Religious Liberty, Welfare Reform, and Charitable Choice

Keith J. Pavlischek

On August 22, 1996 President Clinton signed into the law "The Personal Responsibility and Work Opportunity Reconciliation Act," thereby "ending welfare as we know it." Largely lost amidst the public controversy over welfare reform, was the section of the act with potentially landmark significance for church-state relations. Section 104, commonly referred to as the "Charitable Choice" provision, was a product of the larger movement to "devolve" welfare responsibility to the states and to the institutions of civil society. The motivation for the Charitable Choice provision stemmed from the realization that faith-based service providers, in particular, were often more successful in meeting the needs of the poor than government agencies or even large bureaucratic nonprofit organizations.

The success of these faith-based service providers, however, stemmed precisely from their refusal to separate the religious or "spiritual" part of their ministry from the service rendered. Even so, such organizations often have been unfairly disadvantaged in the competition for service with "secular" agencies, or with those "religious" agencies more willing to compromise their religious identity. And often they have been subjected to the threat of lawsuits by church-state watchdog agencies or welfare state bureaucrats. The charitable choice section sought to mitigate this problem. According to Sen. John Ashcroft, (R. Mo.) the primary promoter of the provision was "to encourage faith-based organizations to expand their involvement in the welfare reform effort by providing assurances that their religious integrity would be protected." (Introduction to "A Guide to Charitable Choice," p. v).

The Charitable Choice provision stipulates that states receiving block grants for welfare assistance may not exclude religious service providers from eligibility for subcontracts or vouchers on the grounds that they are religious. The act includes several safeguards to protect the religious character of organizations receiving indirect or direct government assistance. The organization retains its independence from Federal, State and local governments, including the organization's control over "the definition, development, practice and expression of its religious beliefs" (Section 104D(1)). Neither the Federal or State government may require a religious organization to alter its form of internal governance; it may not require it to remove "religious art, icons, scripture or other symbols" from its premises (Section 104(d)(2); and a participating religious organization continues to be exempt from the discrimination prohibitions of Section 702 of the Civil Rights Act of 1964 (Section 104(f)), thus allowing it to hire in accordance with the organization's religious convictions. As long a the religious organization segregates the federal funds it receives from its other accounts it is only subject to a limited audit (Section 104(h)). And finally, a religious organization may sue a state in state civil court if it believes its rights under section 104 have been violated (Section 104(i)).

Congress anticipated that religious service providers could cooperate with government assistance welfare efforts in two ways. The involvement would be indirect if the state offers the individual beneficiary certificates or vouchers for the delivery of service redeemable at the participating organization. But Congress also anticipates and intends that states will contract directly with religious providers through purchase-of-service agreements.

While these safeguards reflect the goal of Charitable Choice to involve faith-based providers in delivering welfare services "without impairing the religious character of such organizations" [subsection (b)], it also stipulates that "no funds provided directly to institutions or organizations to provide services ... shall be expended for sectarian worship, instruction, or proselytization." Faith-based organizations that receive funds indirectly by means of vouchers or certificates, however, are not subject to this restriction. Needless to say, a state can only authorize a provider to redeem vouchers if that organization, in fact, provides the authorized and stipulated services for the needy. But under charitable choice an organization's eligibility for funds disbursed through vouchers and certificates does not take into account its religious character or whether or not it is "pervasively sectarian."

Strict-separationists watchdog organizations and their judicial camp followers have long held that the mere presence of religious symbols and hiring on the basis of religious conviction is evidence of an organization being "pervasively sectarian," and that a general program of direct assistance unconstitutionally advances religion if the organization is "pervasively sectarian." One is not surprised to learn that the Charitable Choice provision was actively opposed by the ACLU and other separationist watchdog organizations-strong evidence that the provision was intended as a direct assault on their interpretation of the establishment clause.

The distinction between direct and indirect funding and the permissibility of the latter to religious organizations is fairly well established in constitutional law, the most notable cases being Mueller v. Allen (upholding a state income tax deduction for parents paying school tuition), Witters v. Washington (upholding a state vocational rehabilitation grant to use for training as a pastor), and Sobrest v. Catalina Foothills School District (providing special education services to a student attending Catholic high school permissible under the establishment clause). Each of these decisions determined that "indirect" aid was permissible under the Establishment Clause.

Yet these cases leave unresolved is the more interesting question prompted by Charitable Choice: whether excluding religious providers from a general program of either direct or indirect assistance would violate the Free Exercise clause.

Current constitutional law suggests that neither the Establishment clause nor the Free Exercise clause is triggered if a state decides to provide assistance solely through government-operated agencies. A state may decide, for instance, to permit indirect benefits to be redeemed only at its own government-run welfare agencies. What it cannot do, according to the Charitable Choice, and arguably according to the Free Exercise clause, is adopt a program that involves the independent sector but disqualifies participation by religious providers. A recent case in the Sixth Circuit, Hartman v. Stone, suggests that this is a promising judicial strategy against a state seeking to exclude religious providers. The court held, citing Church of the Lukumi Babalu v. City of Hialeah, that the U.S. Army violated the Free Exercise clause when it excluded religious -but not secular-child care providers from operating on its bases and receiving various benefits.

Somewhat more problematic may be a state's choice to cooperate directly with a provider through purchase of service agreements. The Act stipulates that none of the Federal funds transferred to a provider may be "expended for sectarian worship, instruction or proselytization" [Section j]. The $64,000 question is whether this can be squared with the goal of the act to ensure that the religious identity and autonomy of the provider is not compromised.

The problem is that many of the more effective service agencies, most notably drug rehabilitation organizations such as Teen Challenge, cannot so neatly segregate the "religious" aspects of their programs (prayer, Bible reading and devotions, worship, etc.) from the "secular" aspects, which in turn renders them "pervasively sectarian" in the minds of some. If the above stipulation is interpreted strictly it may undermine the very purpose of the Act and discriminate against the most effective providers. Establishment clause challenges to Charitable Choice will surely be directed against these so-called "pervasively sectarian" providers receiving direct funds. Even here, however, separationist challenges will have to overcome the precedent of Bowen v. Kendrick.

In Bowen the Supreme Court narrowly (by a five to four margin) upheld "on its face" the constitutionality of The Adolescent Family Life Act (AFLA). AFLA authorized direct cash grants to both governmental and independent nonprofit organizations for research and services in the areas of teenage pregnancy and counseling of adolescent sexual relations. The Act expressly invited participation by religious organizations, to ensure that religious groups would not be discriminated against when competing with similarly situated grant recipients. Opponents claimed that the act violated the Establishment clause, but the Court in Bowen rejected the argument in rather sweeping terms: "Religious institutions need not be quarantined from public benefits that are neutrally available to all," adding that "this Court has never held that religious institutions are disabled by the First Amendment from participating in publicly sponsored welfare programs."

The Court then proceeded to apply the infamous three-prong test of Lemon v. Kurtzman. Of critical significance was that the majority refused to hold that faith-based counseling centers were necessarily "pervasively sectarian." Moreover, while AFLA did not expressly bar the use of federal funds for worship, prayer, proselytizing and other explicitly religious activities, the Court said that no explicit bar was required and added that "clearly, if there were such a provision in this statute, it would be easier to conclude that the statute on its face" was constitutional. Since the Charitable Choice provision does include that bar (and was probably written to address the Court's concern in Bowen v. Kendrick), it would seem a fortiori that Section 104 is sufficiently similar, indeed is more cautious than Bowen and is thus also constitutional on its face.

Simply by dividing the analysis between "facial" and "applied" components in Bowen, the Court put strict separationists on the defensive. As long as the Court was willing to overturn legislation at the mere risk that the second and third prong of Lemon (the primary effect of a law shall not advance religion and shall not involve excessive entanglement between religion and government) were violated, activists could "rove the country filing suits claiming Establishment Clause transgressions." Strict separationists sought to halt all aid not merely on a piecemeal basis but by enjoining the entire Act insofar as it allowed any participation by religiously-based providers. But after Bowen v. Kendrick, "a violation of the Establishment Clause must be proved in each case by palpable evidence that confessional religion is being advanced. The only exception occurs when the entire class of religious service providers is pervasively sectarian. Because not all faith-based social service providers are pervasively sectarian, a facial attack will fail."

But that, of course, leaves open the possibility that in certain cases a social service provider will be ineligible for funds because it is found to be "pervasively sectarian." It is here that the final nail should be put into the coffin of the strict separationists. The entire idea of distinguishing between organizations that are "pervasively sectarian" and those that are not should be put to rest once and for all.

The strict separationists should be hoist on their own petard, or "prong" as it were. To require government officials to distinguish between, say, a faith-based drug counseling center that is "pervasively sectarian" and one that is not, inevitably entangles them in discerning the religious character of faith-based providers. And that, of course, is prohibited by the third prong of Lemon.

An even more aggressive attack against the strict separationists, following the lead of Richard Baer, would demonstrate that the Supreme Court's use of the term "sectarian" is itself discriminatory, a euphemism for rhetorically more loaded terms like "bigoted," "narrow-minded," "heretical," "parochial" or "dogmatic," always with the implication that there exists a non-sectarian "mainstream," a right way of thinking and a common position to which all rational persons should subscribe. The term "sectarian," in other words, is essentially used as the rhetorical equivalent of a racial or ethnic slur, a use that to which objection should henceforth be raised.

The Charitable Choice provision provides the opportunity for the advocates of a more responsible understanding of the religion clauses to move from playing defense (against the offense of the strict separationists) on the playing field of the Establishment clause, to the offensive on the playing field of the Free Exercise clause. To allow faith-based service providers to compete for public funds with secular providers on an equitable basis, and to allow "pervasively sectarian" providers to compete with so-called non-sectarian religious providers is not only permissible under the Establishment clause, but should be required under the Free Exercise clause. If we say that the Free Exercise clause is violated when religious providers are excluded from a generally applicable program for a legitimate public purpose when the funds flow indirectly to providers, so too is the Free Exercise clause violated when the benefits flow directly. If a certain program is to be funded which the legislature decides it is of public benefit to society and is conducive to the common good and a nonreligious organization is eligible for these public funds, then a religiously based program should be eligible as well. To deny them that chance is simply governmentally-supported discrimination. If "free Exercise" doesn't prohibit that, it is hard to understand how it can mean anything at all.

A Brief Bibliography Related to Charitable Choice

For a very helpful handbook on the issue of Charitable Choice in a very accessible question and answer format (and a forward by Sen. Ashcroft) see, A Guide To Charitable Choice: The Rules of Section 104 of the 1996 Federal Welfare Law Governing State Cooperation with Faith-based Social-Service Providers (The Center for Public Justice and The Christian Legal Society's Center for Law and Religious Freedom, 1997), and Carl H. Esbeck, "The Regulation of Religious Organizations as Recipients of Governmental Assistance" (Center for Public Justice, 1996). Both are available from The Center for Public Justice, P.O. Box 48368, Washington, DC 20002-0368, (410) 263-5909.

For a rather predictable separationist criticism of Charitable Choice provision see Derek H. Davis, "The Church-State Implications of the New Welfare Reform Law" in 38 Journal of Church and State 719 (Autumn1996). For a constitutional defense of the provision see: Carl H. Esbeck, "A Constitutional Case for Governmental Cooperation with Faith-Based Social Service Providers, with responses by Douglas Laycock and John Garvey, in 46 Emory Law Journal (Winter, 1997), forthcoming.

Stephen V. Monsma's When Sacred and Secular Mix: Religious Nonprofit Organizations and Public Money (Rowan & Littlefield, 1996) is a pathbreaking study of the religious nonprofit sector and the implications for church-state jurisprudence. For my favorable review of the book, see "At the Border of Church and State" in 72 First Things 47 (April, 1997).

For a fine article outlining the initial mainline and liberal church reaction to welfare reform, particularly their opposition to charitable choice see: Stanley Carlson-Thies "'Don't Look to Us': The Negative Responses of the Churches to Welfare Reform" The Notre Dame Journal of Law, Ethics and Public Policy (forthcoming). Finally, as the title suggests, Richard A. Baer's "The Supreme Court's Discriminatory use of the Term 'Sectarian'" in 6 The Journal of Law and Politics 449 (Spring 1990) is a spirited attack on the use of the term sectarian to marginalize individuals and groups with strong religious conviction.


2001 The Federalist Society