Charitable Choice Basics

The Charitable Choice rules govern federal funds, and associated state and local funds (e.g., commingled and matching funds), in the TANF program, the Community Services Block Grant program, and SAMHSA drug treatment programs (SAMHSA indirect funding is governed by the Equal Treatment rules).

The purpose of the Charitable Choice rules is to enable state and local governments to provide funds to faith-based organizations “on the same basis as any other nongovernmental provider without impairing the religious character of [the] organizations, and without diminishing the religious freedom of beneficiaries of assistance”  (from the Personal Responsibility and Work Opportunity Reconciliation Act).

Types of financial relations
•    “direct” funds:  grants, subgrants, contracts, and subcontracts
•    “indirect” funds:  vouchers, certificates, scholarships

Eligibility of faith-based providers
•    no exclusion of faith-based providers because they are religious, highly religious, or “sectarian”
•    faith-based providers are eligible on the same basis as other providers

Rights of faith-based providers
•    may retain religious name, religious mission statement, selection of board members on religious basis
•    do retain control over their internal governance
•    may maintain their religious missions
•    may offer voluntary religious activities, separate from directly funded services
•    may maintain a religious atmosphere with icons, religious art, etc.
•    do retain the independence from government they had before accepting government funds
•    may keep government funds in separate account(s), thereby protecting private funds from government audit
•    may staff on a religious basis, despite state and local bans; if SAMHSA funding, the organization can appeal to the
Religious Freedom Restoration Act against the federal staffing restriction

Obligations of faith-based providers
•    must meet the same fiscal accountability standards as other providers
•    must not fund inherently religious activities with direct funds
•    limitation on funding inherently religious activities does not apply to indirect funds

Protections for beneficiaries
•    must be served without discrimination on the basis of religion or religious belief
•    participation in inherently religious activities cannot be required in directly funded services
•    a religiously acceptable alternative must be available (the state is responsible)
•    notice of the right to an alternative must be given

Indirect funding
•    the provider is paid via a voucher or scholarship offered by a beneficiary who selected the provider
•    the beneficiaries have a choice of multiple providers, including non-religious providers
•    inherently religious activities can be woven into the government-funded services
•    beneficiaries who object to a faith-based provider and/or services that include religion will choose a different provider

Rights and duties of intermediate organizations
•    must follow Charitable Choice in awarding subgrants (neutral selection of subgrantees, enforcing the direct funding rules)
•    retain all Charitable Choice religious rights vis-à-vis government