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entitled 'Charitable Choice: Overview of Research Findings on 
Implementation' which was released on January 18, 2002. 

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United States General Accounting Office: 
GAO: 

Report to Congressional Requesters 

January 2002: 

Charitable Choice: 

Overview of Research Findings on Implementation: 

GAO-02-337: 

United States General Accounting Office: 
Washington, DC 20548: 

January 18, 2002: 

The Honorable Joseph I. Lieberman:
Chairman:
Committee on Governmental Affairs:
United States Senate: 

The Honorable Elijah E. Cummings:
Ranking Minority Member:
Subcommittee on Criminal Justice, Drug Policy, and Human Resources:
Committee on Government Reform: 
House of Representatives: 

This report addresses your request for an overview of research findings 
on the implementation of charitable choice provisions in current law.
Charitable choice provisions require states and localities to allow 
religious organizations to compete for federal funding on the same 
basis as other social service providers, without impairing the 
religious character of such organizations. These provisions apply to 
several programs, including the Temporary Assistance for Needy Families 
program, the Community Services Block Grant program, and substance 
abuse treatment and prevention programs under amendments to the Public 
Health Services Act in 2000. 

The Congress has been considering legislation to expand charitable 
choice provisions to other specific government programs. To provide you 
with information to consider during this debate, you asked that we 
review the available literature to determine (1) the extent to which 
and how states have responded to charitable choice provisions in 
current law; (2) the factors that have limited the collaboration 
between states and faith-based organizations (FBOs); (3) the issues 
that have been encountered once collaboration has occurred; and (4) how 
FBOs performed as compared to secular providers of social services. 

To address your request, we reviewed the existing research on charitable
choice provisions and interviewed several experts in the field. We 
conducted our work from June through July 2001 in accordance with 
generally accepted government auditing standards. We briefed your staff
on the results of our work on July 27 and August 28, 2001. This report
formally conveys the documents used at those briefings. 

In summary, while the literature does not provide a national picture of 
the extent to which states have responded to charitable choice 
provisions, it provides some useful information. At least 19 states 
have contracted with FBOs to provide some welfare-related services. 
Moreover, states are using a variety of approaches to implement 
charitable choice legislation. For example, some states have created 
state faith-based liaisons to promote greater awareness of charitable 
choice provisions or changed state procurement requirements to remove 
barriers to contracting with FBOs. Several factors have limited the 
establishment of collaborations between FBOs and states, including some 
FBOs’ lack of awareness and understanding of charitable choice 
provisions, their reluctance to partner with government, and the 
limited financial and administrative capacity of some FBOs. Once 
collaborations have occurred, some small FBOs have encountered 
difficulties in covering ongoing costs while awaiting government 
reimbursement or difficulties managing the performance-based contracts, 
due to limited technological and management systems. Finally, the 
literature we reviewed provides no information with which to assess the 
effectiveness of FBOs as providers of social services. While some 
anecdotal evidence attributes success to FBOs, the effectiveness of 
FBOs as social service providers has not been rigorously examined by the
research community. 

We are sending copies of this report to relevant congressional 
committees, the Office of Faith-Based and Community Initiatives in the 
White House, and the Centers for Faith-Based and Community Initiatives 
in the Departments of Education, Health and Human Services, Housing and
Urban Development, Justice, and Labor. We will make copies available to
others upon request. If you or your staff have any questions about this
report, please contact me on (202) 512-7215 or Andrew Sherrill on (202)
512-7252. 

Signed by: 

Sigurd R. Nilsen: 
Director, Education, Workforce, and Income Security Issues: 

[End of section] 

Charitable Choice: What Does The Literature Tell Us About 
Implementation? 

Briefing for Congressional Staff of Senator Lieberman, Chairman,
Senate Committee on Governmental Affairs: 

July 27, 2001: 

Charitable Choice: What Does The Literature Tell Us About 
Implementation? 

Briefing for Congressional Staff of Representative Cummings, Ranking 
Member, Subcommittee on Criminal Justice, Drug Policy, and Human 
Resources, House Committee on Government Reform: 

August 28, 2001: 

Outline of Briefing: 
* Objectives; 
* Background; 
* Scope and Methodology; 
* Findings; 
* Other Issues; 
* Relevant Reports. 

Objectives: 

Determine what information the available literature provides to answer 
the following questions: 

1. To what extent and how have states responded to charitable choice 
provisions? 

2. What factors have limited the collaboration between states and faith-
based organizations (FBOs)? 

3. What issues have been encountered once collaboration has occurred? 

4. How have FBOs performed as compared to secular providers of social 
services? 

Background: Programs with Charitable Choice Provisions: 

Charitable Choice provisions require states and localities to allow 
religious organizations to compete for, or receive, contracts, grants, 
certificates, vouchers, or other forms of disbursement on the same 
basis as any other non-governmental provider without impairing the 
religious character of such organizations and without diminishing the 
religious freedom of beneficiaries of assistance. The provisions apply 
to: 

* Temporary Assistance for Needy Families (TANF) and Welfare-to-Work 
grants as well as Supplemental Security Income(SSI), Medicaid, Food 
Stamps, and child support enforcement under the Personal Responsibility 
and Work Opportunity Reconciliation Act of 1996 (PRWORA). 

* Community Services Block Grant Program (CSBG), reauthorized in 1998. 

* Substance abuse treatment and prevention programs under two separate 
amendments to the Public Health Services Act in 2000. 

Background: Terminology: 

Although “faith-based organization” is not defined in the law, the term
is commonly used in the literature as follows: 

* Faith-based organizations (FBOs) are religious organizations or 
religiously affiliated not-for-profit entities. FBOs that may provide
social services could be classified into two major categories: 

- Sectarian - “Pervasively religious” organizations, such as churches, 
temples, synagogues, mosques, and congregations. 

- Non-Sectarian - Separate, secular organization created by a religious 
organization to provide social services, such as Jewish Family 
Services, Catholic Charities USA, Lutheran Social Services, and the 
Salvation Army. 

Background: How Charitable Choice Affects FBOs: 

FBOs have historically provided help for the needy in partnership with 
the government through their non-sectarian entities. Now, sectarian 
FBOs that receive federal funding under charitable choice provisions: 

* Are not required to separate their religious nature from their social 
service activities in order to receive federal funding. 

* Are not prohibited from displaying religious symbols. 

* Are allowed, in their employment practices, to discriminate on 
religious grounds. 

* Are prohibited from discriminating against beneficiaries in delivery 
of services. 

* Are subject to the same financial audit regulations for federal funds 
as are other non-governmental organizations. 

* Must not use public funds received directly, through contracts and 
grants, for the purpose of worship, religious instruction, or 
proselytizing. 

Background: How Charitable Choice Affects States and Localities: 

Charitable choice provisions do not prescribe how states or localities
should implement the law, however, these provisions: 

* Require states and localities to allow religious organizations to
compete for, or receive, federal funding for the provision of social
services on the same basis as any other non-governmental provider. 

* Provide that if a beneficiary objects to the religious nature of a
provider, the state or locality must make available an alternative
(non-religious), accessible provider. 

* Prohibit states and localities from requiring an FBO to change its 
form of internal governance or to remove religious art, icons, or 
symbols. 

Scope and Methodology: 

We limited the scope of our work to programs that have charitable
choice provisions: 

* To identify relevant reports and publications that have been issued
since PRWORA in 1996, we conducted library and internet research and 
interviewed some study authors and experts in the field. 

* We reviewed over 30 reports and publications; of these, 8 provided
information directly relevant to our objectives. 

* Most of the 8 reports have methodological limitations, preventing us
from drawing conclusions about the national experience with charitable 
choice. However, these reports provide some useful information about 
aspects of charitable choice. 

To what extent have states responded to charitable choice provisions? 

There is no national picture of the extent to which states have 
responded to charitable choice, due to the limited number, scope, and 
quality of existing reports. However: 

* One survey reported that 19 states had contracts with FBOs that were 
funded by TANF or Welfare-to-Work funds. (Meckler) 

* A study of 9 states identified TANF or Welfare-to-Work financial 
agreements with 45 FBOs that had not previously received federal 
funding. (Sherman) 

* Only 3 percent of a national sample of religious congregations 
surveyed in 1998 reported receiving government funding to provide 
social services. (Chaves) 

How have states responded to charitable choice provisions? 

Some states have taken an active approach in responding to charitable 
choice provisions. Some state activities identified in one or more of 
these 8 reports included: 

* Creating a central office, appointing liaisons, or hosting educational
meetings to promote greater awareness of charitable choice provisions 
and increase coordination with FBOs. 

* Developing demonstration projects to gain experience in working
with FBOs. 

* Changing state procurement requirements and practices to remove
barriers to contracting with FBOs. 

* Entering into various types of financial agreements with FBOs,
including contracts, grants or vouchers. 

What factors have limited the collaboration between states and FBOs? 

Some key factors identified in one or more of these 8 reports included: 

* Lack of awareness and understanding of charitable choice provisions 
on the part of some states and FBOs. 

* Unwillingness on the part of some FBOs to partner with government due 
to general mistrust of government, fear of erosion of their mission, or 
fear of oversight. 

* Theological or philosophical beliefs of some FBOs that preclude
collaboration with government. 

* Difficulty of contracting process for some FBOs that lack experience
with the RFP process. 

* Limited administrative capacity of some FBOs to develop accounting 
systems for administering grants or contracts. 

* Limited financial capacity of some FBOs to obtain start-up funds for
such projects. 

* Limited numbers of staff or volunteers in some FBOs. 

What issues have been encountered once collaboration has occurred? 

Key issues identified in one or more of these 8 reports included: 

* Capacity Issues - Some small FBOs have experienced difficulties in 
managing performance-based contracts, due to limited technological and
management systems. In some cases these issues became less problematic 
when larger organizations were used as intermediaries. 

* Financial issues: Some small FBOs have encountered difficulties in
covering their ongoing costs while awaiting government reimbursement on
cost-based contracts. 

* Coordination Issues: Some FBOs have reported difficulties obtaining 
client information from, and coordinating activities with, other social 
service agencies. 

* Oversight Issues: Some state officials have expressed concerns about 
the challenges they face in holding FBOs accountable for their 
performance. 

How have FBOs performed as compared to secular providers of social 
services? 

The literature that we reviewed provides no information on which to 
assess the effectiveness of FBOs as providers of social services. 

Other Issues: 

Some aspects of charitable choice have generated significant debate. 
However, there is little or no information in the literature about the 
extent to which the following aspects have been problematic: 

* Exemption of FBOs from prohibition of discrimination based on 
religion in their hiring practices. 

* Requirement that FBOs do not discriminate in the delivery of 
services. 

* Requirement that FBOs do not use federal funds for worship, religious
instruction, or proselytizing. 

* Requirement that an alternative (non-religious) service provider be 
made available upon request by a beneficiary. 

* State discretion to exempt or partially exempt from state 
certification or programmatic oversight those FBOs that provide 
specified services (e.g. childcare, substance abuse treatment, or youth 
homes). 

* State discretion to determine the range of organizations covered by 
charitable choice provisions. 

Relevant Reports: 

Anderson, Scott, Orr, John, and Carol Silverman, “The California 
Religious Community Capacity Study: Technical Report,” California 
Council of Churches, 2000. 

Bartkowski, John P., and Regis, Helen A. “Charitable Choice and the 
Feasibility of Faith-Based Welfare Reform in Mississippi,” Working 
Paper, Joint Center for Poverty Research, 1999. 

Center for Public Justice, “Charitable Choice Compliance: A National 
Report Card,” 2000. 

Chaves, Mark, “Congregations and Social Services: What They Do, How 
They Do It, and With Whom,” University of Arizona, 2000. 

Cnaan, Ram, and Boddie, Stephanie. “Philadelphia Census of 
Congregations and Their Involvement in Social Service Delivery,” 
University of Pennsylvania, 2001. 

Meckler, Laura, “Most States Pass on Charitable Choice,” Associated 
Press, 2001. 

Reingold, David A., Pirog, Maureen, and Brady, David. “Empirical 
Evidence on Welfare Reform & Faith Based Organizations,” Indiana 
University, 2000. 

Sherman, Amy, “The Growing Impact of Charitable Choice: A Catalogue of 
New Collaborations Between Government and Faith-Based Organizations in 
Nine States,” Hudson Institute, 2000. 

[End of section] 

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