith-based organizations
receiving federal funds are to be allowed to discriminate in employment — (1) Protecting
the Civil Rights and Religious Liberty of Faith-Based Organizations: Why Religious Hiring
Rights Must Be Preserved
and (2) Guidance for Faith-Based and Community Organizations
on Partnering with the Federal Government
. Moreover, in the SAMSHA’s final rule
implementing the EO, the Bush Administration held that the Public Health Service Act’s
(continued...)

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requiring that alternative service providers be furnished for beneficiaries objecting
to the religious character of a provider. Also missing from EO 13279 are provisions
in the original 1996 welfare reform law dealing with: (1) audits, (2) enforcement
through court action, and (3) preemption of state/local laws.9
To carry out the principles set out by the Executive Order, the Departments of
Agriculture, Education, Health and Human Services, Housing and Urban
Development, Justice, Labor, and Veterans Affairs, as well as the Agency for
International Development have issued regulations. Details about these regulations
are available at [http://www.whitehouse.gov/government/fbci/reg-changes.html].
EO 13279 also amended an existing executive order (EO 11246, dating from
1965) concerning employment discrimination to specify that religious organizations
that contract to provide goods or services directly to the federal government or
participate in federally assisted construction contracts can discriminate on religious
grounds in their employment practices.10
What Is the “Faith-Based Initiative”?
Soon after taking office, President Bush put forward an agenda to “enlist, equip,
empower, and expand the heroic works of faith-based and community groups across
America.” It included an expansion of tax incentives for charitable giving —
covered in a separate report (CRS Report RS21144, Tax Incentives for Charity: An
Overview of Legislative Proposals
) — and extension of Charitable Choice rules (see
the discussion above) to most federally supported social service programs. As
already discussed, Congress has not enacted an extension of Charitable Choice rules
beyond those put in law in 1996, 1998, and 2000, but the Administration has put in
place most Charitable Choice rules for many federally supported social service
programs through an executive order.
8 (...continued)
general nondiscrimination hiring rules are “inapplicable” to religious organizations
demonstrating that they would substantially burden their exercise of religion. The
Administration maintained that the Religious Freedom Restoration Act of 1993 (P.L. 103-
141) forbids the government from substantially burdening a person’s exercise of religion
unless this is the least restrictive way of furthering a compelling government interest. See
the Federal Register of September 30, 2003 (68 FR 56429-56449).
9 Although the EO contains no provisions as to audits, a publication of the White House
Office of Faith-Based and Community Initiatives — Guidance to Faith-Based and
Community Organizations on Partnering with the Federal Government
— notes that, like
the rule in the 1996 law, audits should be limited to federal funds (when segregated).
10 EO 11246 defines “construction contract” to mean a “contract for the construction,
rehabilitation, alteration, conversion, extension, or repair of buildings, highways, or other
improvements to real property.” Its requirements are applicable to all federally assisted
construction contracts that arise in the course of carrying out a “federal grant, contract, loan,
insurance, or guarantee....” See also CRS Report RL32195, Charitable Choice: Legal and
Constitutional Issues
, by Angie Welborn.

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As part of his faith-based initiative, the President also has established a White
House Office of Faith-Based and Community Initiatives (EO 13199) and has set up
Centers for Faith-Based and Community Initiatives in 10 agencies: the Departments
of Agriculture, Commerce, Education, Health and Human Services, Housing and
Urban Development, Justice, Labor, and Veterans Affairs, as well as the Small
Business Administration and the Administration for International Development (EO
13198, EO 13199, EO 13280, EO 13342). These offices have the role of ensuring
that faith-based and community organizations have improved access to the programs
operated by their agencies.
According to the White House Office of Faith-Based and Community
Initiatives, in FY2004, a total of $2 billion in funding for faith-based organizations
was provided through 151 federally administered competitive grant programs for
domestic social services run by six departments (Agriculture, Education, Health and
Human Services, Housing and Urban Development, Justice, and Labor) and 17
program areas at the Agency for International Development. This represented 10%
of the $19.5 billion spent by the surveyed programs.11 The three agencies having the
largest pools of funding available for competitive grant programs reported 7% (the
Department of Health and Human Services, 73 programs), 23% (the Department of
Housing and Urban Development, 11 programs), and 14% (the Agency for
International Development). For the five departments for which there is information
for both FY2003 and FY2004, funding for faith-based organizations increased by
14%, and the number of grants jumped by 20%.
A fourth component of the initiative is the Compassion Capital Fund, a program
operated by the Department of Health and Human Services’ Administration for
Children and Families that provides direct grants to faith- and community-based
organizations to help them expand their services. This program (its funding is
included in the totals noted above) is covered in a separate report, CRS Report
RS21844, The Compassion Capital Fund: Brief Facts and Current Developments.
In addition to the Compassion Capital Fund, the initiative also is perceived to
encompass a number of specific projects in which faith-based organizations play (or
are expected to play) a substantial role: e.g., the SAMSHA’s “Access to Recovery”
grants for substance abuse treatment, a matching grant program to mentor children
of prisoners, a prisoner pre-release pilot project, a maternity group home program,
a pilot project to increase participation of faith-based organizations in community
development programs, responsible fatherhood projects, construction projects
involving historic religious structures, and “anti-gang” efforts directed at youth.
11 Further details on federal competitive grant spending through faith-based organizations
are available at the website for the White House Office of Faith-Based and Community
Initiatives [http://www.whitehouse.gov/government/fbci], under the heading Data
Collection
. Spending figures do not include sub-grants through intermediary organizations
or grants of federal funds administered by states and localities. As such, they are
underestimates.

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How Do Charitable Choice Rules Differ from Preexisting
Practices?

Charitable Choice rules represent a shift in how the government treats faith-
based organizations applying for social service grants. The pre-existing general rule
often barred aid to “pervasively sectarian” organizations (unless they segregated their
government-provided funding or government-supported services, or provided a
service/benefit that was effectively secular in nature). Under Charitable Choice rules,
aid is denied for “inherently religious” activities, like worship or proselytization
(unless they are indirectly funded through vouchers and the like). Examples of this
change include allowing religious organizations and staff to receive government
funds (as long as they separate their religious activities from the provision of
government-funded services in time and place), permission to use government money
for construction projects (to the extent money is devoted to non-religious purposes),
allowing religious symbols and mission statements, and authority for discrimination
in employment practices.
Under pre-Charitable Choice practices, many faith-based organizations
participated in federally supported programs. Federal grants typically provided that
private or nonprofit entities were eligible to participate, including religious and other
private organizations. For example, religious organizations have and continue to run
major portions of Head Start, housing, Older Americans Act, employment and
training, emergency feeding/housing (like soup kitchens and homeless housing
initiatives), and school meal programs, as well as activities financed through Child
Care and Development Block Grants and Social Services Block Grants. Such entities
as religiously-sponsored schools and local organizations, Catholic Charities USA,
Lutheran Services in America, the Salvation Army, United Jewish Communities,
Habitat for Humanity, and numerous other religiously affiliated or religiously
sponsored organizations have long participated in publicly funded social service
programs. These groups often are incorporated separately from their sponsoring
religious organization and have tax-exempt status under Section 501(c)(3) of the
Internal Revenue Code; they also tend to be relatively large organizations.
However, interpretations and applications of the Establishment (of religion)
Clause of the First Amendment to the U.S. Constitution, as well as policy decisions
by administrators, generally required programs operated by religious groups that
receive direct federal funding to be essentially secular in nature if they wish to
receive federal funds.12 Religious symbols and art have sometimes had to be
removed; religious worship, instruction, proselytizing have been barred as a
condition for receipt of government money; and construction financed with federal
money has been denied to faith-based groups. Moreover, faith-based entities in
which religion is a pervasive element in all that they do, have (until recently) been
found to be “pervasively sectarian” and, in many cases, forbidden government aid.
This view was put forward by the Clinton Administration in statements
following on or accompanying signing the 1996 welfare reform law, the 1998 CSBG
12 For more information, see CRS Report RL32195, Charitable Choice: Legal and
Constitutional Issues
, by Angie Welborn.

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amendments, and the two substance abuse prevention and treatment program
measures enacted in 2000 mentioned above. These statements typically noted that
it was the Administration’s position that it would be “unconstitutional if and to the
extent it [the Charitable Choice provision] were construed to permit governmental
funding of pervasively sectarian organizations, as the term has been defined by the
courts” and construed the law in question as “forbidding the funding of pervasively
sectarian organizations and as permitting Federal, State, and local governments
involved in disbursing ... funds to take into account the structure and operations of
a religious organization in determining whether such an organization is pervasively
sectarian.”13
Why Are Charitable Choice Rules Controversial?
Charitable Choice rules effectively overturn long-standing practice governing
how faith-based organizations are treated when applying for government assistance.
While government aid to religious organizations, in itself, is not the major issue,
the conditions of this assistance are.14 In effect, Charitable Choice rules change the
ground rules for faith-based organizations applying for government grants; they are
to be judged by whether their “activities”are government-funded rather than their
religious “character.” Moreover, specifics of Charitable Choice rules are of
particular concern to opponents: hiring discrimination rules, provisions for benefits
to be converted to indirect (e.g., voucher) aid in order to avoid prohibitions against
spending on religious activities, rules regarding alternative service providers where
an applicant/recipient objects because of the religious character of the program, and
provisions that may allow recipient faith-based organizations to infuse religious
content into their federally funded social service programs (e.g., the potential
weakness of audit mechanisms, the vagueness of provisions dealing with the
religious content of services provided).
Charitable Choice supporters claim that:
! Pre-Charitable-Choice rules effectively discriminated against
religious organizations, particularly smaller “congregation-based”
projects/organizations;
13 See (1) comments accompanying the Clinton Administration’s “Proposed Correcting
Amendments to P.L. 104-193, the Personal Responsibility and Work Opportunity
Reconciliation Act of 1996 (PRWORA), (2) comments in President Clinton’s “Statement
on Signing the Community Opportunities, Accountability, and Training and Educational
Services Act of 1998 [P.L. 105-285], October 27, 1998,” (3) comments in President
Clinton’s “Statement on Signing the Children’s Health Act of 2000 [P.L. 106-310], October
17, 2000,” and (4) comments in President Clinton’s “Statement on Signing the Consolidated
Appropriations Act, FY2001 [P.L. 106-554], December 21, 2000.” It is important to note
that court interpretations relating to the “pervasively sectarian” test (and other related issues)
have been changing; see CRS Report RL32195, Charitable Choice: Legal and
Constitutional Issues
, by Angie Welborn.
14 Charitable Choice opponents have not objected to the array of government aid through
faith-based organizations pre-dating Charitable Choice rules.

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! Pre-Charitable-Choice rules often interfered with what supporters
see as religious organizations’ right (under Title VII of the Civil
Rights Act) to use religious criteria in their hiring practices, limiting
their access to federal aid;15
! Faith-based programs can attract volunteer time; staff have a “sense
of mission” that inspires those they serve; these organizations often
help in ways typical government aid cannot (providing love and
friendship, as well as services, meals, training, and guidance);
! Charitable Choice rules have been written to protect constitutional
values regarding the practice of religion and the religious liberty of
beneficiaries;
! Charitable Choice rules protect the religious character of faith-based
service providers.
Opponents maintain that:
! Charitable Choice rules may lead to the use of government funds to
promote specific religious practices or beliefs;
! Since money is fungible, government funds given for a secular
purpose could indirectly help fund a faith-based organization’s
religious purposes, undermining governmental neutrality toward
religion;
! Charitable Choice rules can require the government to decide what
is a legitimate “religion,” and what constitutes “worship”
“preaching,” and “proselytizing”;
! Expansion of direct grants to religious groups could make churches
dependent on government, eroding their mission and tending to
secularize them; and
! Charitable Choice rules promote government-funded discrimination
by allowing religious organizations to hire and fire on the basis of
religion, using federal dollars.16
Are Faith-Based Programs More Effective than Others?
There is much anecdotal evidence on the effectiveness of social service
programs operated by faith-based organizations, but there are no rigorous studies
comparing their performance with other initiatives. For example, programs often cite
impressive outcomes for graduates, but fail to report what fraction of participants
stayed to graduate, or how participants were chosen. Three reports shed some light
on this issue: (1) Faith-Based vs. Secular: Using Administrative Data to Compare
the Performance of Faith-Affiliated and Other Service Providers
(this report is
available from the Roundtable on Religion and Social Welfare Policy at
15 For more information on the “Title VII” employment discrimination debate, see (1) CRS
Report RL32195, Charitable Choice: Legal and Constitutional Issues, by Angie Welborn,
and (2) the March 2, 2005, House floor debate over H.R. 27 (amendments to the Workforce
Investment Act).
16 See note 15 above.

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[http://www.religionandsocialpolicy.org]), (2) Charitable Choice: Overview of
Findings on Implementation
(Government Accountability Office, GAO Report 02-
337), and (3) Charitable Choice: Federal Guidance on Statutory Provisions Would
Improve Consistency of Implementation
(GAO Report 02-887).
Are Charitable Choice Rules Being Litigated?17
Yes. According to two recent publications by the Roundtable on Religion and
Social Welfare Policy — Partnerships Between Government and Faith-Based
Organizations: The State of the Law - 2004
and The State of the Law 2005: Legal
Developments Affecting Partnerships Between Government and Faith-Based
Organizations
18 — several significant court cases relating to Charitable Choice rules
are of particular interest.
! In Locke v. Davey, the U.S. Supreme Court upheld states’ authority
to maintain their own policies regarding church-state separation.
! In American Jewish Congress v. Corporation for National and
Community Service, the U.S. District Court for the District of
Columbia held unconstitutional various religion-related aspects of
the AmeriCorps Educational Award program. However, the U.S.
Court of Appeals for the District of Columbia Circuit reversed this
decision. The Court of Appeals’ primary holding was that
AmeriCorps rules are not unconstitutional in that individuals who
fulfill their AmeriCorps service at religious institutions and opt to
teach religion may count only time spent on non-religious activities
toward their counted service hours, are prohibited from wearing the
AmeriCorps logo when doing so, and have made a personal choice
to do so.
! In Catholic Charities v. Superior Court, the California Supreme
Court rejected both federal and state constitutional arguments
against a state legislative decision that requires that most employers
(including Catholic Charities) include contraceptive drugs in
insurance coverage.
! In Freedom from Religion Foundation, Inc. v. Montana Office of
Rural Health et al., a U.S. District Court ruled unconstitutional a
government-financed, faith-based program run by the Montana
Office of Rural Health.19
! In Freedom from Religion Foundation, Inc. (and others) v. Jim
Towey, Director of the White House Office of Faith-Based and
Community Initiatives et al.
, a U.S. District Court dismissed
17 See also (1) CRS Report RL32195, Charitable Choice: Legal and Constitutional Issues,
by Angie Welborn, and (2) CRS Report RL31043, Public Aid to Faith-Based Organizations
(Charitable Choice) in the 107th Congress: Background and Selected Legal Issues
, by David
Ackerman.
18 These reports and updates on current cases are available at the Roundtable’s website,
[http://www.religionandsocialpolicy.org].
19 This decision was very narrowly focused on a specific “parish nurse center” grant that
involved the state agency’s director.

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virtually all of the claims challenging the general purport of federal
Charitable Choice rules. However, the U.S. Court of Appeals for
this Circuit has reinstated significant portions of the lawsuit.
! In Lown (and others) v. the Salvation Army, Inc,; Commissioner,
New York City Administration for Children’s Services (and others)
a U.S. District Court was asked to decide the extent to which civil
rights laws or the Constitution preclude government financing of
faith-based organizations that prefer co-religionists in their
employment practices. The Court dismissed significant portions of
the plaintiffs’ case, but other major issues are still pending.
! In Americans United for Separation of Church and State v. Prison
Fellowship Ministries (and others), a U.S. District Court is called on
to decide on a challenge to constitutionality of a program that uses
religious means to prepare prisoners to return to society as
“productive and law-abiding citizens.”
! In Moeller v. Bradford County, a U.S. District Court is asked to rule
on a challenge that a program run under a government grant to a
correctional facility is unconstitutionally suffused with religious
activities and employs only those of its faith in violation of
constitutional and statutory prohibitions.
What Are States Doing?
A major item on the Bush Administration’s Charitable Choice agenda is
encouraging states to pursue Charitable Choice initiatives. To date, over 30 states
have set up offices or liaisons for faith-based and community initiatives that perform
outreach and other functions similar to those carried out by federal offices for faith-
based and community initiatives.20 State actions are important because the majority
of social service assistance is administered through state agencies that receive federal
support. However, a number of states (and localities) have rules built into their
constitution, or set up by law, that may limit their ability to expand the use of faith-
based organizations in providing services — e.g., employment discrimination
provisions, limits on the use of funds for religious organizations.21
2005 Gulf Coast Hurricane Rules22
Virtually all federally supported programs dealing with the 2005 Gulf Coast
hurricanes followed their regular rules regarding help delivered through faith-based
organizations (including recent regulatory changes opening up participation to faith-
based organizations). However, subject to some controversy, the Federal Emergency
20 State contacts (and federal offices) may be reached through the White House faith-based
and community initiative website: [http://www.whitehouse.gov/government/fbci/].
21 For more information, see The State of the Law — 2005: Legal Developments Affecting
Partnerships Between Government and Faith-Based Organizations
. This report is available
at the website of the Roundtable on Religion and Social Welfare Policy:
[http://www.religionandsocialpolicy.org].
22 For more information, see the report cited in note 21 above.

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Management Agency (FEMA) changed its prior rules so that faith-based
organizations would be eligible for reimbursement for a wide array of costs — basic
provisions (like food, water, blankets), facilities (rent, expenses for operation,
modification, and repair), and services (medical care, counseling, and security).
Additional Resources
Two major organizations closely follow issues relating to government and faith-
based organizations and Charitable Choice: (1) the White House Office of Faith-
Based and Community Initiatives at [http://www.whitehouse.gov/government/fbci/]23
and (2) the Roundtable on Religion and Social Welfare Policy at
[http://www.religionandsocialpolicy.org].
Recent Legislative Developments
Workforce Investment Act (WIA).24 WIA reauthorization legislation is
pending. On March 2, 2005, the House passed the Job Training Improvement Act
(H.R. 27; H.Rept. 109-9). This bill governs activities conducted under the WIA.
Among other amendments, it would give grantees that are religious organizations an
exemption from the WIA’s general rule barring providers from discriminating in their
employee hiring practices on religious grounds (similar to provisions in the House-
passed WIA amendments of 2003 (H.R. 1261). A House floor amendment to delete
this amendment, and thereby retain the WIA employment discrimination rule
covering religious groups that are grantees, was defeated. The current Senate version
of the WIA legislation (S. 1021) would not change existing law.
Community Services Block Grants (CSBG).25 As with WIA
reauthorization legislation, CSBG reauthorization is pending. On January 25, 2005,
Representative Osborne (and other Republican Members, including the chairman of
the House committee of jurisdiction) introduced the Improving the Community
Services Block Grant Act of 2005 (H.R. 341). Among other amendments to the law
governing CSBG, this bill proposes to add a provision barring providers that are
religious organizations from discriminating against beneficiaries (or potential
beneficiaries) on the basis of religion or religious belief.26 It does not, however,
include more controversial proposals that would delete some existing CSBG
Charitable Choice rules (e.g., those allowing grantees to discriminate in hiring).
23 This contact includes links to the offices of faith-based and community initiatives in
individual federal agencies and states.
24 For more information on the WIA and WIA reauthorization, see CRS Report RL32778,
Workforce Investment Act of 1998: Reauthorization of Job Training Programs, by Ann
Lordeman.
25 For more information on CSBG and CSBG reauthorization (including discussion of
proposals related to faith-based organizations in earlier Congresses), see CRS Report
RL32872, Community Services Block Grants (CSBG): Funding and Reauthorization, by
Karen Spar and Garrine P. Laney.
26 As noted earlier, CSBG law does not now include this feature of Charitable Choice rules.

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Head Start.27 As with WIA and CSBG reauthorization legislation, Head Start
reauthorization is pending. On September 22, 2005, the House passed a Head Start
reauthorization measure (H.R. 2123), which, as amended on the House floor,
includes a provision changing Head Start law to allow faith-based provider to
discriminate in hiring based on religion. The current Senate version of the Head Start
reauthorization bill (S. 1107) does not include a similar faith-based hiring provision.
Putting Executive Order 13279 into Law.28 On March 2, 2005,
Representative Green introduced a bill entitled the Tools for Community Initiatives
Act (H.R. 1054). This bill would establish an Office of Faith-Based and Community
Initiatives in the Executive Office of the President charged with encouraging faith-
based and community initiatives and working to eliminate federal barriers to the
participation of faith- and community-based entities in federal programs. In effect,
it proposes to put into law the provisions of Executive Order 13279 (and its
accompanying executive orders). Hearings on this bill were held on May 3 and June
21, 2005 — before the House Government Reform Committee’s Subcommittee on
Criminal Justice, Drug Policy, and Human Resources. No further action has been
taken.
27 For more information on Head Start and Head Start reauthorization (including discussion
of proposals related to faith-based organizations in earlier Congresses), see CRS Report
RL30952, Head Start: Background and Issues, by Melinda Gish.
28 For a discussion of Executive Order 13279 (and its accompanying executive orders), see
the earlier part of this report entitled “What Are Charitable Choice Rules?”