Partnering with the Federal Government: Some Do's and Don'ts for Faith-Based Organizations

Dealing with the Federal government isn't always easy. In fact, if you are a small organization, all the governmental rules and regulations can be intimidating. If you are a faith-based organization, the rules can seem complicated because there are some special considerations that come into play when faith-based groups work with the Federal government.

The goal of the President's Faith-Based and Community Initiative is clear - to enable faith-based and community organizations to provide compassionate care for the poor by receiving Federal grants on the same basis as other groups. President Bush believes that it is wrong for these groups to be discriminated against when it comes to partnering with the Federal government. This section provides information helpful to faith-based groups on how an organization can maintain its faith identity while delivering Federal services.

If these rules sound complicated, remember that thousands of faith-based organizations, from small daycare centers to homeless shelters, have taken Federal money and delivered services without a hitch. They have been able to comply with these principles " without sacrificing their faith identity.

Keep in mind that this section provides only a brief overview of some of the major legal issues that come up when faith-based groups receive Federal funds. The area of church-state relations is complicated. Specific programs may have some different requirements. You should not rely upon this document as an authoritative statement of the law. For more information, you may wish to consult with a lawyer or the agency that administers the program that interests you.

What are the rules on funding religious activity with Federal money?

The United States Supreme Court has said that faith-based organizations may not use direct government support to support "inherently religious" activities. Don't be put off by the term "inherently religious" - it's simply a phrase that has been used by the courts in church-state cases. Basically, it means you can not use any part of a direct Federal grant to fund religious worship, instruction, or proselytization. Instead, organizations may use government money only to support the non-religious social services that they provide. Therefore, faith-based organizations that receive direct governmental funds should take steps to separate, in time or location, their inherently religious activities from the government-funded services that they offer. Such organizations should also carefully account for their use of all government money.

This does not mean your organization can't have religious activities. It simply means you can't use taxpayer dollars to fund them. Some faith-based organizations set up separate charitable organizations (so-called "501(c)(3) corporations") to keep programs that receive government money separate from those that engage in inherently religious activities.

This rule of thumb is different if your organization receives Federal money that comes in the form of "vouchers" or other so-called "indirect aid." In simple terms, an indirect aid program is one that gives funds or certificates to individuals in need, which can be used to obtain services from a number of qualified organizations. A good example of indirect aid is a child-care certificate that a parent can use for daycare at any participating child-care center. School vouchers are another example of indirect aid. Recently, the United States Supreme Court upheld a school voucher program in Cleveland where the vouchers were used for education at religious schools. However, the vast majority of programs affected by President Bush's Faith-Based and Community Initiative involve direct aid to organizations (that is, money that goes directly to the organizations themselves), not vouchers or indirect aid.

If I cannot take government money to support religious activity, how do I separate our religious activities from our Federally-funded social service program?

A faith-based organization should take steps to ensure that its inherently religious activities, such as religious worship, instruction, or proselytization, are separate - in time or location - from the government-funded services that it offers. If, for example, your church receives Federal money to help unemployed people improve their job skills, you may conduct this program in a room in the church hall and still have a Bible study taking place in another room in the same hall (but no Federal money can be used to conduct the Bible study). Or a faith-based social service provider may conduct its programs in the same room that it uses to conduct religious activities, so long as its government-funded services and its religious activities are held at different times. If you have any questions or doubts, you should check with the official who administers your Federal funds.

Can people who receive Federally-funded services from us also participate in our religious activities?

Yes, provided that a few rules are followed. It may be that some people have chosen to receive services from your organization because it is faith-based, and they will be eager to participate. But faith-based organizations that receive direct Federal aid may not require program participants to attend or take part in any religious activities. Although you may invite participants to join in your organization's religious services or events, you should be careful to reassure them that they can receive government-funded help even if they do not participate in these activities, and their decision will have no bearing on the services they receive. In short, any participation by recipients of taxpayer-funded services in such religious activities must be completely voluntary. For example, a church that receives direct government aid to provide shelter to homeless individuals may not require those individuals to attend a Bible study or participate in a prayer preceding a meal as part of the government-funded services they provide. But they may invite those individuals to join them, so long as they make clear that their participation is optional.

What about religious activities that we have with our staff and volunteers in the presence of those whom we are helping?

A faith-based group may gather volunteers and employees together to engage in religious activities, such as a prayer to renew their own religious mission and recommit themselves to helping those in need. An example might be a soup kitchen where volunteers say a prayer together before the meal is served. It is important for faith-based groups to make sure that a prayer in these circumstances is voluntary, and understood to be voluntary, for program participants.

If someone asks me about my faith, can I share it with them?

If someone asks you about your personal faith while you are providing a government-funded service, you may answer briefly. But if you wish to have a longer discussion on matters of faith, you should set up a time to speak with that person later. In this way, you avoid using government funds for what might be taken to be an inherently religious activity, and the program is kept on track. But you also have an opportunity later to share your faith and explain why you do what you do.

Can we use Federal funds to purchase religious materials or materials that are faith-filled?

No. Faith-based organizations may not use Federal funds to purchase religious materials - such as the Bible, Torah, Koran, Talmud, or other religious or scriptural materials. If you have questions about the appropriateness of your materials, you may want to consult an attorney or ask the government official who is administering your program for guidance.

We are a faith-based organization. Can Federal funds be used to pay the salary of a member of our staff?

Yes, provided that this staff person is delivering the Federally-funded service and is not engaged in religious worship, instruction, or proselytization. The staff member may be a rabbi, priest, imam, or preacher, so long as he or she does not engage in these activities while being paid with public dollars. For example, a minister may teach an anger management seminar to ex-offenders as part of a Federal grant. But the minister must keep his or her teaching on the subject of anger management separate from his church duties and preaching responsibilities.

What if we have someone on our staff who works for a government-sponsored program only part-time?

It is fine for a faith-based organization to employ someone on their staff to perform religious duties while also having that person administer part of a Federally-funded program. There are, however, rules that must be followed. The part-time worker must not engage in inherently religious activities while working on the Federally-funded portion of his or her job. And that part-time worker must also document that he met his time commitment to the government-sponsored program by keeping careful time records of his activities. This will make sure that government funds are spent only on non-religious activities.

Will the way in which our faith-based organization hires employees change if we receive Federal funding?

In most circumstances, no. There is no general Federal law that prohibits faith-based organizations that receive Federal funds from hiring on a religious basis. Nor does the Civil Rights Act of 1964, which applies regardless of whether an organization receives Federal funds, prohibit faith-based organizations from hiring on a religious basis. This Act protects Americans from employment discrimination based on race, color, religion, sex, national origin, age, and disability. But the Civil Rights Act also recognizes the fundamental rights of faith-based organizations to hire employees who share their religious beliefs. The United States Supreme Court unanimously upheld this special protection for faith-based groups in 1987, and it has been the law since then. Thus, a Jewish organization can decide to hire only Jewish employees, a Catholic organization can decide to hire only Catholics, and so on, without running into problems with the Civil Rights Act.

This special provision for faith-based groups protects the religious liberty of communities of faith. It permits faith-based groups to promote common values, a sense of community and unity of purpose, and shared experiences through service - all of which contribute to a religious organization's effectiveness. In order for a religious organization to define or carry out its mission, it is important that it be able to take religion into account in hiring staff. Just as a college or university can take the academic credentials of an applicant for a professorship into consideration in order to maintain high standards, or an environmental organization can consider the views of potential employees on conservation, so too should a faith-based organization be able to take into account an applicant's religious belief when making a hiring decision.

One final point. In general, a faith-based organization retains this exemption even if it receives Federal, State, or local financial assistance. However, certain Federal laws and regulations, as well as State and local laws, may place conditions on the receipt of government funds. For example, some employment laws may prohibit discrimination on the basis of religion. Or a State or local law may prohibit discrimination on the basis of sexual orientation or require certain organizations to provide benefits to employees' unmarried domestic partners. Some of these laws may exempt religious organizations, while others may not. Organizations with further questions about this issue may wish to consult a lawyer to find out about the specific requirements that apply to your organization and any rights you may have under the Constitution or Federal laws.

If our organization receives Federal funds, can it choose not to provide services to some people?

No. If you take Federal money you may not discriminate against a person seeking help who is eligible for the service. For example, if you are a religious organization and receive public money to run an emergency food distribution program, you may not serve only persons of your faith and turn away others. In addition, and as discussed above, you may not require those you serve to profess a certain faith or participate in religious activities, in order to receive the service you provide for the Federal government.

What will happen if we violate any of these rules?

If you violate the requirements specified in your grant or otherwise improperly use the funds you receive, you may be subject to legal action. Among other things, you may lose your grant funds, be required to repay the funds you received, and pay any damages that might be awarded through court action. If an organization uses its funds fraudulently, it could be subject to criminal prosecution.

Does our religious organization have to form a special nonprofit organization in order to receive Federal funding?

In general, no. There is no general Federal requirement that an organization incorporate or operate as a nonprofit or obtain tax-exempt status under section 501(c)(3) of the Internal Revenue Code in order to receive Federal funds. However, some Federal, State, or local programs may impose such a requirement.

Although it will take some time and cost some money, a faith-based organization may wish to establish a separate nonprofit organization to use the government funds it receives. Taking this step can make it easier for a faith-based organization to keep track of the public funds that it recieves and spends. It will also be easier for the government to monitor the group's use of grant funds without intruding on the group's internal affairs, in the event that an audit is conducted.

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