Public Aid to Faith-Based Organizations (Charitable Choice) in the 107th Congress: Background and Selected Legal Issues

Order Code RL31043
CRS Report for Congress
Received through the CRS Web
Public Aid to Faith-Based Organizations
(Charitable Choice) in the 107th Congress:
Background and Selected Legal Issues
Updated August 19, 2003
(name redacted)
Legislative Attorney
American Law Division
Congressional Research Service ˜ The Library of Congress

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Public Aid to Faith-Based Organizations (Charitable
Choice) in the 107th Congress: Background and
Selected Legal Issues
Summary
Soon after taking office in 2001, President Bush put forward an agenda “to
enlist, equip, enable, empower, and expand the heroic works of faith-based and
community groups across American.” That agenda included a substantial expansion
of tax incentives for charitable giving and an extension of charitable choice to most
of the federal government’s social services programs. But the 107th Congress refused
to adopt these initiatives. The House adopted a modified version of the President’s
initiative; but H.R. 7 bogged down in the Senate due to concerns about the
constitutionality and desirability of the government funding entities that employ
religious faith in carrying out their programs and that discriminate on religious
grounds in their employment practices. A bipartisan compromise proposal that
included tax incentives for charitable giving and certain other provisions paralleling
those in H.R. 7 but that excluded most of H.R. 7's charitable choice provisions (S.
1924) also failed of adoption.
As a consequence, the Bush Administration on December 12, 2002, announced
a series of administrative initiatives to put in place many of the most salient features
of charitable choice which had failed of adoption in the 107th Congress. The
initiatives included an executive order applying charitable choice to most federally
funded social services programs, a significant proposed revision in the rules
governing the participation of religious organizations in the federal government’s
housing and community development programs, and the issuance for the first time
of proposed regulations to implement the four existing charitable choice statutes.
Although enacted into law in four previous statutes, charitable choice has been
the subject of persistent controversy; and President Bush’s initiative led the
controversy to become highly visible. This report (which will not be updated)
provides background and analysis on a number of the salient factual and legal issues
about charitable choice in a question-and-answer format as well as an Appendix
comparing the four charitable choice statutes with the House-passed version of H.R.
7 and Executive Order 13279. The questions addressed are as follows:
(1) What is charitable choice?
(2) Aren’t religious organizations already eligible to receive public funds?
(3) What charitable choice proposals have been enacted into law?
(4) What is President Bush’s faith-based initiative and what steps has the
Administration taken to implement it?
(5) What hearings have been held on charitable choice?
(6) What action took place on H.R. 7 and related measures in the 107th Congress?
(7) What did the charitable choice title of H.R. 7 provide and how did it differ
from previous charitable choice statutes?
(8) What legal framework governs the civil rights concerns that have been raised
about charitable choice?
(9) Does charitable choice violate the establishment of religion clause?
(10) What court suits involving charitable choice or similar programs have been
filed or decided so far?

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Contents
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
(1) What Is Charitable Choice? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
(a) Protecting the religious character of the organization . . . . . . . . . . . 4
(b) Protecting the religious freedom of recipients . . . . . . . . . . . . . . . . . 5
(c) Protecting the constitutionality of the subsidized programs . . . . . . . 5
(2) Aren’t Religious Organizations Already Eligible to Receive
Public Funds? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
(3) What Charitable Choice Proposals Have Been Enacted into Law? . . . . . 7
(4) What Is President Bush’s Faith-Based Initiative and What Steps
Has the Administration Taken To Implement It? . . . . . . . . . . . . . . . . . 8
(a) Initial effort . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
(b) The December 12, 2002, initiative . . . . . . . . . . . . . . . . . . . . . . . . . 10
(5) Have any Hearings Been Held on Charitable Choice? . . . . . . . . . . . . . . 15
(6) What Legislative Action Occurred on H.R. 7, S. 1924, and Other
Charitable Choice Measures in the 107th Congress? . . . . . . . . . . . . . . 16
(a) H.R. 7, the “Community Solutions Act of 2001,” and S. 1924,
the “CARE Act of 2002" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
(b) Re-authorization of welfare reform . . . . . . . . . . . . . . . . . . . . . . . . 22
(c) Other measures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
(7) What Did the House-Passed Version of Title II of H.R. 7 Provide and
How Did It Differ from Previous Charitable Choice Statutes? . . . . . . 24
(8) What Is the Legal Framework for the Civil Rights Concerns That Have
Been Raised About Charitable Choice? . . . . . . . . . . . . . . . . . . . . . . . . 26
(a) Nondiscrimination in federally assisted programs . . . . . . . . . . . . . 27
(b) Nondiscrimination in employment . . . . . . . . . . . . . . . . . . . . . . . . . 28
(c) Preemption of state and local civil rights laws . . . . . . . . . . . . . . . . 32
(d) The December 12 modification of Executive Order 11246 . . . . . . 33
(9) Does Charitable Choice Violate the Establishment of Religion Clause
of the First Amendment? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
(a) Direct aid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
(b) Indirect aid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
(c) Constitutionality of charitable choice . . . . . . . . . . . . . . . . . . . . . . . 41
(10) What Court Suits Involving Charitable Choice or Similar Programs
Have Been Filed or Decided So Far? . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Appendix: Comparison of Charitable Choice Statutes with
Title II of H.R. 7, as Adopted by the House in 2001, and Executive
Order 13279 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48

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Public Aid to Faith-Based Organizations
(Charitable Choice) in the 107th Congress:
Background and Selected Legal Issues
Introduction
Soon after taking office in 2001, President Bush put forward an agenda “to
enlist, equip, enable, empower, and expand the heroic works of faith-based and
community groups across American.”1 That agenda included a substantial expansion
of tax incentives for charitable giving and a broad extension of provisions promoting
the involvement of religious organizations in the federal government’s social services
programs – provisions that are known as “charitable choice.” The House on July 19,
2001, by a vote of 233-198 adopted a modified version of that proposal (H.R. 7, the
“Community Solutions Act of 2001"). But that measure bogged down in the Senate
due to continuing concerns about the constitutionality and desirability of the
government funding entities that employ religious faith in carrying out their programs
and that discriminate on religious grounds in their employment practices.
Senators Santorum (R.-Pa.) and Lieberman (D.-Conn.) developed a compromise
measure early in the second session of the 107th Congress – S. 1924, the “CARE Act
of 2002" – that included tax incentives for charitable giving and certain other
provisions paralleling those in H.R. 7 but that excluded most of H.R. 7's charitable
choice provisions. The Senate Finance Committee on July 16, 2002, reported a
modified version of the CARE Act that contained none of the charitable choice
provisions of either the House-passed version of H.R. 7 or S. 1924. But efforts to
obtain a unanimous consent agreement allowing the legislation to be brought up for
Senate debate foundered on continuing disagreements about what amendments could
be offered by proponents and opponents of charitable choice. As a result, the 107th
Congress adjourned on November 22, 2002, without enacting any major charitable
choice legislation.
As a consequence, the Bush Administration on December 12, 2002, announced
a series of measures to implement the most salient features of charitable choice
administratively.2 On that date the White House
1 President Bush, Rallying the Armies of Compassion (January, 2001), available on the
White House web site at [http://www.whitehouse.gov/news/reports/faithbased.html].
2 The announcement and the pertinent documents are available on the web site of the White
H o u s e O f f i c e o f F a i t h - B a s e d a n d C o m m u n i t y I n i t i a t i v e s a t
[http://www.whitehouse.gov/government/fbci/].

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CRS-2
! issued an executive order (E.O. 13279) directing seven federal
departments and agencies that provide financial assistance pursuant
to a wide variety of social services programs to ensure that their
programs conform with a number of the most salient principles of
charitable choice3;
! issued an executive order (E.O. 13280) establishing Centers for
Faith-Based and Community Initiatives in the Department of
Agriculture and the Agency for International Development with
missions comparable to the centers previously established in five
other departments4;
! announced that the Department of Health and Human Services is, for
the first time, issuing proposed regulations to implement the four
charitable choice statutes that have previously been enacted as part
of specific grant programs;
! announced that the Department of Housing and Urban Development
is issuing proposed regulations that would significantly alter its rules
governing the participation of religious organizations in its housing
and community development programs;
! stated that the Federal Emergency Management Agency is revising
its policies to ensure that the facilities of faith-based organizations
which are used for social services are eligible to receive disaster
relief aid on the same basis as those of other social service
organizations damaged by natural disasters;
! announced that the Department of Education is issuing guidelines
with respect to the participation of religious organizations in
providing supplemental educational services under the “No Child
Left Behind Act”; and
! released a document prepared by the White House Office for Faith-
Based and Community Initiatives entitled Guidance to Faith-Based
and Community Organizations on Partnering with the Federal
Government that is intended to answer some of the concerns such
groups have about receiving public monies and working with the
government.
In the 107th Congress the House also adopted a bill (H.R. 4737) to re-authorize
and extend the welfare reform program enacted in 1996, which was the first statute
to include charitable choice provisions. That bill contained no amendments to the
charitable choice provisions of the 1996 “Temporary Assistance to Needy Families”
(TANF) enactment. But it did authorize a new program of grants to the states to
promote healthy marriages which would have been subject to the existing charitable
choice rules in the statute; and it would also have required the states to describe what
they are doing “to engage religious organizations in the provision of services” under
TANF.5 In the Senate the Finance Committee reported out a modified version of
H.R. 4737 on July 25, 2002. That version would have authorized two new grant
3 E.O. 13279, published at 67 Fed. Reg. 77139-44 (Dec. 16, 2002).
4 E.O. 13280, published at 67 Fed. Reg. 77145-46 (Dec. 16, 2002).
5 H.R. 4,§§ 103 and 112(a)(1)(B), 108th Cong., 1st Sess. (2003).

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programs which would have been subject to the existing charitable choice rules of
TANF – one to promote healthy marriages (section 301) and a second to provide
funding for “Second Chance Homes” to help young mothers learn parenting skills in
a group home setting (section 305). But this measure received no further action.6
Late in the second session the 107th Congress enacted a short extension of TANF and
deferred more thorough consideration of the issue to the 108th Congress.
Although enacted into law in four prior statutes,7 charitable choice has been
persistently controversial; and President Bush’s faith-based initiative made that
controversy highly visible. Numerous aspects of charitable choice have been
disputed, although not until the 107th Congress were there full hearings and extended
debates on its constitutionality, efficacy, and public policy implications. Much of the
legal controversy has centered on the constitutionality of the federal government
directly subsidizing faith-based social services programs and on whether subsidized
religious organizations ought to be able to discriminate on religious grounds in their
employment practices.
With particular attention to the legal issues concerning charitable choice, this
report provides information and analysis on a number of factual, civil rights, and
constitutional questions that have been raised. The questions it addresses are as
follows:
(1) What is charitable choice?
(2) Aren’t religious organizations already eligible to receive public funds?
(3) What charitable choice proposals have been enacted into law?
(4) What is President Bush’s faith-based initiative and what steps has the
Administration taken to implement it?
(5) Have any hearings been held on charitable choice?
(6) What legislative action took place on H.R. 7, S. 1924, and other charitable
choice measures in the 107th Congress?
(7) What did the charitable choice title of H.R. 7 provide and how did it differ
from previous charitable choice statutes?
(8) What is the legal framework governing the civil rights concerns that have
been raised about charitable choice?
(9) Does charitable choice violate the establishment of religion clause of the First
Amendment?
(10) What court suits involving charitable choice or similar programs have been
filed or decided so far?
The report also includes an Appendix that compares the provisions of the four
charitable choice measures that have been enacted into law, Title II of H.R. 7 as
6 It might be noted that both measures would also have authorized a new program to promote
fatherhood. But neither version of the program appears to have been made subject to
charitable choice.
7 These four enactments are summarized in the answer to question 3 in this report. For a
fuller description of the consideration of these and other charitable choice proposals in the
104th, 105th, and 106th Congresses, see CRS Report RL30388, Charitable Choice:
Constitutional Issues and Developments Through the 106th Congress, and CRS Report
RS20712, Charitable Choice, Faith-Based Initiatives, and TANF.

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CRS-4
adopted by the House in the 107th Congress, and E.O. 13279. This report will not be
updated.
(1) What Is Charitable Choice?
Charitable choice is a set of statutory and/or regulatory provisions intended to
ensure that religious organizations can apply to participate in federally funded social
services programs on the same basis as other nongovernmental providers and can
provide services pursuant to such programs without abandoning their religious
character or infringing on the religious freedom of recipients. The underlying
assumptions of charitable choice seem to be that religious organizations should be
given greater access to public funding and should be allowed to employ their faiths
in carrying out the publicly funded programs to a greater degree than has traditionally
been the case.8 Except for small technical assistance programs operated by the
Department of Labor and the Department of Health and Human Services, charitable
choice does not, in itself, contain new funding for faith-based organizations. Prior
to President Bush’s issuance of Executive Order 13279 on December 12, 2002,
charitable choice rules applied only to discrete social services programs specifically
designated in four statutes enacted by Congress since 1996. The four charitable
choice measures that have been enacted, the House-passed version of H.R. 7 in the
107th Congress, and Executive Order 13279 differ in some of their details, and
sometimes significantly so (see questions 4, 7, and the Appendix). But the major
provisions of charitable choice include the following:
(a) Protecting the religious character of the organization. Charitable
choice bars government from discriminating against an organization that applies to
provide publicly funded social services on the basis of its religious character. To
protect such organizations’ religious character, charitable choice further provides
that:
(i) religious organizations which receive public funds remain independent
of government and retain control over the definition, development, practice, and
expression of their religious belief;
(ii) government may not require such organizations to change their form of
internal governance or to remove religious art and other symbols as a condition
of participation; and
(iii) religious organizations which receive federal funds may discriminate
on religious grounds in their employment practices as allowed under Title VII of
the Civil Rights Act of 1964.9
The charitable choice statutes provide that a religious organization’s use of public
funds is subject to audit. But they allow – and in several cases require – the public
funds to be segregated into a separate account and limit the government audit to that
account.

8 The latter objective may raise constitutional questions about the initiative and may also be
foreclosed by certain provisions in the statutes that have been enacted as well as in H.R. 7
and in E.O. 13279. See the discussion under questions 8 and 9.
9 42 U.S.C.A. 2000e-1.

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(b) Protecting the religious freedom of recipients. Charitable choice
specifies that a religious organization cannot discriminate against a beneficiary or
potential beneficiary on the basis of religion or religious belief (and in some versions
on the basis of a refusal to hold a religious belief and/or a refusal to actively
participate in a religious practice as well). Charitable choice also requires that an
alternate and accessible provider be made available to a recipient who objects to the
religious character of a given provider and that the government give all beneficiaries
notice of their right to an alternate provider. Title II of H.R. 7 as passed by the House
in 2001 would have added to these provisions an explicit requirement that
participation by beneficiaries in any religious activity offered by a provider that
receives direct governmental assistance be voluntary. But it also would have
provided that this requirement of voluntariness does not apply if a religious
organization receives funding indirectly, i.e., in the form of vouchers; and in such
programs it would have barred religious discrimination against beneficiaries only in
admissions. E.O. 13279 tracks these provisions as well.
(c) Protecting the constitutionality of the subsidized programs.
Charitable choice bars a religious organization from using direct government aid for
sectarian worship, instruction, or proselytization (unless the aid is received in the
form of vouchers, in which case this restriction does not apply). Moreover,
charitable choice programs are explicitly required to be implemented in a manner
“consistent with” the establishment of religion clause of the First Amendment to the
Constitution (and in some versions with the free exercise clause as well). Title II of
H.R. 7 as passed by the House in 2001, although not the charitable choice statutes
previously enacted into law, also would have required that any religious activity
offered by a religious organization be separate from the program that receives direct
federal assistance and that participation in any religious activity that is directly
funded be voluntary for the individuals receiving services. (E.O. 13279 imposes
these requirements as well.) Charitable choice also gives the government discretion
with respect to whether religious programs and entities receiving federal funds have
to be incorporated separately from their sponsoring religious organizations. All of
these provisions, arguably, enhance the prospect that charitable choice meets
constitutional requirements.
(2) Aren’t Religious Organizations Already Eligible to Receive
Public Funds?
Yes. Some federal programs, such as the Child Care and Development Block
Grant program,10 explicitly specify that religious organizations are eligible to
participate. More commonly, federal grant and cooperative agreement programs11
provide that private entities or nonprofit entities are eligible to participate; and these
10 42 U.S.C.A. 9858 et seq.
11 “Cooperative agreement” is the legal phrase used to refer to funding agreements between
the federal government and social services providers that involve substantial interaction
between the government agency and the provider, while the term “grant” refers to funding
agreements that do not involve substantial interaction. The term “contract” is limited to
agreements for the provision of property or services to the government itself. See 31
U.S.C.A. 6303-6305.

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categories include religious as well as secular organizations. Such entities as
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 at the national, state, and local levels have
long participated in publicly funded social services programs. These organizations
are commonly incorporated separately from their sponsoring religious organizations
and usually have tax-exempt status under § 501(c)(3) of the federal tax code.12
But interpretations and applications of the establishment of religion clause of
the First Amendment as well as policy decisions by administrators have in the past
generally required programs operated by religious organizations that receive direct
public funding to be essentially secular in nature. Religious symbols and art have
sometimes had to be removed from the premises; and religious worship, instruction,
and proselytizing have been forbidden as conditions of receiving public monies.
Moreover, religious entities that have been found to be “pervasively sectarian,” i.e.,
entities in which religion is a pervasive element of all that they do, have until recently
generally been deemed constitutionally ineligible to participate in most direct funding
programs.
The courts have applied these constraints most strictly in the context of direct
aid programs benefitting sectarian elementary and secondary schools.13 But the same
standards have been held to apply to programs of direct public aid to religiously
affiliated colleges and social services programs.14 Recent decisions by the Supreme
12 Section 501(c)(3) of Title 26 of the U.S. Code provides an exemption from federal income
taxes to the following:
Corporations, and any community chest, fund, or foundation, organized and
operated exclusively for religious, charitable, scientific, testing for public safety,
literary, or educational purposes ..., no part of the net earnings of which inures
to the benefit of an private shareholder or individual, no substantial part of the
activities of which is carrying on propaganda, or otherwise attempting, to
influence legislation ..., and which does not participate in, or intervene in
(including the publishing or distributing of statements), any political campaign
on behalf of (or in opposition to) any candidate for public office.
One of the primary benefits of tax-exempt status, and a major incentive for obtaining such
status, is that donations to such organizations may be claimed as a tax deduction by the
donors. See 26 U.S.C.A. 170. Tax- exempt status is not always a requirement for
organizations to participate in federal funding programs.
13 See, e.g., Lemon v. Kurtzman, 403 U.S. 602 (1971) (subsidy of teachers of secular
subjects in sectarian elementary and secondary schools held unconstitutional); Committee
for Public Education v. Nyquist, 413 U.S. 756 (1973) (grants for maintenance and repair of
sectarian school facilities and tuition subsidies for the parents of children attending private
sectarian elementary and secondary schools held unconstitutional); and Wolman v. Walter,
433 U.S. 229 (1977) (public subsidy of field trip transportation for children in sectarian
elementary and secondary schools held unconstitutional).
14 See, e.g., Tilton v. Richardson, 403 U.S. 672 (1971) (public subsidy of the construction
of academic buildings at sectarian colleges held constitutional, subject to the restriction that
(continued...)

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CRS-7
Court have loosened these constitutional constraints to a considerable degree but still
require that direct public aid not be used for purposes of religious indoctrination.
Charitable choice is a legislative and regulatory effort to move beyond these
restrictions and to expand the involvement of religious organizations in federally-
funded social services programs while allowing them at the same time to retain their
religious character. (See question # 9 for a fuller discussion of the constitutional
framework governing charitable choice.)
(3) What Charitable Choice Proposals Have Been Enacted
into Law?
Between 1996 and 2000 Congress enacted four charitable choice measures into
law. Charitable choice was first enacted in 1996 as part of the “Temporary
Assistance for Needy Families” program (TANF) and applies as well to the welfare-
to-work grant program added to TANF in 1997.15 The 105th Congress included
selected charitable choice provisions in its reauthorization of the “Community
Services Block Grant Program” in 1998.16 In 2000 the 106th Congress adopted two
measures adding charitable choice to the substance abuse prevention and treatment
services funded under both the block grant and discretionary grant provisions of
Titles V and XIX of the Public Health Services Act.17
The language in the 1996 welfare law has been the basic model for charitable
choice. That law authorizes the states, at their option, to administer and provide
TANF services or benefits through nongovernmental entities or through the provision
of certificates or vouchers to TANF beneficiaries redeemable with private entities.
The law said that if a state exercised this option, it had to allow religious
organizations to participate on the same basis as any other private entity, subject to
the requirements of charitable choice regarding the religious character of such
organizations, the religious freedom of beneficiaries, and the use of funds (see
question 1 and Appendix). Subsequent enactments and proposals have varied some
14 (...continued)
the buildings be limited to secular use) and Bowen v. Kendrick, 487 U.S. 589 (1988)
(provisions in Adolescent Family Life Act allowing grants to be made to religious
organizations held constitutional so long as particular grants were not made to pervasively
sectarian entities).
15 P.L. 104-193, Title I, § 104 (August 22,1996); 110 Stat. 2161; 42 U.S.C.A. 604a.
16 P.L. 105-285, Title II, § 201 (Oct. 27, 1998); 112 Stat. 2749; 42 U.S.C.A. 9920.
17 P.L. 106-310, Title XXXIII, § 3305 (Oct. 17, 2000); 114 Stat. 1212; 42 U.S.C.A. 300x-65
(West Supp. 2001) and P.L. 106-554, § 1 (Dec. 21, 2000); 114 Stat. 2763; 42 U.S.C.A.
290kk (West Supp. 2001). The charitable choice provisions in the latter act were part of
H.R. 5662, the “Community Renewal Tax Relief Act of 2000,” which was incorporated and
enacted by reference in the “Consolidated Appropriations Act, 2001.” See 114 Stat. 2763I-1,
at 2763I-33. It might be noted that the provisions of these two charitable choice statutes are
not entirely consistent.

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CRS-8
of these requirements, but the basic framework of the charitable choice provisions
of welfare reform has been retained.18
(4) What Is President Bush’s Faith-Based Initiative and What
Steps Has the Administration Taken To Implement It?
(a) Initial effort. The promotion of increased involvement by faith-based and
community organizations in federally funded social services programs has been a
centerpiece of President’s Bush’s domestic agenda. Soon after taking office, on
January 29, 2001, President Bush issued two executive orders establishing federal
offices to define and promote this initiative. Executive Order 13199 created an
Office of Faith-Based and Community Initiatives in the White House to take the lead
responsibility in enhancing and promoting governmental partnerships with faith-
based and community organizations.19 Executive Order 13198, in turn, established
centers for faith-based and community initiatives in each of five federal agencies –
the Departments of Health and Human Services, Housing and Urban Development,
Labor, Justice, and Education.20 These centers are mandated to work with the White
House office in order to make their agencies “as open and supportive as possible to
successful faith-based and grassroots organizations” and, more particularly, to
identify and eliminate regulatory, statutory, and administrative barriers to the
participation of such groups. On August 16, 2001, the White House issued the first
of what it said will be annual reports summarizing the initial findings of the
departmental centers – Unlevel Playing Field: Barriers to Participation by Faith-
Based and Community Organizations in Federal Social Service Programs.21
18 For a fuller description of the consideration of these and other charitable choice proposals
in the 104th, 105th, and 106th Congresses, see CRS Report RL30388, Charitable Choice:
Constitutional Issues and Developments Through the 106th Congress, and CRS Report
RS20712, Charitable Choice, Faith-Based Initiatives, and TANF.
19 66 Fed. Reg. 8499 (Jan. 31, 2001). Initially, that office was headed by Catholic scholar
John J. DiIulio, Jr. But on August 17, 2001, the White House announced his resignation.
On February 2, 2002, President Bush announced the selection of James Towey, an attorney
with an extensive background in working with social services organizations, as the head of
the office and also designated him as a Deputy Assistant to the President.
20 Id. at 8497.
21 The report summarized the initial findings of the five departmental centers as including
the following:
(i) small faith-based and secular groups receive “very little” federal support
relative to the scope of the services they provide;
(ii) there is a “widespread bias” against such groups reflected in “cumbersome”
regulations and prohibitions on religious activities that go beyond constitutional
requirements;
(iii) regulations often impose requirements beyond what the legislation mandates;
(iv) the existing charitable choice statutes have been “almost entirely ignored”
by federal administrators;
(v) there is very little evaluation of the results that are achieved in federally
funded social services programs; and
(continued...)

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These executive orders were part of a document released by President Bush on
January 30, 2001, entitled Rallying the Armies of Compassion. The document
detailed his agenda “to enlist, equip, enable, empower, and expand the heroic works
of faith-based and community groups across America” and set forth the following
initiatives:

! encouraging and helping states to create their own versions of the
White House Office of Faith-Based and Community Initiatives;
! a commitment to fully implement the charitable choice measures
that have previously been enacted into law;
! a recommendation that pilot programs incorporating charitable
choice be established to help the children and families of prisoners,
to improve inmate rehabilitation prior to release, to establish
maternity group homes, and to provide after-school programs for
low-income children; and
! an expansion of incentives for private giving to religious and
charitable enterprises by such means as allowing a charitable gift tax
deduction to those who do not itemize on their federal income tax
returns, permitting individuals to take tax-free withdrawals from
their IRAs for the purpose of making charitable contributions,
limiting the liability of corporations for the donation of equipment
and supplies to charitable organizations, encouraging the states to
adopt a charitable gift tax credit, increasing the charitable donation
deduction for corporations from 10 percent to 15 percent of taxable
income, and creating a Compassion Capital Fund from both federal
and private funds to provide technical assistance to small community
and faith-based organizations and to provide start-up capital to such
enterprises.
In the 107th Congress the Administration strongly supported H.R. 7, the
“Community Solutions Act of 2001,” as the primary legislative vehicle for a number
of these initiatives.22 When that bogged down in the Senate, President Bush
heralded the bipartisan compromise worked out by Sen. Lieberman and Sen.
Santorum (S. 1924) as “a great accomplishment” and urged its adoption,
notwithstanding its deletion of most of the charitable choice provisions in the House
21 (...continued)
(vi) the Government Performance and Results Act of 1993, which was enacted
to promote performance-based management, has had “little discernible impact.”
T h e r e p o r t i s a v a i l a b l e o n t h e W h i t e H o u s e w e b s i t e a t
[http://www.whitehouse.gov/news/releases/2001/08/unlevelfield.html]
22 S. 584 was originally the Senate counterpart to H.R. 7. Like S. 1924, that measure also
did not include the charitable choice title or the corporate liability reform provisions of H.R.
7. It was superseded by S. 1924 and the version of H.R. 7 reported by the Senate Finance
Committee.

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bill.23 The 107th Congress adjourned without either measure coming up for Senate
floor action, however.
Notwithstanding the refusal of Congress to enact comprehensive charitable
choice legislation, pieces of the proposals listed above have been enacted as parts of
other legislation. For instance, the fiscal 2002 appropriations act for the Departments
of Justice, Commerce, and State24 included a directive that $5 million be used to start
five faith-based pilot programs in prisons to help inmates prepare for release.25
Similarly, the fiscal 2002 appropriations act for the Departments of Labor, Health and
Human Services, and Education and Related Agencies provided $30 million to the
Department of Health and Human Services (HHS) to establish a Compassion Capital
Fund “to provide grants to charitable organizations to emulate model social service
programs and to encourage research on the best practices of social service
organizations”26; and the fiscal 2003 appropriations act for the Department provided
$35 million for this purpose.27 HHS is using the funds to support intermediary
organizations that can help faith-based and community-based organizations to
compete for funding, partner with other organizations, and replicate and implement
best practices in program management and services.28 In addition, President Bush
on January 17, 2002, signed into law a new authorization of $67 million to provide
mentoring services to children of prisoners.29
(b) The December 12, 2002, initiative. As noted above, the 107th Congress
adjourned on November 22, 2002, without enacting any major charitable choice
legislation. In apparent response to that fact, and to further implement the President’s
faith-based initiative, the White House on December 12, 2002, announced a number
of significant administrative actions, as follows:
23 White House Office of the Press Secretary, “Remarks by the President and Senator
Lieberman in Photo Opportunity After Meeting on Armies of Compassion” (Feb. 7, 2002).
24 P.L. 107-77 (Nov. 28, 2001).
25 The allocation was made by language in the legislative history of the statute. In H.Rept.
107-139, 107th Cong., 1st Sess. (July 13, 2001), at 35, the House Appropriations Committee
stated as follows:
In addition, the Committee supports the request to establish a multi-faith based
prison pre-release pilot program. The Committee directs that a fifth pilot be
added, and that it be located at the Petersburg, VA, facility.
The conference report on the legislation, in turn, stated that “[t]he conference adopts by
reference House language regarding drug treatment programs and establishment of
faith-based and other pilots ....” See H. Conf. Rept. 107-278 (Nov. 9, 2001), reprinted at
147 CONG. REC. H 8008 (daily ed. Nov. 9, 2001).
26 P.L. 107-116, Title II (Jan. 10, 2002); 115 Stat. 2177, 2196.
27 P.L. 108-7, Division G, Title II (Feb. 20, 2003).
28 67 Fed. Reg. 39561-39570 (June 7, 2002).
29 P.L. 107-133, Title I, Subpart B (Jan. 17, 2002); 115 Stat. 2413, 2419; 42 U.S.C.A. 629i.

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(1) Executive Order 13280 – Establishment of New Centers.30 By an
earlier executive order (E.O. 13198) the President on January 31, 2001, established
Offices of Faith-Based and Community Initiatives in five federal departments –
Health and Human Services, Housing and Urban Development, Labor, Justice, and
Education. This new executive order (E.O. 13280) establishes similar offices in the
Department of Agriculture and the Agency for International Development. Like their
predecessors, these new offices are charged with identifying barriers to the
participation of faith-based and community organizations in their social services
programs, removing such barriers, encouraging the participation of such
organizations “to the greatest extent possible,” developing innovative programs to
increase their participation, and expanding outreach efforts to them.
(2) Executive Order 13279 – Equal Protection of the Laws for Faith-
Based and Community Organizations.31 By this executive order the President
directed the heads of the afore-mentioned seven departments and agencies to ensure
that the regulations and policies governing the administration of their social services
programs conform with several of the major principles of charitable choice. The
scope of the executive order is broad. It applies to social services programs
administered directly by the seven departments and agencies or by state and local
governments using federal financial assistance provided under their programs; and
the programs covered include those “directed at reducing poverty, improving
opportunities for low-income children, revitalizing low-income communities,
empowering low-income families and low-income individuals to become self-
sufficient, or otherwise helping people in need.”32 The executive order directs that
the administration of these social services programs conform with the following
principles of charitable choice:
! Faith-based and other community organizations should be able “to
compete on an equal footing for Federal financial assistance” with
all other eligible organizations.
! “No organizations should be discriminated against on the basis of
religion or religious belief in the administration or distribution of
Federal financial assistance ....”
! All organizations that receive federal financial assistance under the
social services programs of these seven departments and agencies
should be barred from discriminating “against current or prospective
program beneficiaries on the basis of religion, a religious belief, a
refusal to hold a religious belief, or a refusal to actively participate
in a religious practice.”
! In order to comply with the establishment and free exercise clauses
of the Constitution, organizations that engage in “inherently
30 67 Fed. Reg. 77145 (Dec. 16, 2002).
31 67 Fed. Reg. 77139-44 (Dec. 16, 2002).
32 The executive order states that such programs include, but are not limited to, child care
services; transportation services; job training; referral and counseling services; health
support services; soup kitchens and food banks; literacy and mentoring programs; the
prevention of juvenile delinquency, crime, substance abuse, and domestic violence; and
housing.

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religious activities, such as worship, religious instruction, or
proselytization, must offer those services separately in time or
location from any programs or services supported with direct Federal
financial assistance, and participation in any such inherently
religious activities must be voluntary for the beneficiaries” of
programs that are directly subsidized.
! Religious organizations that participate in federally financed social
service programs may not “use direct Federal financial assistance to
support any inherently religious activities, such as worship, religious
instruction, or proselytization.”
! Faith-based organizations that apply for or participate in federally
financed social service programs may “retain [their] independence
and ... continue to carry out [their] mission, including the definition,
development, practice, and expression of [their] religious beliefs;
use their facilities to provide social services “without removing or
altering religious art, icons, scriptures, or other symbols”; retain
religious terms in their names; select board members on a religious
basis; and include religious references in their “mission statements
and other chartering or governing documents.”
E.O. 13279 does not address whether religious organizations that provide
federally funded social services can discriminate on religious grounds in their
employment practices.33 It does, however, amend an existing executive order – E.O.
11246 – to specify that religious organizations that contract to provide goods or
services directly to the federal government or that enter into federally funded
construction contracts can discriminate on religious grounds in their employment
practices. Executive Order 13279 gives the departments and agencies 90 days to
develop implementation plans.
(3) Regulations To Implement Existing Charitable Choice Statutes.
The Department of Health and Human Services (DHHS) on December 12, 2002,
issued proposed rules to implement the four charitable choice statutes enacted into
law between 1996 and 2000.34 No such regulations have previously been provided.
The proposed regulations would apply to the Temporary Assistance for Needy
Families program (TANF) under the Personal Responsibility and Work Opportunity
Reconciliation Act of 1996, the Community Services Block Grant program, the
substance abuse prevention and treatment block grant and discretionary grant
programs administered by the Substance Abuse and Mental Health Services
Administration (SAMHSA), and the Projects for Assistance in Transition from
Homelessness grant program (also administered by SAMHSA). All of the proposed
33 Executive Order 13279 amends E.O. 11246 to specify that religious organizations that
contract to provide goods or services directly to the federal government or that enter into
federally funded construction contracts can discriminate on religious grounds in their
employment practices.
34 See 67 Fed. Reg. 77349-60 (SAMHSA programs), 77361-67 (TANF program), and 77368-
71 (Community Services Block Grant program) (Dec. 17, 2002). The proposed regulations
are also available at the website of the DHHS Office of Faith-Based and Community
Initiatives: [http://www.hhs.gov/fbci/]

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regulations incorporate all of the principles set forth above in Executive Order
13279. All have the following additions as well:
! Although E.O. 13279 states that faith-based organizations that
receive direct federal financial assistance cannot use the assistance
for inherently religious activities, all of the proposed regulations
emphasize that this restriction does not apply to federal financial
assistance that is received indirectly, i.e., funding that an
organization receives “as the result of the genuine and independent
private choice of a beneficiary through a voucher, certificate,
coupon, or other similar mechanism.” Thus, the proposed
regulations explicitly affirm that organizations that receive funds
indirectly can use them for inherently religious activities and need
not segregate their religious activities by time or location from the
subsidized activities.
! All of the proposed regulations explicitly state that receipt of funds
under the applicable program by a religious organization does not
affect the organization’s exemption from the religious
nondiscrimination in employment requirement of Title VII of the
Civil Rights Act of 1964.35 In other words, participating religious
organizations can discriminate on religious grounds in their
employment practices as allowed under Title VII notwithstanding
their receipt of public funds. The regulations applicable to the
programs administered by or through SAMHSA further state that the
religious nondiscrimination in employment requirements in the
Public Health Service Act36 also do not apply if a participating
religious organization can demonstrate that application of the
requirement would “substantially burden” its religious exercise. The
reason for that exception, the explanatory material states, is not
anything in charitable choice but the Religious Freedom Restoration
Act,37 which bars the federal government from imposing any
“substantial burden” on religious exercise unless necessary to
accomplish a compelling public purpose.
! All of the proposed regulations state that beneficiaries who object to
the religious character of a given service provider have a right to
receive services from another provider to whom they have no
religious objection. The regulations require that beneficiaries be
given notice of their right to an alternative provider, that such
alternative providers be “reasonably accessible,” and that the value
of the services received be no less than those that would have been
received from the original provider. The regulations further make
35 42 U.S.C.A. 2000e-2.
36 42 U.S.C.A. 290cc-33(a)(2) and 300x-57(a)(2) (West Supp. 2002) of the Public Health
Service Act provide that “[n]o person shall on the ground of sex ... or ... religion be excluded
from participation in, be denied the benefits of, or be subjected to discrimination under, any
program or activity funded in whole or in part with funds made available under section ...
of this title.”
37 42 U.S.C.A. 2000bb et seq.

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clear that the alternative provider need not be non-religious, just
non-objectionable on religious grounds to the beneficiary.
Public comments on the proposed regulations were due by February 18, 2003.
(4) Revision of DHUD’s housing and community development
regulations. On December 12, 2002, the Department of Housing and Urban
Development (DHUD) announced that it would soon publish proposed regulations
that would substantially revise its rules governing the participation of religious
organizations in several housing and community development programs – the
Community Development Block Grant (CDBG) program; HOME Investment
Partnerships program; Hope for Homeownership of Single-Family Homes; Housing
Opportunities for Persons with AIDS; Emergency Shelter Grant program; Shelter
Plus Care; Supportive Housing; and Youthbuild.38 On January 6, 2003, it did so.39
DHUD’s existing regulations allow religious organizations to participate in the
foregoing programs but impose special restrictions on “primarily religious” entities.
More particularly, existing regulations generally (1) prohibit direct assistance to
primarily religious organizations for the construction, acquisition, or rehabilitation
of housing or other structures; (2) require such entities, in order to obtain grants for
the acquisition, construction or rehabilitation of housing or other structures, to form
separate secular corporations; and (3) require that structures constructed, acquired,
or rehabilitated with public funds be used for wholly secular purposes. In addition,
existing regulations governing the receipt of grants by primarily religious
organizations for the provision of services generally bar them from (4) discriminating
on religious grounds in their employment practices and (5) exerting “religious
influence” in their provision of services.
The proposed regulations would eliminate all of these requirements. The new
regulations would allow DHUD to make grants directly to primarily religious
organizations for all purposes, i.e., such entities would not need to set up separate
secular organizations to receive grants for the construction, acquisition, or
rehabilitation of housing or other structures. Moreover, in what may be the most
dramatic departure from the existing regulations, structures constructed, acquired, or
rehabilitated with public funds could be used not only for eligible secular activities
but also for inherently religious ones. Public funding in such situations would simply
have to be limited to the proportion for which the structures are used for eligible
activities. Finally, religious entities receiving public funds would be permitted to
discriminate on religious grounds in their employment practices.
The proposed regulations would also incorporate all of the charitable choice
principles described above in Executive Order 13279. Public comments on DHUD’s
proposed regulations were due by March 7, 2003.
38 The existing regulations for these programs are found at 24 CFR Part 92, 570, 572, 574,
576, 582, 583, and 585, respectively.
39 See 68 Fed. Reg. 648 et seq. (Jan. 6, 2003).

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CRS-15
(5) Practical guidance. To facilitate the participation of faith-based and
community organizations in federally funded social services programs, the White
House Office of Faith-Based and Community Initiatives on December 12, 2002,
issued a brochure entitled Guidance to Faith-Based and Community Organizations
on Partnering with the Federal Government.40 The brochure provides general
information on the federal grant process and specific information on a list of “do’s
and don’t” for faith-based organizations. The latter section addresses such questions
as whether religious organizations need to form a separate nonprofit corporation to
receive public funds and whether funded entities can engage in religious activities,
discriminate on religious grounds in their employment practices, or discriminate on
religious grounds in providing services. The brochure is organized in a question and
answer format and generally elaborates in colloquial language the charitable choice
principles set forth in Executive Order 13279. But it also provides specific answers
to questions that are only implicitly addressed by the executive order.
(6) Eligibility for disaster assistance. The White House and the Federal
Emergency Management Agency (FEMA) announced on December 12, 2002, that
FEMA is revising the standards governing the eligibility of certain private, nonprofit
organizations for assistance to repair damage caused by natural disasters. The White
House announcement stated that “[u]nder current FEMA policy religious non-profits
such as schools, soup kitchens, and homeless shelters cannot receive federal disaster
relief when they suffer damage” and that “[u]nder the changes announced by the
President today, faith-based social services organizations will be eligible to receive
aid just like other social service organizations damaged or destroyed by natural
disasters, retroactive to January 2001.” The FEMA announcement stated that “this
new policy will recognize the eligibility of the Seattle Hebrew Academy (SHA), a
religious school closed for almost two years due to damages suffered during the
Nisqually, Washington, earthquake on February 28, 2001.”
(5) Have any Hearings Been Held on Charitable Choice?
Notwithstanding the enactment of four charitable choice measures in the 104th,
105th, and 106th Congresses, no congressional committee had held a hearing on
charitable choice prior to the first session of the 107th Congress. In the 107th
Congress five hearings were held, as follows:
(1) Two hearings were held by the Subcommittee on the Constitution of the
House Judiciary Committee, chaired by Rep. Chabot (R.-Oh). The first, on April
24, 2001, examined “State and Local Implementation of Existing Charitable
Choice Programs.” The second, on June 7, 2001, focused on “The Constitutional
Role of Faith-Based Organizations in Competitions for Federal Social Service
Funds.”41
40 The brochure is available on the web site of the White House OFBCI:
[http://www.whitehouse.gov/government/fbci/guidance_document.pdf]
41 State and Local Implementation of Existing Charitable Choice Programs: Hearing
Before the Subcommittee on the Constitution of the House Committee on the Judiciary, 107th
Cong., 1st Sess. (April 24, 2001) (Serial 107-13) and The Constitutional Role of Faith-Based
(continued...)

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(2) On April 26, 2001, the Subcommittee on Criminal Justice, Drug Policy,
and Human Resources of the House Committee on Government Reform, chaired
by Rep. Souder (R.-Ind.) held a hearing on “The Role of Community & Faith-
Based Organizations in Providing Effective Social Services.”42
(3) On June 6, 2001, the Senate Committee on the Judiciary, chaired by
Sen. Leahy (D.-Vt.), held a hearing on “Faith-Based Solutions: What Are the
Legal Issues?”43
(4) On June 14, 2001, two subcommittees of the House Ways and Means
Committee – the Subcommittee on Human Resources, chaired by Rep. Herger (R.-
Ca.), and the Subcommittee on Select Revenue Measures, chaired by Rep. McCrery
(R.-La.) – held a joint hearing on H.R. 7 as introduced in the House.44
(6) What Legislative Action Occurred on H.R. 7, S. 1924, and
Other Charitable Choice Measures in the 107th Congress?
(a) H.R. 7, the “Community Solutions Act of 2001,” and S. 1924, the
“CARE Act of 2002". As noted above, H.R. 7, the “Community Solutions Act of
2001,” was the primary initiative concerning charitable choice in the 107th Congress
but was not ultimately enacted. The bill was introduced with the support of the
White House on March 29, 2001, by Rep. Watts (R.-Okla.), Rep. Hall (D.-Oh.), and
Speaker Hastert (R.-Ill.).45 The measure included not only an expansion of charitable
choice but also tax incentives for charitable giving, limitations on corporate liability
for charitable donations of equipment, and modifications of the program of individual
development accounts for low-income persons. The tax incentive provisions of Title
I and the individual development account provisions of Title III were referred to the
Committee on Ways and Means, while the corporate liability provisions of Title I and
the charitable choice provisions contained in Title II were referred to the Committee
on the Judiciary. After an all-day markup session on June 28, 2001,46 the Judiciary
Committee approved, 20-5, a substitute version of the corporate liability and
41 (...continued)
Organizations: Hearing Before the Subcommittee on the Constitution of the House
Committee on the Judiciary,107th Cong., 1st Sess. (June 7, 2001) (Serial 107-17).
42 The Role of Community and Faith-Based Organizations in Providing Effective Social
Services: Hearing Before the Subcommittee on Criminal Justice, Drug Policy, and Human
Resources of the House Committee on Government Reform, 107th Cong., 1st Sess. (April 26,
2001) (Serial 107-69).
43 Faith-Based Solutions: What Are the Legal Issues?: Hearing Before the Senate Committee
on the Judiciary, 107th Cong., 1st Sess. (June 6, 2001) (S. Hrg. 107-375) (Serial No. J-107-
24).
44 H.R. 7 -- The Community Solutions Act of 2001: Hearing Before the Subcommittee on
Human Resources and the Subcommittee on Select Revenue Measures of the House
Committee on Ways and Means, 107th Cong., 1st Sess. (June 14, 2001) (Serial 107-34).
45 An identical bill, H.R. 1284, was introduced by the same sponsors on March 28, 2001.
46 The transcript of the Committee’s markup is reproduced in the committee’s report on H.R.
7, infra, n. 23.

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charitable choice sections offered by its chairman, Rep. Sensenbrenner (R.-Wis.),
which had been developed in extensive discussions with the Administration. The
Democratic minority proposed numerous modifications to the substitute, but most of
these were rejected.47 The Ways and Means Committee, in turn, marked up the tax
and individual development account provisions on July 11, 2001, and approved a
version substantially reducing the amount of the tax incentives by a vote of 23-16.48
On July 19, 2001, the House debated a substitute proposal proffered by Rep.
Sensenbrenner that combined and slightly modified the foregoing measures, rejected
two minority proposals, and adopted the substitute, 233-198.49
47 See H.Rept. 107-138, Part I, 107th Cong., 1st Sess. (July 12, 2001). As noted, the report
includes a transcript of the markup. Amendments rejected by the committee included
(i) proposals by Rep. Scott (D.-Va.) to strike the Title VII exemption allowing
religious organizations to discriminate on religious grounds in their employment
practices (11-19), to exclude all ESEA programs from the purview of charitable choice
(10-17), to require an alternative provider to be “at least as accessible” as the original
provider (voice vote), to define a religious organization as a “pervasively sectarian”
entity (voice vote), and to require funding decisions to be made on the basis of the
“objective merits of the applications submitted” (7-20);
(ii) proposals by Rep. Nadler (D.-N.Y.) to broaden the judicial relief provision
by allowing suits against religious organizations as well as governmental agencies and
permitting the award of damages as well as injunctive relief (voice vote); to require as
a condition of eligibility that a religious organization be incorporated separately from
its pervasively sectarian parent or affiliate (voice vote), to bar a religious organization
from engaging any beneficiary in religious activity while that person is receiving
assistance (7-22), and to require that a secular alternative provider be provided to an
individual who objected to the religious character of an initial provider (voice vote);
(iii) a proposal by Rep. Frank (D.-Mass.) to bar religious organizations receiving
assistance indirectly from discriminating against an individual on the basis of a
religious belief (7-15);
(iv) a proposal by Rep. Lofgren (D.-Cal.) to strike the liability reform section
concerning corporate donations to charitable organizations (7-13); and
(v) a proposal by Rep. Jackson-Lee (D.-Tex.) to strike the section concerning the
autonomy of religious organizations (7-19).
Amendments accepted by the committee included one by Rep. Scott to increase the
authorization for technical assistance to $50 million and to allow such assistance to include
help in creating a 501(c)(3) organization (accepted by unanimous consent) and another to
add a provision to the subsection stating that funds are not to be considered aid to the
religious organization saying that Title VI still applies (voice vote); a modified amendment
by Rep. Watt stating that religious organizations that receive public funds, notwithstanding
their partial exemption from Title VII, still must comply with its nondiscrimination
provisions (accepted by unanimous consent); and an amendment by Rep. Frank stating that
nothing in the section alters the duty of a religious organization to comply with Title VI,
Title IX, section 504, and the Age Discrimination Act of 1975 (voice vote).
48 See H.Rept. 107-138, Part II, 107th Cong., 1st Sess. (July 16, 2001). The committee
reduced the cost of the tax incentives for charitable giving from the $84.4 billion originally
proposed to $6.4 billion (estimated over ten years). See Congressional Quarterly, Ways and
Means Scales Back Bush Plan for Fostering Charitable Donations (July 14, 2001), at 1688.
49 147 CONG.REC. H4222 - H4281 (daily ed. July 19, 2001)

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In the Senate H.R. 7 failed to garner widespread support and languished in the
Senate Finance Committee As a consequence, Senators Santorum (R.-Pa.) and
Lieberman (D.-Conn.) developed and introduced a bill (S. 1924) on February 8,
2002, that provided more generous tax incentives than H.R. 7, comparable individual
development account provisions, and a restoration of the full amount of the social
services block grant. But S. 1924 excluded most of the charitable choice provisions
of H.R. 7. Subsequently, on July 16, 2002, the Senate Finance Committee reported
out a version of H.R. 7 that incorporated many of the tax incentive and individual
development account provisions of S. 1924 but that had none of the charitable choice
provisions of the House-passed measure or even the more modest provisions
concerning religious organizations of S. 1924.50 Senators Santorum and Lieberman
led efforts to develop a unanimous consent agreement that would have allowed H.R.
7 and the excluded provisions of S. 1924 as well as several amendments by
opponents of charitable choice to be considered on the Senate floor. But the 107th
Congress came to an end without any Senate floor debate on charitable choice on
either H.R. 7 or S. 1924. The following subsections give greater detail on what
happened on these measures:
(i) Judiciary Committee report. In reporting the bill on July 12, 2001, the
Judiciary Committee stressed that charitable choice is “not new” and has previously
been enacted four times. It stated that the bill was a response to the decline in private
philanthropy caused by “higher and higher taxes” as well as to “misguided
understandings of the Constitution” which prevented government from working more
closely with religious organizations; that support for public funding of social services
programs operated by religious organizations was strong, “particularly ... among
African-Americans”; that “[e]xisting charitable choice programs have had a
significant impact on social welfare delivery”; and that H.R. 7 had been modified to
respond to some of the criticisms that had been made about charitable choice.
The report also gave an extended defense of the constitutionality of charitable
choice and of the provision allowing religious organizations to discriminate on
religious grounds in their employment practices. It emphasized that the bill ensured
that aid to social services organizations would be distributed in a religiously neutral
way and that it respected the “individual choices, whether religious or nonreligious,
of the needy who are served by these programs.” Recent decisions by the Supreme
Court, it said, had abandoned the notions that public aid cannot be provided directly
to pervasively sectarian organizations and that employees of such organizations
“cannot be trusted to follow guidelines preventing the use of Government funds for
proselytizing activities ....” The bill, it said, contained “constitutionally adequate
safeguards” for monitoring how public funds are used. Moreover, with respect to the
new provision in H.R. 7 authorizing social services programs to be converted to
voucher programs if deemed “feasible and efficient” by the Secretary of the
administering department, the report asserted that “[c]haritable choice programs
administered through the use of vouchers or certificates to individuals, who may then
choose to give them to nonreligious or religious organizations in return for services,
enjoy the widest constitutional berth”:
50 See S.Rept. 107-211 (July 16, 2002).

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So long as the initial beneficiaries have a choice about where to redeem the
vouchers or certificates, and a range of choices are available including religious
and nonreligious social service organizations, such programs do not violate the
First Amendment.51
With respect to employment discrimination, the committee report contended that
“one of the most important charitable choice principles is the guarantee of
institutional autonomy that allows faith-based organizations to select staff on a
religious basis .... This guaranteed ability is central to each organization’s freedom
to define its own mission according to the dictates of its faith.” That is the reason,
the report stated, that Congress wrote an exemption for religious organizations into
Title VII of the Civil Rights Act of 1964; and that exemption, it asserted, “is not
waived or forfeited when a religious organization receives Federal funding.”
“Staffing on a religious basis,” it said, does not constitute “invidious discrimination;
and constitutionally the exemption is a “permissible religious accommodation.”
Moreover, it stated, this exemption should apply “even when State or local laws
provide otherwise.” Both the autonomy provision and the provision stating that the
charitable choice rules apply to state funds that are commingled with federal funds,
the report stated, served to preempt state and local civil rights laws that would intrude
on the right of religious organizations to employ persons of their own faiths. The
report noted that under H.R. 7 the right is judicially enforceable.
Twelve Democrats filed “Dissenting Views” in the committee report stating that
“[w]e cannot support legislation which seeks to enlarge the role of religious
institutions by sanctioning government-funded discrimination and by breaking down
the historic separation between church and state.” Contending that the bill not only
allowed religious organizations to discriminate on the basis of a prospective
employee’s religion but also on the basis of “a failure to adhere to religious doctrine
(e.g., being pregnant and unmarried, being gay or lesbian)” and that it preempted
conflicting state and local nondiscrimination laws as well, the dissenters asserted that
“it is unacceptable for any group or entity to discriminate with taxpayer funds.”
Given that the federally funded services to be provided by such organizations must
be wholly secular under H.R. 7, they said, employment discrimination on the basis
of religion is simply unnecessary.
With respect to the separation of church and state, the dissenters contended that
the safeguards in the bill were inadequate. They noted that H.R. 7 provided no
funds to ensure that a beneficiary’s right to a secular alternative to a faith-based
service – “the most critical Establishment Clause safeguard included in the
legislation” – could be honored and said the requirement constituted “an unfunded
and unenforceable mandate.” They contended as well that the other “key religious
protections in the bill” – the ban on the use of government funds for sectarian
proselytization and the requirements that religious activity be separate from the
funded program and that participation in such activity be voluntary -- were “largely
left to self enforcement.” They questioned as well whether participation in such
programs by children or, perhaps, even drug addicts could ever be truly voluntary.
The dissenters further argued that the nondiscrimination provisions in the bill still
51 H.Rept. 107-38, Part I, supra,at 28.

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allowed religious organizations to discriminate not only on grounds of religion but
also on the grounds of “sex, pregnancy status, marital status, or sexual orientation.”
Moreover, they asserted, in indirectly funded programs the ban on religious
discrimination applied only to admissions and the requirements that religious
activities be separate and voluntary did not apply at all. The dissenters further
charged that the funding process contemplated by H.R. 7 would diminish religion’s
“independent voice of compassion,” support only those religious groups able to
muster sufficient lobbying power to obtain government grants, precipitate intense
religious competition for funds, and lead to government discrimination against
unpopular groups. Finally, the dissenters expressed “concern that H.R. 7 would fail
to pass constitutional muster.”
(ii) Rules Committee report. On July 17, 2001, the House Rules
Committee adopted a rule which provided that in lieu of the bill as reported by the
two committees, a substitute amendment sponsored by Rep. Sensenbrenner which
consolidated and reordered their recommendations would be deemed the pending bill
upon adoption of the rule.52 The rule also made in order a minority substitute
measure that proposed to (1) delete the Title VII exemption allowing religious
organizations to discriminate on grounds of religion in their employment practices,
(2) add a provision making clear that state and local civil rights laws remain
applicable to religious organizations receiving funds under charitable choice, (3) bar
religious activity from taking place at the same time and place as a government
funded program, (4) delete the provision allowing programs to be converted to
vouchers if deemed “feasible and efficient” by the Secretary of the pertinent
department, (5) eliminate the liability reform provisions regarding corporate
contributions of equipment and supplies to charitable organizations, and (6) provide
a revenue offset for the cost of the charitable giving tax incentives. Finally, the rule
made in order one motion to recommit.53
(iii) House floor debate. After some delay because of concerns raised by a
Washington Post article that disclosed an apparent agreement between the Salvation
Army and the Administration concerning the issuance of a regulation to preempt state
and local laws barring discrimination on the basis of sexual orientation in exchange
for support for H.R. 7,54 the House took up the measure on July 19, 2001, and
52 See H.Rept. 107-144, 107th Cong., 1st Sess. (July 17, 2001), accompanying H. Res. 196.
The Sensenbrenner substitute was printed in the Congressional Record on July 16 and again
on July 19. See 147 CONG.REC. H 4014-H4019 (daily ed. July 16, 2001) and H 4239-H
4243 (daily ed. July 19, 2001).
53 The Rules Committee refused to allow three other amendments to be offered – one to bar
religious groups receiving assistance from exempting themselves from state and local civil
rights laws (defeated 4-9), another to prohibit direct funding of pervasively sectarian
organizations (defeated 3-10), and a third to bar the tax provisions from taking effect if the
Director of OMB projects a deficit outside of the Social Security and Medicare Trust Funds
(defeated 3-10). See id. at 2.
54 Dana Milbank, Charity Cites Bush Help in Fight Against Hiring Gays, Washington Post,
July 10, 2001, at A1. Later that same day the White House Press Office issued a statement
saying “The White House will not pursue the OMB regulation proposed by the Salvation
(continued...)

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adopted the rule, 228-199. After several hours of vigorous debate, the House then
rejected the minority substitute described above, 168-231; rejected as well a motion
to recommit offered by Rep. Conyers (D.-Mich.) incorporating the first two
provisions of the rejected substitute which would have barred religious
discrimination in employment as well as the preemption of state and local
nondiscrimination statutes, 195-234; and adopted the bill, 233-198.55 Prior to the
vote on the minority substitute and in response to concerns raised during the debate
about the preemption of state and local civil rights laws, Rep. Watts (R.-Ok.) made
a commitment for himself and the other primary sponsor of H.R. 7, Rep. Hall (D.-
Oh.) to “more clearly address this issue in conference.”56
(iv) Senate Finance Committee version. In the Senate H.R. 7 was
referred to the Finance Committee. Because concerns about the civil rights and
constitutional implications of the bill seemed to threaten its viability, Senators
Lieberman (D.-Pa.) and Santorum (R.-Pa) initiated efforts to work out an acceptable
compromise with the Administration. On February 8, 2002, they introduced the
result of their efforts, S. 1924, the “CARE Act of 2002.”57 President Bush
immediately endorsed the bill and urged its adoption.58
Like H.R. 7, S. 1924 contained tax incentives for charitable giving (albeit more
generous ones) and modifications of the individual development account program.
But it did not have H.R. 7's limitations on corporate liability nor most of its charitable
choice provisions. With respect to the latter, Title III simply retained the provisions
barring government at all levels from requiring religious organizations participating
in publicly funded social services programs to remove religious art and icons from
their premises or to change the religious elements of their names or charter
documents; and it added a new prohibition barring government from requiring such
organizations to change or remove religious requirements for membership on their
governing boards. In addition, S. 1924
! mandated that nongovernmental organizations not be disadvantaged
in applying to participate in federally funded social services
programs simply because they had not previously participated (Title
III);
! authorized social services grants or cooperative agreements to be
awarded to intermediate organizations that could facilitate the
participation of small nongovernmental providers (Title III)
54 (...continued)
Army and reported today.”
55 For the full debate on the bill, see 147 CONG.REC. H 4222 - H 4281 (daily ed. July 19,
2001). For the votes, see id. at H 42778-78, H 4280-81, and H 4281, respectively.
56 Id. at H 4274 (statement of Mr. Watts of Oklahoma).
57 148 CONG. REC. S 546 (daily ed. February 8, 2002). The full title of the bill is the
“Charity Aid, Recovery, and Empowerment Act of 2002.”
58 See n. 17.

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! directed the IRS to adopt expedited procedures for acting on
applications for tax-exempt status by social services providers (the
EZ Pass system) (Title IV);
! authorized $150 million for a “Compassion Capital Fund” to enable
several federal departments to provide technical and programmatic
assistance to small community-based social services providers (Title
V);
! restored funding for the Social Services Block Grant program
established under Title XX of the Social Security Act (Title VI); and
! authorized funding for a new program to support maternity group
homes (Title VII).
S. 1924 was also referred to the Senate Finance Committee.
In two markup sessions in June on H.R. 7 and two tax bills, the Finance
Committee incorporated a number of elements of S. 1924; and on July 16, 2002, it
reported out its revised version of H.R. 7.59 Also entitled the “CARE Act of 2002,”
the Committee’s version of H.R. 7 contained a number of incentives for charitable
giving, modified the individual development account program, restored funding for
the Social Services Block Grant program, and included a variety of other tax
initiatives. But it had none of the charitable choice provisions of the House-passed
measure and none of the narrower counterpart provisions from Title III of S. 1924.
It also did not have an authorization for a Compassion Capital Fund, as contemplated
by Title V of S. 1924.
Subsequently, Senators Santorum and Lieberman led efforts to work out a
unanimous consent agreement that would allow H.R. 7 to be taken up and several
charitable choice-related proposals – including Titles III and V of S. 1924 as well as
a proposal to bar subsidized providers from discriminating on religious grounds in
their employment practices – to be offered as amendments. On October 14, 2002,
Rep. Watts (R.-Ok.), one of the main House sponsors of H.R. 7 and a proponent of
charitable choice, announced that he would accept the Santorum-Lieberman
compromise if the Senate passed it; and that appeared to be the position of the
Administration as well. But in the end no unanimous consent agreement could be
worked out, and the 107th Congress came to an end without any further action on
H.R. 7 or S. 1924.
(b) Re-authorization of welfare reform. The welfare reform measure that
Congress enacted in 1996 was due for re-authorization in 2002. Charitable choice
was part of that 1996 enactment and, consequently, the possibility existed that the
107th Congress might choose to revisit the issue in the course of revising and re-
authorizing the program. Congress did not need to do so, because the existing
charitable choice rules would continue to apply to the re-authorized program; but it
could have. In the end the House passed a re-authorization measure, and the Senate
Finance Committee reported its own version. But the 107th Congress did not
complete action on these bills and deferred further action until after the 108th
Congress convened in January. Neither the bill passed by the House (H.R. 4737) or
59 See S.Rept. 107-211 (July 16, 2002).

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the one reported by the Senate Finance Committee evidenced any intent to revisit or
modify the charitable choice provisions enacted in 1996.
The House-passed version of H.R. 4737 did contain two pertinent provisions.
Section 103(b) would have authorized a new grant program to promote healthy
marriages which would be subject to the existing charitable choice rules; and
§112(a)(1)(B) directed the states to include in their state plans a description of the
“strategies and programs the State is undertaking” to implement the charitable choice
provisions of the 1996 statute.
The version of H.R. 4737 reported by the Senate Finance Committee on July 25,
2002, also would have authorized a new grant program to promote healthy marriages
(section 301) as well as a program of “Second Chance Homes” to help young
mothers learn parenting skills in a group home setting (section 305). These
programs, if enacted, would also have been subject to the existing charitable choice
rules.60
In lieu of further action on these re-authorization measures, Congress included
in the final continuing resolution for the session a provision extending the existing
welfare program until January 11, 2003.61
(c) Other measures. Another measure in the 107th Congress that once
contained charitable choice provisions was S. 304, the “Drug Abuse Education,
Prevention, and Treatment Act of 2001.” As introduced on February 13, 2001, by
Senators Hatch (R.-Ut.) and Leahy (D.-Vt.) and four co-sponsors, the bill would have
extended charitable choice rules to a number of new programs, such as jail-based
substance abuse programs, residential treatment programs for juveniles, programs to
prevent delinquency through character education, and programs to help the children
of prisoners. But in reporting the measure to the Senate on November 29, 2001, the
Senate Judiciary Committee by voice vote approved a substitute measure that did not
contain the charitable choice provisions. (The committee did not issue a report.) The
measure remained pending on the Senate calendar when Congress adjourned.
In addition, it might be noted that, as introduced, Title V of H.R. 1, the “No
Child Left Behind Act of 2001,” would have applied a charitable choice provision
to drug and violence prevention programs and before- and after-school programs for
school-age youth. But that provision was not included in the bill as reported62 or as
60 It might be noted that both measures would also have authorized a new program to
promote fatherhood. But neither version of the program appears to have been made subject
to charitable choice.
61 P.L. 107-294 (Nov. 23, 2002), extending § 114 of P.L. 107-229 (Sept. 30, 2002) to
January 11, 2003. Early in the 108th Congress the program was further extended to June 30,
2003. See P.L. 108-2 (Jan. 10, 2003) (extending the date to January 31, 2003); P.L. 108-4
(Jan. 31, 2003) (extending the date to February 7, 2003); P.L. 108-5 (Feb. 7, 2003)
(extending the date to Feb. 20, 2003); and P.L. 108-7, Division N, Title IV (Feb. 20, 2003)
(extending the date to June 30, 2003).
62 H.Rept. 107-63, Part I (May 14, 2001)).

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CRS-24
adopted by the House.63 Nor was charitable choice part of the counterpart measure
adopted by the Senate re-authorizing the Elementary and Secondary Education Act
(S. 1, the “Better Education for Teachers and Students Act).64 As a consequence, no
charitable choice provisions were included in the measure as signed into law by
President Bush on January 8, 2002 (although religious organizations are eligible to
participate in providing after-school services authorized under the Act).65
(7) What Did the House-Passed Version of Title II of H.R. 7
Provide and How Did It Differ from Previous Charitable
Choice Statutes?
The charitable choice title of H.R. 7, as approved by the Judiciary Committee
and by the House, was a more elaborate version of what had previously been enacted
and would not only have extended charitable choice to most of the federal
government’s social services programs but also allowed administrators to
“voucherize” the programs if they deemed it “feasible and efficient” to do so. Title
II contained a more expansive purposes section than prior enactments stating that the
Act is intended not only to prohibit discrimination against religious organizations on
the basis of their religious character and to protect the religious freedom of
beneficiaries but also to provide assistance to individuals and families “in the most
effective and efficient manner” and to facilitate the entry of religious and other
community organizations in the administration and distribution of government
assistance. In addition, with the provisions that differ from the previously enacted
charitable choice statutes highlighted in italics, Title II of H.R. 7 would have:
(a) extended charitable choice rules to federally funded activities in nine
program areas – (1) the prevention and treatment of juvenile delinquency and the
improvement of the juvenile justice system; (2) the prevention of crime and assistance
to crime victims; (3) the provision of assistance under the federal housing statutes; (4)
workforce investment under subtitles B or D of title I of the Workforce Investment Act
of 199866; (5) the Older Americans Act of 196567; (6) intervention in and prevention
of domestic violence; (7) hunger relief; (8) the Job Access and Reverse Commute grant
program68; and (9) after-school and GED programs.
(b) stated that funds received by religious organizations are to be deemed aid to
individuals and families and not to religion, and are not to be deemed “an
endorsement by the government of religion or of the organization’s religious beliefs
or practices”;
(c) barred government from discriminating against religious organizations that
seek to provide federally funded services because of their religious character;
d) specified that a religious organization providing assistance “retain[s] its
autonomy from Federal, State, and local governments”;
63 147 CONG. REC. H 2421- H 2516 (daily ed. May 22, 2001).
64 147 CONG. REC. S 6305 (daily ed. June 14, 2001).
65 P.L. 107-110 (January 8, 2002); 115 Stat. 1425.
66 29 U.S.C.A. 2801 et seq.
67 42 U.S.C.A. 3001 et seq.
68 49 U.S.C.A. 5309 note.

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(e) barred government from requiring religious organizations, as a condition of
eligibility, to change their form of internal governance or to remove religious symbols
or, in new prohibitions, to change “provisions in [their] charter documents” or “to
change [their] name[s]”;
(f) made clear that the Title VII exemption allowing religious organizations to
discriminate on religious grounds in their employment practices is not affected by their
receipt of federal funds;
(g) provided that the Title VII exemption and the provisions of charitable choice
generally override any contrary mandates in the programs to which charitable choice
is extended by the bill;
(h) stated explicitly that religious organizations receiving federal financial
assistance pursuant to H.R. 7 must still comply with the nondiscrimination
requirements of Title VI of the Civil Rights Act of 1964,69 Title IX of the Education
Amendments of 1972,70 section 504 of the Rehabilitation Act of 1973,71 and the Age
Discrimination Act of 197572;
(i) barred discrimination against beneficiaries generally “on the basis of religion,
a religious belief, or a refusal to hold a religious belief” but, in a new distinction,
limited this nondiscrimination mandate only to admissions in programs funded by
vouchers;
(j) required that beneficiaries that object to the religious character of a provider
be afforded an alternative provider of equal value which, in modified language, is
“unobjectionable to the individual on religious grounds”;
(k) required that government ensure that notice is given to beneficiaries of their
right to an alternative provider;
(l) required that the programs be implemented in a manner that is consistent with
the establishment clause and, as is also provided by one of the existing charitable
choice statutes, the free exercise clause;
(m) barred the use of funds provided directly (but not funds provided indirectly)
to a religious organization for “sectarian instruction, worship, or proselytization”;
(n) required that religious activities offered by a religious organization receiving
direct funding be “separate from the program funded under this subpart” and
“voluntary for the individuals receiving services,” and mandate that religious
organizations certify that they will abide by these requirements;
(o) allowed assistance under all of the programs to which the charitable choice
provisions of Title VII would apply to be distributed in the form of vouchers or
certificates, if the Secretary of the administering department determines that to be
“feasible and efficient”;
(p) given the states a choice of commingling their own funds with the federal
funds in the pertinent program or of keeping them separate but require that charitable
choice rules apply to all commingled funds;
(q) required that religious organizations providing assistance be subject to the
same regulations as other nongovernmental organizations and that their use of funds
be subject to audit by the government, but allow, and in the case of direct assistance
require, that public funds be kept in a separate account and that any audit be limited
to that account;
69 42 U.S.C.A. 2000d et seq. (barring discrimination on the bases of race, color, or national
origin).
70 20 U.S.C.A. 1681 et seq. (barring discrimination on the basis of gender in federally
assisted education programs).
71 29 U.S.C.A. 794 (barring discrimination on the basis of handicap).
72 42 U.S.C.A. 6101 et seq. (barring discrimination on the basis of age).

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(r) required organizations providing services to conduct an annual self-audit;
(s) in a provision that was also in one of the drug abuse charitable choice
statutes, imposed on nongovernmental entities that make subgrants the same
charitable choice obligations imposed on government and, if such entities are
religious in nature, extended to them the same rights otherwise afforded religious
organizations;
(t) allowed parties who believe their rights have been violated to bring suit in
state and federal courts for injunctive relief, but in contrast to existing charitable
choice statutes, allowed suits only against the federal, state, or local governments and
not against the service providers; and
(u) authorized $50 million to provide training and technical assistance to small
nongovernmental organizations “in procedures relating to potential application and
participation” in the pertinent programs, including assistance in setting up a 501(c)(3)
organization, in applying for grants, and in complying with the federal
nondiscrimination mandates.
As noted, the version of H.R. 7 reported by the Senate Finance Committee on
July 16, 2002, did not contain any of the foregoing provisions. (For a summary of
the more modest provisions of S. 1924, see the preceding question.)
(8) What Is the Legal Framework for the Civil Rights
Concerns That Have Been Raised About Charitable Choice?
Several civil rights concerns have been raised in the debates on charitable
choice. The primary one has been whether the religious exemption in Title VII of the
Civil Rights Act of 1964, which allows religious organizations to discriminate on
religious grounds in their employment practices, should apply to religious
organizations that receive public funds under the rubric of charitable choice.
President Bush’s December 12 executive order raised a related issue by exempting
religious organizations that contract to provide goods and services to the federal
government or that participate in federally financed construction contracts from the
religious nondiscrimination in employment provisions of Executive Order 11246.
There has also been some concern over the protections from discrimination afforded
beneficiaries by charitable choice and, in an issue that only became apparent in the
debates on H.R. 7, on whether charitable choice should preempt state and local civil
rights laws that go beyond federal nondiscrimination requirements and bar
employment discrimination on such bases as sexual orientation and marital status.
These issues arise in the context of a complex panoply of civil rights mandates
and exemptions that already exist. The following subsections explicate charitable
choice with respect to (1) existing mandates barring discrimination in programs and
activities that receive federal financial assistance, (2) existing regulatory mandates
barring discrimination in employment practices, particularly Title VII of the Civil
Rights Act of 1964; and (3) the preemption of state and local nondiscrimination laws
that go beyond federal law. A final subsection discusses the employment
nondiscrimination requirements of Executive Order 11246 and the President’s
exemption of religious organizations from the religious nondiscrimination
requirement of that Order. The question of the constitutionality of public aid going
to organizations which discriminate on religious grounds in their employment
practices is discussed in question 9.

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CRS-27
(a) Nondiscrimination in federally assisted programs. Federal law
imposes a number of civil rights obligations on the provision of services in programs
and activities that receive federal financial assistance:
! Title VI of the Civil Rights Act of 1964 bars discrimination on the
bases of race, color, or national origin.73
! Title IX of the Education Amendments of 1972 bars discrimination
on the basis of sex and on the basis of blindness (in admissions) in
education programs.74
! Section 504 of the Rehabilitation Act of 1973 bars discrimination on
the basis of handicap.75
! The Age Discrimination Act of 1975 bars discrimination on the
basis of age.76
All of these prohibitions on discrimination are triggered by the receipt of federal
funds, but most of them apply only to the delivery of services and not to the
employment practices of the entities that receive federal funds. The applicability of
these statutes to federally financed programs and activities is not altered by charitable
choice.77
In contrast, there is no comparable federal statute that generally bars religious
discrimination in federally funded programs and activities. Individual programs
sometimes contain such a prohibition,78 but there is no general statutory prohibition.
Nonetheless, charitable choice has, since its inception as part of the welfare
reform measure in 1996, included provisions that bar religious organizations from
discriminating against beneficiaries on religious grounds and that require government
to make an alternate provider available to any beneficiary who objects to the religious
character of a given provider. But there have been some distinctions in the types of
religious discrimination that are prohibited, and the House-passed version of H.R. 7
drew a new distinction based on whether the religious organization receives funding
directly or indirectly. With respect to indirect assistance, H.R. 7 would have barred
religious discrimination against individuals only in admissions.
73 42 U.S.C.A. 2000d et seq.
74 20 U.S.C.A. 1681 et seq.
75 29 U.S.C.A. 794.
76 42 U.S.C.A. 6101 et seq.
77 Because H.R. 7 contained a provision stating that any funds received under the rubric of
charitable choice “constitute[] aid to individuals and families in need” and not aid to the
organization, there was some concern in the House about whether Title VI, Title IX, Section
504, and the Age Discrimination Act would be applicable. Consequently, an amendment
was agreed to in the committee markup and retained in the House-passed bill referencing
these statutes and clarifying that “nothing in this section” affects their applicability.
78 See, e.g., the nondiscrimination prohibition attached to the Head Start program at 42
U.S.C.A. 9849(a).

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All of the existing charitable choice statutes (as well as H.R. 7) bar a religious
organization that receives assistance from discriminating against beneficiaries on the
basis of “religion” or “a religious belief.” Three of the four statutes also bar such
discrimination on the basis of a “refusal to actively participate in a religious
practice.” But H.R. 7 and one of the substance abuse statutes do not include this
latter prohibition (although H.R. 7's requirement that participation in a religious
activity must be voluntary is arguably equivalent). Moreover, H.R. 7 and the other
drug abuse statute also bar discrimination on the basis of “a refusal to hold a religious
belief.” Finally, H.R. 7 as passed by the House would have applied its religious
nondiscrimination mandates to all aspects of programs that are directly funded but
only to admissions in programs that are indirectly funded. Given that H.R. 7 also
would have allowed the Secretaries of the appropriate department to convert the
programs to which the charitable choice provisions would be applied to vouchers if
they find it to be “feasible and efficient,” this distinction might have been very
significant.
(b) Nondiscrimination in employment. Federal statutes impose a number
of employment nondiscrimination requirements on public and private employers, and
generally these are not dependent on whether or not the entity receives federal
financial assistance, i.e., they are regulatory requirements that apply regardless of
whether an entity receives federal assistance. With the exception of Title IX, none
of the nondiscrimination statutes described in the previous subsection applies to the
employment practices of entities that receive federal funds (unless a primary
objective of the federally funded program is to provide employment). But most
public and private employers that employ more than a specified number of employees
are barred by the Americans with Disabilities Act from discriminating in their
employment practices on the basis of disability,79 by the Age Discrimination in
Employment Act on the basis of age,80 and by Title VII of the Civil Rights Act of
1964 on the bases of race, color, national origin, sex, and religion.81
A number of these statutes contain special provisions with respect to the
employment practices of religious institutions. Religious educational institutions are
exempt from the sex nondiscrimination requirement of Title IX, for instance, if “the
application of this subsection would not be consistent with the religious tenets of
such organization.”82 The Americans with Disabilities Act, while barring religious
organizations from discriminating on the basis of disability in employment,
specifically provides that they may still give preference in their employment practices
on the basis of religion and may require their employees to conform to their religious
tenets.83 Most important, Title VII specifically exempts religious employers from its
ban on religious discrimination in employment.
79 42 U.S.C.A. 12201 et seq.
80 29 U.S.C.A. 621 et seq.
81 42 U.S.C.A. 2000e et seq.
82 20 U.S.C.A. 1681(a)(3).
83 42 U.S.C.A. 12113(c).

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Title VII and the religious exemption. It is the Title VII exemption that
has generated the most extensive debate in the discussion of charitable choice,
because all of the charitable choice statutes and proposals so far, including the
House-passed version of H.R. 7, have explicitly provided that the Title VII
exemption “shall not be affected by the religious organization’s provision of
assistance under, or receipt of funds from, a program described in ....”84 (Neither the
Senate Finance Committee version of H.R. 7 nor S. 1924, it should be noted,
contained such a provision.)

Title VII bars most public and private employers with 15 or more employees
from discriminating in their employment practices on the bases of race, color,
national origin, sex, and religion. This threshold requirement of 15 employees
means that many churches, synagogues, and other congregational entities, as well as
small religious social services providers, are not large enough to be covered by any
of the nondiscrimination mandates of Title VII. But Section 702 of Title VII
specifically exempts those religious employers that are large enough to be covered
from its prohibition on religious discrimination, as follows:
This title shall not apply ... to a religious corporation, association, educational
institution, or society with respect to the employment of individuals of a
particular religion to perform work connected with the carrying on by such
corporation, association, educational institution, or society of its activities.85
Thus, religious organizations otherwise covered by Title VII may use religion as a
criterion in their hiring, firing, promotion, and other employment practices; and they
may do so not only with respect to employees engaged in religious activities but also
those engaged in purely secular activities. This exemption has been unanimously
upheld as constitutional by the Supreme Court with respect to the nonprofit activities
84 Title II of H.R. 7 as introduced included as well a provision that would have allowed
religious entities receiving public funds to require their employees to adhere to their
“religious practices.” Given the broad construction that has been given the Title VII
exemption, that provision likely added nothing to the Title VII exemption. But in any event,
the provision was not part of the manager’s substitute for Title II proposed at the beginning
of the markup of H.R. 7 by the House Judiciary Committee and was not part of the bill as
approved by the committee or by the House.
85 42 U.S.C.A. 2000e-1. Title VII also contains two other exemptions, now largely
redundant, allowing religious employers to discriminate on religious grounds. The first
allows educational institutions that are religiously controlled or that are “directed toward the
propagation of a particular religion” to discriminate on religious grounds in their
employment practices. The second allows all employers, not just religious organizations,
to use religion, sex, or national origin as a criterion in their employment practices if religion,
sex, or national origin “is a bona fide occupational qualification reasonably necessary to the
normal operation of that particular business or enterprise.” See 42 U.S.C.A. 2000e-2(e).

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of religious organizations86 and has been applied to allow a wide variety of religious
entities to discriminate on religious grounds in a wide variety of circumstances.87
As noted, Title VII is a regulatory statute. Nothing in its language generally or
in the religious exemption provision (§ 702) suggests that either is limited to
situations in which an employer does not receive public funds. The case in which the
Supreme Court upheld § 702 as constitutional did not involve any public funding,88
but several lower federal courts have held the exemption to be applicable to religious
organizations receiving public funds.89 Nonetheless, apparently to eliminate any
possible misunderstanding, all four charitable choice statutes as well as Title II of
H.R. 7 have stated explicitly that the religious exemption in Title VII is not lost
simply because a religious employer receives public funds. That, in turn, has
generated vigorous opposition from those who believe government should not
subsidize such discrimination.
86 Corporation of the Presiding Bishop of Church of Jesus Christ of Latter-Day Saints v.
Amos, 483 U.S. 327 (1987). The Court offered no comment with respect to the
constitutionality of the exemption as it might be applied to any profit-making activities of
religious organizations.
87 See, e.g., Corporation of the Presiding Bishop v. Amos, supra (church fired a building
engineer employed in a church-owned gymnasium open to the public because he failed to
qualify for a “temple recommend”); Little v. Wuerl, 929 F.2d 944 (3d Cir. 1991) (Catholic
school fired a teacher who had remarried without first seeking an annulment of her first
marriage in accord with Catholic doctrine); Porth v. Roman Catholic Diocese of Kalamazoo,
209 Mich.App. 630, 532 N.W.2d 195 (Mich. App. 1995) (Catholic school refused to renew
the contract of a Protestant teacher after it had decided to hire only Catholics as faculty
members); Walker v. First Orthodox Presbyterian Church, 22 FEP Cases 761 (Cal. 1980)
(church fired its organist on the grounds his homosexuality conflicted with the church’s
beliefs); Boyd v. Harding Academy of Memphis, Inc., 88 F.3d 410 (6th Cir. 1996) (Christian
school fired an unmarried female teacher after she became pregnant because of its beliefs
opposing extramarital sex); Maguire v. Marquette University, 814 F.2d 1213 (7th Cir. 1987)
(Catholic university refused to hire a female professor because her views on abortion were
not in accord with Catholic doctrine); EEOC v. Presbyterian Ministries, Inc., 788 F.Supp.
1154 (W.D. Wash. 1992) (a Christian retirement home fired a Muslim receptionist because
she insisted on wearing a head covering as required by her faith); Piatti v. Jewish
Community Centers of Greater Boston, Mass. LEXIS 733 (1993) (a Jewish community
center refused to hire a Catholic as a youth director); Feldstein v. Christian Science Monitor,
555 F.Supp. 974 (D. Mass. 1983) (a newspaper owned by the Christian Scientist Church
refused to hire applicants of other faiths); and Hall v. Baptist Memorial Health Care
Corporation, 215 F.3d 618 (6th Cir. 2000) (a Baptist health care corporation fired an
employee because she had assumed a leadership role in a church that welcomed and
supported gay and lesbian individuals).
88 Corporation of the Presiding Bishop of the Church of Jesus Christ of Latter-Day Saints,
supra, n. 86.
89 See, e.g., Hall v. Baptist Memorial Health Care Corporation, supra, n. 10 (student
assistance); Siegel v. Truett-McConnell College, supra, n. 11 (student assistance); Young
v. Shawnee Mission Medical Center, Civ. No. 88-2321-S (D. Kan., decided Oct. 21, 1988)
(Medicare payments); Dodge v. Salvation Army, 1989 U.S.Dist.LEXIS 4797, 48 Empl. Prac.
Dec. (CCH) P38,619 (S.D. Miss. 1989) (unspecified public funding of a Victims Assistance
Coordinator position).

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Religious organizations that meet the minimum size requirement of Title VII
(i.e. 15 or more employees) are not exempt from the other employment
nondiscrimination requirements of Title VII regarding race, color, national origin,
and sex; and charitable choice does not alter, or propose to alter, the applicability of
these requirements. Thus, religious organizations have in a number of instances been
held liable under Title VII for discrimination on the bases of race, sex, or national
origin.90 It can sometimes be a close question, however, whether the alleged
discrimination by a religious employer is based on religion or one of the prohibited
bases of discrimination.91
Ministerial exception. It should be noted that the Title VII exemption
overlaps to some degree with a constitutionally-based employment discrimination
exemption for religious organizations that has been labeled the “ministerial
exception.” This exception exempts religious organizations from all statutory
prohibitions on discrimination with respect to the employment of ministers and other
ecclesiastical personnel. The free exercise of religion clause of the First Amendment,
it has been held, bars the government from interfering in any way with the
relationship between a religious institution and its ministers. The ministerial
exception has been held to apply to the employment of ministers (including youth
ministers, probationary ministers, and ministers of music), seminary faculty, and
hospital chaplains.92 It has been held not to apply, however, with respect to the
90 See, e.g., EEOC v. Pacific Press Publishing House, 676 F.2d 1272 (9th Cir. 1982)
(publishing house had fired a female employee after she complained that she had been
denied monetary allowances paid to similarly situation male employees); EEOC v. Lutheran
Family Services in the Carolinas, 884 F.Supp. 1033 (E.D. N.C. 1994) (a religious social
services provider had refused to give a pregnant employee a leave of absence but gave
extended leaves of absence to male employees for a variety of reasons); and EEOC v.
Southwestern Baptist Theological Seminary, 651 F.2d 277 (5th Cir. 1981), cert. den., 456
U.S. 905 (1982) (seminary held to be subject to filing information reports on its employment
practices with respect to staff in its non-academic departments).
91 In several cases the courts have refused to grant summary judgment in favor of Christian
schools that had each fired an unmarried female teacher who had become pregnant, saying
that if the dismissals were due to the teachers’ adultery the Title VII religious exemption
would apply but that dismissal for pregnancy alone would constitute forbidden sex
discrimination. See Vigars v. Valley Christian Center of Dublin, Cal., 805 F.Supp. 802
(N.D. Cal. 1992); Ganzy v. Allen Christian School, 995 F.Supp. 340 (E.D. N.Y. 1998); and
Cline v. Catholic Diocese of Toledo, 199 F.3d 853 (6th Cir. 1999).
92 See McClure v. Salvation Army, 460 F.2d 553 (5th Cir.), cert. den., 409 U.S. 896 (1972)
(firing of a female officer in the Salvation Army after she claimed she was given a lower
salary and fewer benefits than male officers held to be within the scope of the ministerial
exemption); Bryce v. Episcopal Church in the Diocese of Colorado, 121 F.Supp.2d 1327
(firing of youth minister by her church after she participated in a commitment ceremony
with her partner held to be a constitutionally exempt act); Young v. Northern Illinois
Conference of the United Methodist Church, 21 F.3d 184 (7th Cir. 1994), cert. den., 513 U.S.
929 (1994) (conference of churches’ refusal to change the probationary status of an African-
American minister held to be constitutionally exempt);EEOC v. The Roman Catholic
Diocese of Raleigh, N.C., 213 F.3d 795 (4th Cir.), cert. den., 69 U.S.L.W. 3206 (2000)
(church fired its minister of music);EEOC v. Southwestern Baptist Theological Seminary,
supra (seminary’s criteria for its faculty held to be constitutionally exempt from monitoring
(continued...)

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employment by religious organizations of persons who are not engaged in a religious
ministry or in the training of persons for such ministries, such as the administrative
and support staff in religious institutions.93 Because the ministerial exemption is
constitutionally based, it is not modified by charitable choice in any way.
Thus, under the Title VII exemption a religious organization can discriminate
on religious grounds with respect to all of its employees; but if it meets the minimum
size requirement, it is otherwise subject to the statute’s employment
nondiscrimination mandates. With respect to the employment of its spiritual leaders,
however, a religious organization, pursuant to the ministerial exception, is
unconstrained by any nondiscrimination requirement
(c) Preemption of state and local civil rights laws. An issue that
received only slight attention in previous debates on charitable choice gained
substantial visibility during House consideration of H.R. 7. That issue concerns the
preemptive effect of charitable choice on state and local civil rights laws that bar
forms of discrimination that are not barred by federal law, such as discrimination
based on sexual orientation or marital status. All of the charitable choice statutes that
have been enacted, as well as Title II of H.R. 7, provide that a religious organization
that is a program participant “shall retain its independence from Federal, State, and
local government, including such organization’s control over the definition,
development, practice, and expression of its religious beliefs.” But prior to the
House debate on H.R. 7, there had been no legislative history explicating the
meaning of this provision. Similarly, all of the charitable choice statutes and
proposals have barred government from requiring that a religious provider “alter its
form of internal governance” and, as noted above, have explicitly provided that a
religious organization’s exemption under Title VII “shall not be affected by its
participation in, or receipt of funds from, a designated program.” But with the
exception of a provision added to the charitable choice statute concerning substance
abuse programs,94 little attention has been paid to whether these provisions might
have a preemptive effect on state and local civil rights laws.
The House debate on H.R. 7 seemed to make clear that these provisions, and
particularly the first one concerning the independence of religious organizations, are
intended to preempt state and local civil rights laws. The report of the House
Judiciary Committee stated:
92 (...continued)
and examination by the EEOC); and Sharon v. St. Luke’s Presbyterian School of Theology,
713 N.E.2d 334 (Ind. Ct. App., 1st Dist., 1999) (firing of a chaplain by a religiously affiliated
hospital held to be constitutionally protected).
93 See, e.g., EEOC v. Southwestern Baptist Theological Seminary, supra (administrative and
support staff in a seminary) and EEOC v. Pacific Press Publishing Association, 676 F.2d
1272 (9th Cir. 1982) (editorial support staff in a religious publishing house).
94 P.L. 106-554,which added charitable choice provisions to Title V of the Public Health
Services Act, prefaced the Title VII exemption language with the following sentence:
“Nothing in this section shall be construed to modify or affect the provisions of any other
Federal or State law or regulation that relates to discrimination in employment.”

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Because H.R. 7 expands charitable choice principles to cover many new Federal
programs, one uniform rule should apply to all programs and allow religious
organizations to retain their autonomy over the definition, development, practice,
and expression of their religious beliefs, including through hiring staff. This is
so even when State or local laws provide otherwise .... Wherever federal funds
go, this statutory right of religious organizations to staff on a religious basis
should follow ....95
The report similarly made clear that if state and local funds are commingled with
federal funds in an applicable program, state and local civil rights laws will not apply
to those funds.96
Under the supremacy clause of the Constitution,97 it seems clear that Congress
has the power to preempt state and local laws pursuant to charitable choice. What
has been the subject of debate has been the desirability of doing so in this case. It
might be noted, however, that Executive Order 13279 issued by President Bush on
December 12, 2003, directs federal departments and agencies to implement a similar
policy regarding the independence of religious entities from state and local laws in
their social services programs.
(d) The December 12 modification of Executive Order 11246.
Executive Order 11246, in effect since 1965,98 requires that all federal procurement
contracts (Part II) and federally assisted construction contracts (Part III) include
clauses barring contractors and subcontractors from discriminating in their
employment practices on the bases of race, color, religion, sex,99 or national origin
and requiring them to take affirmative action to promote equal employment
opportunity. Section 202 of the Order provides in part as follows:
During the performance of this contract, the contractor agrees as follows: (1) The
contractor will not discriminate against any employee or applicant for
95 H.Rept. 107-138, Part I, supra, at 37.
96 Id. at 38. During the markup of the bill, Rep. Sensenbrenner responded to a question from
Rep. Frank about the preemptive effect of the measure on state and local laws by stating that
“Federal law applies where Federal funds go, and State law does not apply.” Id. at 176. The
committee also rejected an amendment by Rep. Frank to bar religious organizations
receiving assistance from discriminating against any individual “on any basis prohibited
under applicable Federal, State, or local law ....” Id. at 249-254. It rejected as well an
amendment by Rep. Jackson-Lee specifying that religious organizations receiving assistance
would not be exempt from state and local laws. Id. at 258-266. Floor debate during House
consideration of H.R. 7 also made clear the preemptive effect of the bill on state and local
laws.
97 U.S. Constitution, Art. VI, cl. 2: “This Constitution, and the Laws of the United States
which shall be made in Pursuance thereof ... shall be the supreme Law of the Land.”
98 30 Fed. Reg. 12319 (Sept. 25, 1965). As amended, it can be found in the U.S. Code
following 42 U.S.C.A. 2000e.
99 E.O. 11246 did not initially include “sex” among the prohibited grounds of discrimination.
That was added two years later by E.O. 11376 (32 Fed. Reg. 14303 (Oct. 13, 1967)). A
subsequent amendment also consolidated enforcement functions in the Department of Labor.
See E.O. 12086, 43 Fed. Reg. 46501 (Oct. 10, 1978).

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employment because of race, color, religion, sex, or national origin. The
contractor will take affirmative action to ensure that applicants are employed,
and that employees are treated during employment, without regard to their race,
color, religion, sex, or national origin ....
Section 301, in turn, requires that the same provisions be included in all federally
assisted construction contracts.
On December 12, 2002, President Bush issued Executive Order 13279.100 That
Order, inter alia, amends E.O. 11246 with respect to the prohibition on religious
discrimination as it applies to religious organizations. The amendment adds the
following language to E.O. 11246:
Section 202 of this Order shall not apply to a Government contractor or
subcontractor that is a religious corporation, association, educational institution,
or society, with respect to the employment of individuals of a particular religion
to perform work connected with the carrying on by such corporation, association,
educational institution, or society of its activities. Such contractors and
subcontractors are not exempted or excused from complying with the other
requirements contained in this Order.101
E.O. 13279 states that the amendment is “to further the strong Federal interest in
ensuring that the cost and progress of Federal procurement contracts are not
adversely affected by an artificial restriction of the labor pool caused by an
unwarranted exclusion of faith-based organizations from such contracts.”102
The amendment tracks word-for-word the exemption afforded religious entities
from the religious nondiscrimination requirement of Title VII of the Civil Rights Act
of 1964.103 Thus, like the Title VII exemption, the exemption it affords covered
religious entities is broad: It applies to all of the activities of the organizations
regardless of whether an employee’s functions are secular or religious. But the
amendment does not affect the obligation of covered religious entities to comply with
the other requirements of the executive order regarding employment
nondiscrimination on the bases of race, color, sex, and national origin; nor does it
affect the obligation of covered nonreligious entities with respect to religious
discrimination.
To the extent the amendment modifies Part II of E.O. 11246, it seems doubtful
that it has substantial significance for religious organizations. Part II in itself is not
applicable to the federal grant and cooperative agreement programs subsidizing the
provision of social services that have been the primary focus of debate about
charitable choice and religious discrimination by faith-based organizations. Part II
concerns federal procurement contracts, i.e., contracts for the provision of goods and
services directly to the federal government. Such contracts can range from food
100 67 Fed. Reg. 77141 (Dec. 16, 2002).
101 Id. at 77143.
102 Id.
103 42 U.S.C. 2000e-1.

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services to office supplies to bombers and can, obviously, involve substantial sums
of money. But it is not at all clear that religious organizations have historically
played a significant role in such federal procurement contracts.
However, the amendment also appears to apply to Part III of E.O. 11246, i.e.,
to federally assisted construction contracts. Part III 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”;
and its coverage includes construction contracts that are incident to carrying out a
federal “grant, contract, loan, insurance, or guarantee” program. Thus, Part III
reaches beyond the federal procurement contracts addressed by Part II and applies to
the construction aspects of federal grant programs such as, for example, those of the
Department of Housing and Urban Development. Because religious organizations
have historically been extensively involved in federally assisted housing and
community development programs, and because other federally assisted social
services programs in which faith-based organizations participate may incidentally
involve construction or renovation activities, the amendment to this part of E.O.
11246 likely has greater significance for such organizations.
(9) Does Charitable Choice Violate the Establishment of
Religion Clause of the First Amendment?
As noted in question 1, the charitable choice statutes and Title II of H.R. 7 in the
107th Congress contain a number of provisions that seem intended to ensure their
constitutionality. All of these measures require that they be implemented “consistent
with the Establishment Clause of the United States Constitution.” All require that
public funds that are disbursed directly to religious organizations not be used for
purposes of religious worship, instruction, or proselytization. All have provisions to
protect those who receive services from religious organizations from religious
discrimination. All require equal treatment, but not preferential treatment, for
religious organizations seeking to participate in government social services programs.
Title II of H.R. 7, although not the charitable choice statutes previously enacted into
law, also would have required that any religious activity offered by a religious
organization be separate from the program that receives direct federal assistance and
that participation in any religious activity that is directly funded be voluntary for the
individuals receiving services.
On the other hand, all of the statutes as well as H.R. 7 also allow religious
organizations that receive public funds to discriminate on religious grounds with
respect to their employees, to display religious symbols on the premises where
services are provided, and to practice and express their religious beliefs independent
of any government restrictions. None of them, moreover, require the publicly funded
program to be separately incorporated from its sponsoring religious organization. In
addition, the measures allow religious organizations that receive public funds
indirectly, i.e., by means of vouchers, to engage in religious worship, instruction, and
proselytization in the funded program and to impose religious requirements on
beneficiaries after they are once admitted to a program. Finally, all of the charitable
choice initiatives seem premised on the assumption that charitable choice will in
some manner allow religious organizations to employ their faiths in carrying out the

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publicly funded programs, regardless of whether they are directly or indirectly
funded.
As a consequence, questions have been raised about whether charitable choice
on its face or in its implementation is consistent with the establishment of religion
clause of the First Amendment. One aspect of this issue concerns whether it is
constitutional for public funds to go to organizations that discriminate on religious
grounds in their employment practices. More generally, the question is whether it is
constitutional for public funds to go to religious organizations that have the
characteristics detailed in the previous paragraph and that in some manner employ
their faiths in carrying out the funded programs.
These questions of constitutionality, in turn, have at least two dimensions. The
charitable choice statutes and proposals govern public aid that is given directly to
religious organizations by means of grants or cooperative agreements in the specified
programs and, at least in the cases of TANF and Title II of H.R. 7, public aid that is
given indirectly in the form of vouchers that can be redeemed with religious (as well
as nonreligious) organizations. The constitutional strictures that apply to these two
forms of aid differ; and as a consequence, the form in which the public aid is
provided to religious organizations under charitable choice has implications for the
constitutionality of the aid.
These questions are further complicated by the fact that the Supreme Court’s
interpretation of the establishment clause has been shifting. Prior to its recent
decisions, the Court’s construction of the establishment clause made it difficult, if not
impossible, for religious organizations that are deemed pervasively sectarian to
receive aid directly from the government, even for avowedly secular purposes, and
have required that programs receiving direct public aid be essentially secular in
nature. But the Court’s recent decisions in Agostini v. Felton104 and Mitchell v.
Helms105 have relaxed the strictures on direct aid and eliminated the pervasively
sectarian barrier, although the Court still requires that direct aid to religious
institutions not be used for religious indoctrination. With respect to indirect
assistance, the Court’s past jurisprudence has been less restrictive; and its recent
decision in Zelman v. Simmons-Harris106 appears to legitimate an even broader array
of voucher programs.
The following subsections detail the constitutional frameworks that appear to
govern direct and indirect aid and apply them to charitable choice:
(a) Direct aid. In general terms the establishment clause has been construed
by the Supreme Court to “absolutely prohibit government-financed or government-
sponsored indoctrination into the beliefs of a particular religious faith.”107
“[G]overnment inculcation of religious beliefs,” the Court has stated, “has the
104 521 U.S. 203 (1997).
105 530 U.S. 793 (2000).
106 122 S.Ct. 2460 (2002).
107 Grand Rapids School District v. Ball, 473 U.S. 373, 385 (1973).

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impermissible effect of advancing religion.”108 To guard against that effect, public
assistance which flows directly to religious institutions in the form of grants or
cooperative agreements has been required by the Court to be limited to aid that is
“secular, neutral, and nonideological....”109 Government has been able to provide
direct support to secular programs and services sponsored or provided by religious
entities, but it has been barred from directly subsidizing such organizations’ religious
activities or proselytizing.110
The Court gradually distilled the constitutional requirements governing direct
aid into a tripartite test. That test, known as the Lemon test after the case in which
it was first given full expression, required public aid to meet all of the following
requirements:
First, the statute must have a secular legislative purpose; second, its principal or
primary effect must be one that neither advances nor inhibits religion ...; finally,
the statute must not foster “an excessive entanglement with religion.”111
The secular purpose prong has rarely posed a serious obstacle to the constitutionality
of a direct aid program, but the Court’s original formulations of the primary effect
and entanglement tests often proved fatal to programs providing direct aid to
pervasively religious institutions. The Court construed the primary effect test to
mean that direct public aid must be limited to secular use. Thus, a direct aid program
could founder on this aspect of the Lemon test in either of two ways. It could be held
unconstitutional if the aid was not limited to secular use either by its nature or by
statutory or regulatory constraint.112 It could also be held unconstitutional if it flowed
to institutions that the Court deemed to be pervasively sectarian, i.e., entities whose
religious and secular functions were so “inextricably intertwined” that its secular
functions could not be isolated for purposes of public aid.113
Moreover, even if an aid program was limited to secular use, it often foundered
on the excessive entanglement prong of the Lemon test. Particularly in the context
of direct aid to pervasively sectarian organizations, the Court held that government
had to closely monitor the use religious organizations made of the aid provided in
order to be sure that the limitation to secular use was observed. But the very act of
monitoring, the Court sometimes said, excessively intruded the government into the
108 Agostini v. Felton, 521 U.S. 203, 223 (1997).
109 Committee for Public Education v. Nyquist, 413 U.S. 756, 780 (1973).
110 Committee for Public Education v. Nyquist, supra; Lemon v. Kurtzman, 403 U.S. 602
(1971); Bowen v. Kendrick, 487 U.S. 589 (1988).
111 Lemon v. Kurtzman, 403 U.S. 602, 612-13 (1971).
112 See, e.g., Committee for Public Education v. Nyquist, supra; Meek v. Pittenger, 421 U.S.
349 (1975); Wolman v. Walter, 433 U.S. 229 (1977).
113 See, e.g., Wolman v. Walter, supra, and School District of the City of Grand Rapids v.
Ball, 473 U.S. 373 (1985).

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affairs of the religious institution; and for that reason the aid program was
unconstitutional.114
Thus, under this application of the Lemon test, religious organizations were not
automatically disqualified from participating in public programs providing direct
assistance. But in order to meet the secular use requirement, such organizations had
either to divest themselves of their religious character and to become predominantly
secular in nature or, at the least, to be able to separate their secular functions and
activities from their religious functions and activities. To the extent they did so, it
was deemed constitutionally permissible for government to provide direct funding
to their secular functions. This former interpretation of the establishment clause also
generally meant that it was constitutionally impermissible for religious organizations
that are pervasively sectarian to participate in direct public aid programs.115
As a practical matter, these interpretations of the establishment clause had their
most severe effects on programs providing direct aid to sectarian elementary and
secondary schools, because the Court presumed that such schools are pervasively
sectarian. The Court presumed to the contrary with respect to sectarian colleges,
hospitals, and other social welfare organizations, although it held open the possibility
that some of these agencies might be pervasively sectarian.116
In its most recent decisions, however, the Court has reformulated the Lemon
test and abandoned the presumption that some religious institutions, such as sectarian
114 Lemon v. Kurtzman, supra; Meek v. Pittenger, supra; Aguilar v. Felton, 473 U.S. 402
(1985).
115 The Court did not lay down a hard and fast definition of what makes an organization
pervasively sectarian. But it looked at such factors as the proximity of the organization in
question to a sponsoring church; the presence of religious symbols and paintings on the
premises; formal church or denominational control over the organization; whether a
religious criterion is applied in the hiring of employees or in the selection of trustees or, in
the case of a school, to the admission of students; statements in the organization’s charter
or other publications that its purpose is the propagation and promotion of religious faith;
whether the organization engages in religious services or other religious activities; its
devotion, in the case of schools, to academic freedom; etc. See, e.g., Bradfield v. Roberts,
175 U.S. 291 (1899); Lemon v. Kurtzman, supra; Tilton v. Richardson, 403 U.S. 672
(1971); Committee for Public Education v. Nyquist, supra; Meek v. Pittenger, 421 U.S. 349
(1975); Roemer v. Maryland Board of Public Works, 426 U.S. 736 (1976); and Bowen v.
Kendrick, 487 U.S. 589 (1988). But the Court has also made clear that “it is not enough to
show that the recipient of a ... grant is affiliated with a religious institution or that it is
‘religiously inspired.’” Bowen v. Kendrick, supra, at 621. Indeed, none of these factors, by
itself, has been held sufficient to make an institution pervasively sectarian and therefore
ineligible for direct aid. Such a finding has always rested on a combination of factors. For
useful lower federal court discussions of the criteria bearing on whether an institution is
pervasively sectarian or not, see Minnesota Federation of Teachers v. Nelson, 740 F.Supp.
694 (D. Minn. 1990) and Columbia Union College v. Clark, 159 F.3d 151 (4th Cir. 1998),
cert. denied, 527 U.S. 1013 (1999), on remand sub nom Columbia Union College v. Oliver,
2000 U.S.Dist.LEXIS 13644 (D. Md. 2000), aff’d, 2001 U.S.App.LEXIS 14253 (4th Cir.
decided June 26, 2001).
116 See Bowen v. Kendrick, 487 U.S. 589 (1988).

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elementary and secondary schools, are so pervasively sectarian that they are
constitutionally ineligible to participate in direct public aid programs. The Court still
requires that direct public aid serve a secular purpose, not have a primary effect of
advancing or inhibiting religion, and not lead to excessive entanglement. But the
primary effect test now means that the aid itself must be secular in nature, must be
distributed on a religiously neutral basis, and must not be used for purposes of
religious indoctrination. Moreover, the Court has now made the excessive
entanglement test one aspect of the primary effect inquiry; and it no longer assumes
that such entanglement is the inevitable result of government oversight of its aid
program.
Three years ago in Agostini v. Felton117 the Court for the first time overturned
a prior establishment clause decision and held it to be constitutional for public school
teachers to provide remedial and enrichment services on the premises of private
sectarian schools to children attending those schools who were eligible for such
services under Title I of the Elementary and Secondary Education Act.118 The earlier
decision of Aguilar v. Felton, supra, had found the delivery of such services on the
premises of sectarian elementary and secondary schools to be excessively entangling,
because the pervasively sectarian nature of the institutions required government to
engage in a very intrusive monitoring to be sure that the Title I employees did not
inculcate religion. But in Agostini the Court stated that subsequent decisions had
abandoned the presumption that “public employees will inculcate religion simply
because they happen to be in a sectarian environment.”119 As a consequence, it said,
it had also to “discard the assumption that pervasive monitoring of Title I teachers
is required.”120 The Court also stated that
the factors we use to assess whether an entanglement is “excessive” are similar
to the factors we use to examine “effect” .... Thus, it is simplest to recognize
why entanglement is significant and treat it ... as an aspect of the inquiry into a
statute’s effect.121
Most recently, the Court in Mitchell v. Helms122 upheld as constitutional an
ESEA program which subsidizes the acquisition and use of educational materials and
equipment by public and private schools. More particularly, the Court found the
provision of such items as computer hardware and software, library books, movie
projectors, television sets, tape recorders, VCRs, laboratory equipment, maps, and
cassette recordings to private sectarian elementary and secondary schools not to
violate the establishment clause. In the process the Court overturned parts of two
prior decisions which had held similar aid programs to be unconstitutional and which
117 521 U.S. 203 (1997).
118 The Agostini decision overturned in its entirety the Court’s decision in Aguilar v. Felton,
473 U.S. 402 (1985) but also overturned parts of Meek v. Pittenger, supra, and City of
Grand Rapids v. Ball, 473 U.S. 373 (1985).
119 Agostini v. Felton, supra, at 234.
120 Id.
121 Id. at 232-33.
122 530 U.S. 793 (2000).

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had been premised on the view that direct aid to pervasively sectarian institutions is
constitutionally suspect.123 Although the Justices could not agree on a majority
opinion, the plurality opinion by Justice Thomas and the concurring opinion by
Justice O’Connor (joined by Justice Breyer) both appear to have eliminated pervasive
sectarianism as a constitutionally preclusive characteristic regarding direct aid and
modified the primary effect test accordingly. Agostini had hinted at this result but
Mitchell confirmed it. As summarized by Justice O’Connor, the primary effect test
now has three essential elements:
(1) whether the aid results in governmental indoctrination, (2) whether the aid
program defines its recipients by reference to religion, and (3) whether the aid
creates an excessive entanglement between government and religion.124
Thus, the Court now appears to construe the establishment clause to allow some
forms of direct aid to religious entities that formerly were deemed constitutionally
excluded because of their pervasively religious character. Under the reformulated
Lemon test, direct public aid must still serve a secular purpose and not create an
excessive entanglement. But the most critical elements appear to be that the aid is
distributed in a religiously neutral manner, i.e., that it does not define its recipients
on the basis of religion and provide an incentive for beneficiaries to undertake
religious indoctrination, and that it does not result in religious indoctrination which
is attributable to the government.
(b) Indirect aid. Indirect aid in the form of tax benefits or vouchers, however,
was less constrained prior to the Court’s recent revisions of its establishment clause
jurisprudence; and the Court’s most recent decision in Zelman v. Simmons-Harris125
appears to loosen the constitutional bounds even more. Like its standards for direct
aid, the Court requires that indirect aid programs serve a secular purpose and be
distributed to their initial beneficiaries on a religiously neutral basis, i.e., that the
beneficiaries not be chosen or given preference on the basis of a religious criterion.
But the critical element seems to be whether the initial beneficiaries have a “true
private choice” in deciding whether to obtain subsidized services from secular or
religious providers.
In its earlier decisions the Court held indirect aid programs unconstitutional if
they had been designed in such a manner that the universe of choice available to the
beneficiaries was almost entirely religious.126 But if the initial beneficiaries had a
genuinely independent choice among secular and religious providers, the Court held
the programs constitutional and ruled that even pervasively sectarian entities were not
precluded from participating.127 Indeed, the Court made clear that indirect aid which
123 Overturned in part were Meek v. Pittenger, 421 U.S. 349 (1975) and Wolman v. Walter,
433 U.S. 229 (1977).
124 Mitchell v. Helms, supra, at 845 (opinion of O’Connor, J.).
125 122 S.Ct. 2460 (2002).
126 Committee for Public Education v. Nyquist, supra, and Sloan v. Lemon, supra.
127 Mueller v. Allen, 463 US. 388 (1983); Witters v. Washington Department of Social
(continued...)

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ultimately is channeled to religious institutions does not have to be restricted to
secular use but can be used for all of the institutions’ functions, including their
religious ones.128
The Court’s recent decision in Zelman v. Simmons-Harris, supra, further
loosened the constitutional constraints on indirect aid. That case involved a program
of educational vouchers that low-income parents could use at private schools in the
city of Cleveland. Most of those schools were religious in nature. But the Court held
that in evaluating whether the parents had a true private choice in using the aid, all
of the educational options open to the parents needed to be considered and not just
the private school options. Thus, enrollment in public schools, magnet schools, and
community schools, as well as the possibility of receiving special tutoring assistance,
all needed to be considered as options along with the private religious and secular
school possibilities. In other words, the Court held that the universe of choice
available to the voucher recipients was not defined solely by the private providers
where the vouchers could be used but included a number of public school and non-
voucher educational options as well.
(c) Constitutionality of charitable choice.
Some aspects of the charitable
choice proposals that have been enacted as well as Title II of H.R. 7 in the 107th
Congress likely satisfy the foregoing requirements. That seems particularly to be the
case with respect to social services aid that is provided in the form of vouchers. The
Court’s interpretations of the establishment clause make clear that such aid can
ultimately flow even to pervasively sectarian institutions, so long as the initial
recipients have a true private choice among service providers. That means both that
such aid can go to religious entities that discriminate on religious grounds in their
employment practices129 and that such entities need not be barred from engaging in
religious worship, instruction, and proselytizing in programs receiving such support.
127 (...continued)
Services, 474 U.S. 481 (1986); Zobrest v. Catalina Foothills School District, 509 U.S. 1
(1993); Zelman v. Simmons-Harris, supra.
128 For a more detailed examination of the constitutional standards governing indirect aid,
including the Court’s decision in Zelman v. Simmons-Harris, supra, and for summaries of
recent state and lower federal court decisions, see CRS Report RL30165, Education
Vouchers: Constitutional Issues and Cases.
129 A number of recent lower court decisions have held that religious colleges and hospitals
do not forfeit their Title VII exemption as a result of receiving public funds indirectly in the
form of student aid and Medicare payments. See, e.g., Young v. Shawnee Mission Medical
Center, 1988 U.S.Dist.LEXIS 12248 (D. Kan. 1988) (court held that the Title VII exemption
applied to a religiously affiliated hospital’s firing of a clerk-receptionist because she was not
a Seventh Day Adventist, notwithstanding the hospital’s acceptance of Medicare payments);
Siegel v. Truett-McConnell College, Inc., 13 F.Supp.2d 1335 (N.D. Ga. 1994) (Baptist
college’s firing of a teacher because he was not a Christian held to be protected by Title VII
notwithstanding college’s receipt of public funds from a federal student assistance program);
and Hall v. Baptist Memorial Health Care Corporation, 215 F.23d 618 (6th Cir. 2000)
(Baptist college’s firing of a student services specialist because she had become a lay
minister in a community church that welcomed gay and lesbian members held to be
protected by Title VII exemption notwithstanding the college’s receipt of public funds by
means of unspecified federal student assistance programs).

---

CRS-42
Thus, there does not appear to be a constitutional problem in the provisions of the
charitable choice statutes as well as H.R. 7 that allow such employment
discrimination and that permit religious institutions receiving social services aid
indirectly to engage in religious worship, instruction, or proselytizing in the
subsidized program.
Nonetheless, there may still be a constitutional question raised about charitable
choice with respect to indirect aid. The critical issue for indirect aid continues to be
whether there is a genuinely independent decision-maker between the government
and the entity that ultimately receives the assistance or whether the government has
dictated that the aid ultimately goes to a religious entity. All of the charitable choice
measures require that those who object to a particular religious provider be given an
alternative that is either secular or, as in H.R. 7, not religiously objectionable. But
they do not require that a voucher recipient have a choice of secular and religious
providers initially. Whether this is sufficient to meet the Court’s standards does not
seem certain.
Whether direct aid to religious entities that discriminate on religious grounds
in their employment practices, as allowed by all of the charitable choice statutes as
well as the House-passed version of H.R. 7 in the 107th Congress, can pass
constitutional muster seems more complex but still likely. Prior to Mitchell the
Court’s decisions had often used such employment discrimination as an indicator that
an entity was pervasively sectarian and, hence, ineligible for direct assistance.130 But
it had never relied on that factor alone; other factors always entered into the
constitutional equation.131 Those rulings, consequently, seem to suggest that
religious discrimination in employment, by itself, might not have been enough to
render a direct aid program unconstitutional. Mitchell seems to strengthen that
possibility, at least for certain kinds of direct aid. In that case, as noted, the Court
upheld as constitutional a direct aid program providing educational supplies and
130 See, e.g., Lemon v. Kurtzman, supra (fact that most of the teachers in the Catholic
schools were nuns and rest were largely lay Catholics found to support finding that schools
were “an integral part of the religious mission of the Catholic church”); Hunt v. McNair,
413 U.S. 734 (1973) (fact that religiously affiliated college had no religious qualifications
for faculty weighed in determining whether state could issue bonds to subsidize the
construction of academic buildings); Committee for Public Education v. Nyquist, 413 U.S.
756 (1973) (imposition of religious restrictions on faculty appointments found to be one
element in rendering sectarian elementary and secondary schools constitutionally ineligible
for state maintenance and repair grants); and Roemer v. Maryland Board of Public Works,
426 U.S. 736 (1976) (finding that religiously affiliated colleges did not make hiring
decisions “on a religious basis” relied on in part in upholding direct public grants to
colleges).
131 Indeed, in some decisions the Court has given that factor no weight at all. See, e.g.,
Bradfield v. Roberts, 175 U.S. 291 (1899) (upholding construction of wing at a hospital run
by an order of Catholic nuns on the condition the wing be used for the medical care of the
poor) and Tilton v. Richardson, 403 U.S. 672, 681 (1971) (in finding several religiously
affiliated colleges not to be so permeated by religion as to be ineligible for federal
construction grants for academic buildings, the Court placed primary emphasis on the fact
that the schools “were characterized by an atmosphere of academic freedom rather than
religious indoctrination”).

---

CRS-43
equipment to entities that the Court had previously found to be pervasively sectarian
and had previously held to be constitutionally barred from receiving such aid –
sectarian elementary and secondary schools. In so doing the Court shifted the
constitutional focus from the nature of the organization receiving the aid to whether
the aid is distributed in a religiously neutral manner and whether it is used for
religious indoctrination. As a consequence, whether the entity receiving the
assistance discriminates on religious grounds in its employment practices seems to
have become of little or no concern, at least for in-kind direct assistance.
The more critical question concerns the role of faith in carrying out social
services programs that are directly subsidized. The Court’s decisions make clear
that direct public aid cannot be used for religious indoctrination, and all of the
charitable choice measures as well as the House-passed version of H.R. 7 seem to
meet this requirement by explicitly prohibiting direct aid from being used for
religious worship, instruction, or proselytizing. H.R. 7 further buttresses this
prohibition by requiring that any religious activity be entirely separate from the
publicly funded program and that any participation in such activity be wholly
voluntary. But the underlying assumption of charitable choice has been that religious
organizations ought to be able to retain their religious character and employ their
religious faiths in carrying out the subsidized programs. That, it is said, is what
makes their programs distinctive and more effective. Thus, given this assumption
and the various possibilities for how particular subsidized programs might be
implemented, it seems likely that constitutional questions will inevitably arise in the
implementation of direct aid programs under charitable choice, notwithstanding its
prohibitions on the use of direct aid for religious worship, instruction, and
proselytization.
In addition, it should be noted that Mitchell involved an in-kind aid program –
educational supplies and equipment. All of the Justices in Mitchell expressed doubt
that direct grants of money to religious entities could pass constitutional muster even
under the Court’s loosened standards for direct aid programs; and direct grants of
money are what seem contemplated in the programs to which charitable choice now
applies or would have been applied under the House-passed version of H.R. 7.
Justice O’Connor, joined by Justice Breyer, stated in Mitchell both that “[t]his Court
has recognized special Establishment Clause dangers where the government makes
direct money payments to sectarian institutions” and that a direct subsidy “would be
impermissible under the Establishment Clause.”132 Justice Souter, joined by Justices
Stevens and Ginsburg, stated:
[W]e have long held government aid invalid when circumstances would allow
its diversion to religious education. The risk of diversion is obviously high when
aid in the form of government funds makes its way into the coffers of religious
132 Mitchell v. Helms, supra, at 843 (quoting Rosenberger v. Rector and Visitors of
University of Virginia, 515 U.S. 819, 842 (1995) and 841, respectively (O’Connor, J.,
concurring in the judgment).

---

CRS-44
organizations, and so from the start we have understood the Constitution to bar
outright money grants of aid to religion.133
Justice Thomas, joined by Chief Justice Rehnquist and Justices Scalia and Kennedy,
asserted that neutrality is the essential constitutional criterion governing public aid
programs that benefit religious entities. But he, nonetheless, observed that “we have
seen ‘special Establishment Clause dangers’ ... when money is given to religious
schools or entities directly rather than, as in Witters and Mueller, indirectly.”134
These statements are all dicta and do not indicate with any certainty how the Court
might rule on a case involving a particular grant or cooperative agreement. But they
do indicate constitutional doubt about direct money grants.
In addition, it deserves notice that one federal district court, in a decision handed
down some years prior to Mitchell, held religious discrimination in employment by
a religious organization in a position specifically funded by a government grant to
be unconstitutional.135 Neither Agostini nor Mitchell addressed the constitutionality
of direct monetary subsidies. On the other hand, it should also be noted that,
although not in direct conflict, a federal appellate court recently upheld a state
program providing general aid to colleges, including religiously affiliated ones, as
applied to a Seventh Day Adventist college, notwithstanding that the college “gave
an express preference in hiring ... to members of the Church.”136 Another recent case
that was thought to raise the question of the constitutionality of public funding of an
agency that discriminated on religious grounds in its employment practices turned out
not to do so. In Pedreira v. Kentucky Baptist Homes for Children, Inc.137 the federal
district court held that the firing of an employee because of her lesbian lifestyle by
an organization whose Christian values abhorred homosexuality did not involve
religious discrimination, because the organization’s policy did not require employees
to accept or practice its religious beliefs but only to conform to a behavioral
requirement.
As a final observation, it also deserves notice that formal neutrality as the
controlling constitutional principle did gain the adherence of four Justices in Mitchell
v. Helms, supra (Chief Justice Rehnquist and Justices Scalia, Kennedy, and Thomas).
This perspective contends that the critical constitutional elements governing direct
public aid to religious entities are whether the aid itself is secular and whether it has
been distributed in a religiously neutral fashion, i.e., without preference for religious
133 Id. at 890 (Souter, J., dissenting).
134 Id. at 818-19, quoting Rosenberger, supra, at 842 (Thomas, J., plurality opinion)
(emphasis in original).
135 Dodge v. Salvation Army, 48 Empl.Prac.Dec. 38619, 1989 U.S.Dist.LEXIS 4797, 1989
WL 53857 (S.D. Miss. 1989) (establishment clause held to bar the Salvation Army from
firing a Wiccan from her position as Victims Assistance Coordinator in a Domestic
Violence Shelter, both of which were substantially funded by public grants, on the grounds
that public funding of such discrimination would have a primary effect of advancing religion
and would entangle the government in the religious purpose of the Salvation Army).
136 Columbia Union College v. Oliver, 254 F.3d 496 (4th Cir. 2001).
137 186 F.Supp.2d 757, 86 FEP Cases 417 (W.D. Ky. 2001).

---

CRS-45
entities. From this perspective it makes no difference whether the institutional entity
eventually uses the aid for religious purposes or not. A slight shift in the membership
of the Court, thus, could foreshadow further changes in the Court’s jurisprudence in
this area.
(10) What Court Suits Involving Charitable Choice or Similar
Programs Have Been Filed or Decided So Far?
At least seven pertinent suits had been initiated prior to the end of the 107th
Congress, four of which had been decided (at least in part). In Freedom from
Religion Foundation v. McCallum138 a federal district court on January 7, 2002,
struck down as unconstitutional the public funding of a Wisconsin welfare-to-work
program operated by an organization named Faith Works which employed a “faith-
enhanced” version of the Alcoholics Anonymous 12-step program as a central
element of its residential recovery services to male drug and alcohol addicts. The
program was funded by $600,000 in direct grants from the governor’s discretionary
fund under the federally funded welfare-to-work program. Using the Lemon-
Agostini-Mitchell test described above, the court found that the grants served a
secular purpose, did not define their recipients on the basis of religion, and did not
precipitate excessive entanglement. But it held that the grants resulted in religious
indoctrination attributable to the government. It described Faith Works as a holistic
program that sought to “indoctrinate[] its participants in religion” and concluded that
“religion is so integral to the Faith Works program that it is not possible to isolate it
from the program as a whole.” Safeguards in federal and state law barring the use
of funds for religious purposes, it asserted, “exist only on paper” and are “insufficient
to insure that public funding ... does not contribute to a religious end.” Although the
state welfare-to-work program was funded under the federal welfare reform statute
and thus was subject to the charitable choice provisions of that statute, the court
found the suit not to challenge the constitutionality of charitable choice on the
grounds that charitable choice itself bars the “direct funding of religious activities.”
Wisconsin chose not to appeal this decision.
The plaintiffs in McCallum also challenged the constitutionality of a public
subsidy given Faith Works by the Wisconsin Department of Corrections to provide
its residential addiction recovery services to designated offenders. In handing down
the decision described in the previous paragraph, the trial court reserved decision on
this issue pending further fact-finding. But on July 26, 2002, the court held this
program to be constitutional.139 In contrast to the foregoing program, the Department
138 179 F.Supp.2d 950 (W.D. Wis. 2002).
139 Freedom from Religion Foundation, Inc. v. McCallum, 214 F.Supp.2d 905 (W.D. Wis.
2002). (On April 3, 2003, it might be noted, the U.S. Court of Appeals for the Seventh
Circuit unanimously affirmed. The court found no coercion to be exercised on the
offenders’ choices either by the “suggestions” of its agents or the qualitative advantages of
the Faithworks’ program. Nor did it find significant the fact that the state did not actually
hand a voucher to participating offenders but paid Faithworks directly:
...[S]o far as the establishment clause is concerned, there is no difference
(continued...)

---

CRS-46
of Corrections did not make an outright grant to Faith Works but reimbursed Faith
Works for the cost of services rendered to each offender who chose to participate.
Agents for the Department recommended treatment programs to offenders which
included Faith Works and a number of other halfway houses in the Milwaukee area;
and the agents could order the offenders to go to a specific secular treatment
program. But the Department’s regulations stressed that participation in Faith Works
had to be wholly voluntary; and thus agents were required to inform offenders of the
religious nature of the program, to make clear that the offender did not have to go
there, and to offer an alternative secular program. The court found that the agents
complied with the regulations scrupulously. Consequently, although finding it to be
a “close question,” the trial court held that “offenders participate in Faith Works as
a result of genuinely independent, private choice and that this choice makes the
Department of Corrections contract with Faithworks an indirect program that does
not covey a message of endorsement.”
Pedreira v. Kentucky Baptist Homes for Children140 did not involve a federally
funded program but raised the question of whether the establishment clause allows
a state government to fund a religious entity that fired an employee who was found
to be a lesbian on the grounds her sexual orientation violated the agency’s religious
beliefs. In this instance the religious entity received substantial direct state funding
for its services to children. On July 23, 2001, a federal district court held that the
employee’s dismissal did not constitute religious discrimination, because her lifestyle
was not premised on any religious beliefs and Baptist Homes did not require her to
accept its religious beliefs. It only required conformity, the court said, with a
behavioral requirement. The court held over for trial, however, a separate claim
alleging that public funds were being used by Baptist Homes for the purpose of
religious indoctrination in violation of the establishment clause. In so doing it
rejected an argument that Mitchell dictated judgment for Baptist Homes, saying that
“Mitchell is factually dissimilar from this case,” in part because this case involves
“direct monetary assistance.” Thus, the case continues to have implications for
charitable choice.
Another suit, American Jewish Congress v. Bost141 contended that a welfare-to-
work training program funded under the TANF program in Brenham, Texas, was
permeated with the teachings of Protestant evangelical Christianity and even used
public funds to purchase Bibles for participants. The suit contended that the funding
had been provided pursuant to directives promulgated by then-Governor George
Bush that implemented the provisions of charitable choice. But the trial court
dismissed the case as moot because the program was no longer being funded by the
state. On May 15, 2002, however, the U.S. Court of Appeals for the Fifth Circuit
139 (...continued)
between giving the voucher recipient a piece of paper that directs the public
agency to pay the service provider and the agency’s asking the recipient to
indicate his preference and paying the provider whose service he prefers.
140 186 F.Supp.2d 757 (W.D. Ky. 2001).
141 ___ F.Supp.2d ___ (W.D. Tex. 2000), aff’d in part, 37 F.Appx 91, 2002 U.S.App.LEXIS
10091 (5th Cir. 2002).

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CRS-47
remanded the case to the district court for decision on the constitutional issue and the
possible award of monetary damages.
In ACLU of Louisiana v. Foster142 a federal district court enjoined Louisiana
from disbursing any more funds in its abstinence education program to organizations
or individuals who used the funds to convey religious messages or that were
pervasively sectarian. The court found that a number of the grantees in the program
were using the public funds to purchase religious materials and to engage in
specifically religious activities and that in some of the organizations “religion is so
pervasive that a substantial portion of their functions are subsumed in the religious
mission.” Although finding the purpose of the program to be secular, the court held
the funding of the pervasively sectarian institutions and of programs that conveyed
religious message or otherwise advanced religion to violate the establishment clause.
American Jewish Congress v. Bernick charges that the California Employment
Development Department gave an unconstitutional preference for religion by inviting
only religious groups to submit proposals on how to use $5 million in job training
funds under TANF. The suit charges as well that the bid invitation violates the
mandate of charitable choice that religious and non-religious providers be given
equal treatment. The suit is pending in the California Superior Court for the County
of San Francisco.
A suit similar to Pedreira has been filed in Georgia challenging the
constitutionality of religious discrimination against employees and applicants for
employment by a Methodist children’s home that receives substantial funding from
the state. In Bellmore v. United Methodist Children’s Home and Department of
Human Resources of Georgia, a youth counselor who was fired when it was found
she is lesbian and a psychotherapist who was denied employment because he is
Jewish, along with several taxpayers, have sued the Methodist Children’s Home on
the grounds that the establishment clause forbids an entity receiving public funds
from discriminating on religious grounds in its employment practices. Georgia
contracts with the home to provide foster care and counseling services, and the Home
reportedly receives about 40 percent of its budget from the state. The case is pending
in the Superior Court of Fulton County, Georgia.
Finally, on October 3, 2002, the American Jewish Congress reportedly filed suit
against the federal Corporation for National and Community Service charging that
its AmeriCorps program has unconstitutionally subsidized religious instruction in
sectarian schools. The suit alleges that the program has supported teachers in
sectarian schools who provide instruction in religion and has provided grants to
entities such as the Alliance for Catholic Education which incorporate prayer and
worship activities into their daily activities. The suit is pending in the United States
District Court for the District of Columbia.
142 2002 U.S.Dist. LEXIS 13778 (E. D. La. 2002).

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CRS-48
Appendix: Comparison of Charitable Choice Statutes with
Title II of H.R. 7, as Adopted by the House in 2001, and Executive Order 13279

1. States purpose to
2. Bars gov.
3. Requires that
4. Bars gov.
5. Provides that Title
be to allow FBOs to
from
FBOs remain
interference
VII exemption allowing
participate on same
discriminati
independent of
with FBOs’
FBOs to discriminate on
basis as secular
ng on the
government and
form of
religious grounds in
organizations
basis of an
retain control
internal
their employment
without impairing
FBO’s
over expression
governance or
practices is not affected
their religious
religious
of religious
displays of
by receipt of public
character or religious
character
beliefs
religious
funds under designated
freedom of
symbols
programs
beneficiaries
Welfare
X
X
X
X
X
Reform (42
USCA 604a)
Community
X
X
X
X
Services
Block Grant
(42 USCA
9920)
Children’s
X
X
X
X
X (also allows FBOs to
Health Act
require adherence to
(42 USCA
rules forbidding the use
300x-65)
of drugs or alcohol)
Community
X
X
X
X
X (also states that this
Renewal
does not affect the
Tax Relief
applicability of any
Act of 2000
other employment non-
(42 USCA
discrimination statute)
290kk)

---

CRS-49
Title II of
X (also to provide aid
X
X


X (also bars
X (also states that Title
H.R. 7, the
in most effective
gov. from
VII exemption and
“Charitable
manner and to
requiring
charitable choice
Choice Act
broaden the Nation’s
changes in
override contrary
of 2001"
social services
religious terms
provisions in program
capacity)
in charter
statutes, and specifies
documents or
that Title VII continues
in name)
to apply)
Executive
X
X
X
X (is silent on
Amends Executive
Order 13279
internal
Order 11246 to provide
(Dec. 16,
governance
that religious
2002)
but also allows
organizations entering
FBOs to retain
into procurement
religious terms
contracts with the
in charter
federal government can
documents and
discriminate on religious
in name and to
grounds in their
choose board
employment practices
members on a
but is silent on Title VII
religious basis)

---

CRS-50
6. Bars
7. Requires
8. Requires gov. to
9. Requires
10.
11. Bars use
discrimination
gov. to
give notice to
programs to be
Requires
of direct aid
against beneficiaries
provide those
beneficiaries of
consistent with
programs
for sectarian
on basis of religion
who object to
right to an alternate
the
to be
worship,
or a religious belief
FBO’s
provider
establishment
consistent
instruction, or
religious
clause
with the
proselytizatio
character an
free
n
accessible
exercise
alternate
clause
provider of
equal value
Welfare
X (also on the basis
X
X
X
Reform (42
of a “refusal to
USCA
actively participate
604a)
in a religious
practice”)
Community
X
X
Services
Block
Grant (42
USCA
9920)
Children’s
X (also on the bases
X
X
X
X
Health Act
of a “refusal to hold
(42 USCA
a religious belief or a
300x-65)
refusal to actively
participate in a
religious practice”)

---

CRS-51
Community
X
X
X (imposes duty on
X
X
X
Renewal
“program
Tax Relief
participants” as
Act of 2000
well, and requires
(42 USCA
them to “ensure”
290kk)
individual makes
contact with
alternate provider)
Title II of
X (also on the basis
X (alternative
X
X

X
X (also
H.R. 7, the
of “a refusal to hold
must be
requires that
“Charitable
a religious belief,”
“unobjectiona
religious
Choice Act
and requires for
ble to the
activities be
of 2001"
direct aid programs
individual on
separate from
that participation in
religious
subsidized
religious activities be
grounds”)
activities)
voluntary)
Executive
X (also on the basis
X
X
X (also
Order
of “a refusal to hold
requires that
13279 (Dec.
a religious belief, or
religious
16, 2002)
... to actively part. in
activities be
a religious practice,”
separate in
and requires that
time or
part. in rel. activities
location from
be voluntary)
subsidized
activities)

---

CRS-52
12.
13. Requires
14. Allows
15. States that
16. States that
17. States that Title
Requires
FBOs to be
audits of
public aid to
public funding is
VI, Title IX, Section
FBOs to
subject to
FBOs but
FBOs is aid to the
not to be deemed a
504, and Age
certify
same
requires
individual or
government
Discrimination Act
complianc
accounting
public funds
family and not to
endorsement of
remain applicable to
e with # 11
requirement
be segregated
religion or the
religion or of an
FBOs receiving
s as non-
from FBOs’
organization’s
FBO’s religious
assistance or
FBOs for
own funds
religious beliefs
beliefs or practices
providing services
use of funds
or practices
Welfare
X
X (allows, but
Reform (42
does not
USCA
require, funds
604a)
to be
segregated)
Community
X
X
X (bars
Services
discrimination on the
Block
basis of race, color,
Grant (42
national origin, and
USCA
sex, and states that
9920)
Age Discrimination
Act, Section 504, and
Title II of the ADA
are applicable)
Children’s
X
X
Health Act
(42 USCA
300x-65)
Community
X
X
Renewal
Tax Relief
Act of 2000
(42 USCA
290kk)

---

CRS-53
Title II of
X (also
X
X (requires
X (specifies that
X
X
H.R. 7, the
with the
segregation
Title VI still
“Charitable
voluntarin
for direct aid,
applies to direct
Choice Act
ess
allows it for
aid programs)
of 2001"
requireme
indirect aid,
nt of # 6)
and mandates
an annual
self-audit)
Executive
Order
13279 (Dec.
16, 2002)

---

CRS-54
18. States
19. Allows
20. Provides
21. Requires states
22. Allows Depts. to
23. Authorizes
that
suits for
that
to accept training
“voucherize” all
training and
intermediat
injunctive
charitable
of drug counselors
covered social
technical assistance
e grantor
relief in
choice will
by FBOs that is
services programs
program for “small
has same
state or
apply to state
“equivalent” to
where “feasible and
non-governmental
duties as
federal
funds that
usual educational
efficient”
organizations”
gov. in
court for
are
requirements
making
alleged
commingled
subgrants
violations
with federal
but, if an
funds
FBO,
retains all
rights of
FBOs
Welfare
X
Reform (42
USCA
604a)
Community
X (refers
Services
only to
Block
duties)
Grant (42
USCA
9920)
Children’s
X
X
X
Health Act
(42 USCA
300x-65)

---

CRS-55
Community
X (only
X
Renewal
against
Tax Relief
federal
Act of 2000
governmen
(42 USCA
t in federal
290kk)
court)
Title II of
X
X
X
X
X
H.R. 7, the
“Charitable
Choice Act
of 2001"
Executive
Order
13279 (Dec.
16, 2002)

---

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