Charitable Choice: Federal Guidance on Statutory Provisions Could Improve Consistency of Implementation

GAO-02-887 Published: Sep 10, 2002. Publicly Released: Oct 11, 2002.
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The federal government spends billions of dollars annually to provide services to the needy directly, or through contracts with a large network of social service providers. Faith-based organizations (FBO), such as churches and religiously affiliated entities, are a part of this network and have a long history of providing social services to needy families and individuals. In the past, religious organizations were required to secularize their services and premises, so that their social service activities were distinctly separate from their religious activities, as a condition of receiving public funds. Beginning with the passage of the Personal Responsibility and Work Opportunity Reconciliation Act of 1996, Congress enacted "charitable choice" provisions, which authorized religious organizations to compete on the same basis as other organizations for federal funding under certain programs without having to alter their religious character or governance. The statutory provisions cover several programs, including Temporary Assistance for Needy Families (TANF) and Welfare to Work. Similar provisions also apply to the Community Services Block Grant and the substance abuse prevention and treatment programs. GAO found that faith-based organizations receive a small proportion of the government funding provided to nongovernmental contractors. Contracts with faith-based organizations accounted for 8 percent of the $1 billion in federal and state TANF funds spent by state governments on contracts with nongovernmental entities in 2001. Although charitable choice was intended to allow FBOs to contract with government in these programs, several factors continue to constrain the ability of small FBOs to contract with the government. These factors include FBO's lack of awareness of funding opportunities, limited administrative and financial capacity, inexperience with government contracting, and beliefs about the separation of church and state. State and local officials differed in their understanding and implementation of certain charitable choice safeguards, such as the prohibition on the use of federal funds for religious worship or instruction; however, the incidence of problems involving safeguards is unknown. Faith-based organizations are held accountable for performance in the same way as other organizations contracting with the government. However, little information is available to compare the performance of FBOs to that of other organizations.

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Recommendations for Executive Action

Agency Affected Recommendation Status
Department of Health and Human Services In order to promote greater consistency of interpretation and implementation of charitable choice provisions, the Secretary of Health and Human Services should issue guidance to the appropriate state and local agencies administering TANF, the Community Service Block Grants and substance abuse prevention and treatment programs on charitable choice safeguards, including the safeguard prohibiting the use of federal funds for religious worship, instruction, or proselytizing and the safeguard concerning a client's right to an alternative (nonreligious) provider. In particular, this guidance should offer clarification concerning allowable activities that a religious organization may engage in while retaining its religious nature.
Closed – Implemented
On September 30, 2003, HHS issued final regulations regarding charitable choice provisions in the Temporary Assistance for Needy Families program, Community Services Block Grant Act, and Subtance Abuse Prevention and Treatment Block Grants. These regulations provide guidance on the charitable choice safeguards that were highlighted in GAO's recommendation.

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