Charitable Choice
Federal Guidance on Statutory Provisions Could Improve Consistency of Implementation Gao ID: GAO-02-887 September 10, 2002The 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.
RecommendationsOur recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.
Director: Team: Phone:GAO-02-887, Charitable Choice: Federal Guidance on Statutory Provisions Could Improve Consistency of Implementation
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United States General Accounting Office:
GAO:
Report to Congressional Requesters:
September 2002:
Charitable Choice:
Federal Guidance on Statutory Provisions Could Improve Consistency of
Implementation:
GAO-02-887:
Contents:
Letter:
Results in Brief:
Background:
FBOs Received a Small Proportion of Contracted Funds and Most Had
Previously Contracted with the Government:
Limited Awareness, Limited Capacity, and Inexperience Constrain Some
FBOs from Government Contracting:
Understanding and Implementation of Charitable Choice Safeguards Vary
and Incidence of Violations Is Unknown:
FBOs Are Held Accountable for Performance in the Same Way As Non-FBOs,
but Comparative Performance Information Is Unavailable:
Conclusions:
Recommendation for Executive Action:
Agency Comments:
Appendix I: Scope and Methodology:
Appendix II: Comments from the Department of Health and Human Services:
Appendix III: GAO Contacts and Staff Acknowledgments:
GAO Contacts:
Staff Acknowledgments:
Related GAO Products:
Tables:
Table 1: Funding and Objectives of Programs with Charitable Choice
Provisions, Fiscal Year 2001:
Table 2: Charitable Choice Safeguards and the Key Parties They Are
Designed to Protect:
Table 3: State-level TANF Contracting with FBOs, 2001:
Table 4: Contracting with FBOs Using SAPT Funds, Federal Fiscal Year
2001:
Table 5: Contracting with FBOs Using CSBG Funds, Federal Fiscal Year
2001:
Figure:
Figure 1: Percentage of Federal and State TANF Funds and TANF
Contracts, by Type of Contractors for State-Level Contracting, 2001:
Abbreviations:
CAA: community action agency:
CSBG: Community Services Block Grant:
FBO: faith-based organization:
HHS: Department of Health and Human Services:
PRWORA: Personal Responsibility and Work Opportunity Reconciliation Act
of 1996;
RFP: request for proposal:
SAPT: Substance Abuse Prevention and Treatment;
TANF: Temporary Assistance for Needy Families;
WTW: Welfare-to-Work:
[End of section]
United States General Accounting Office:
Washington, DC 20548:
September 10, 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:
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. [Footnote 1] For
example, the organizations often were required to incorporate
separately from their sponsoring religious institution, refrain from
religious activities in the publicly funded services, and remove
religious symbols from the premises where the services were provided.
Beginning with the passage of the Personal Responsibility and Work
Opportunity Reconciliation Act (PRWORA) of 1996, [Footnote 2] the
Congress enacted ’charitable choice“ provisions, which authorized
religious organizations [Footnote 3] to compete on the same basis as
other organizations for federal funding under certain programs without
having to alter their religious character or governance. These
charitable choice provisions also require that the programs be
implemented in a manner consistent with the First Amendment to the
Constitution. These statutory provisions cover several programs, among
them Temporary Assistance for Needy Families (TANF) and Welfare-to-Work
(WTW). Similar provisions also apply to the Community Services Block
Grant (CSBG) and the substance abuse prevention and treatment (SAPT)
programs. These charitable choice provisions contain certain safeguards
that were intended to protect the interests of the various
parties–governments, FBOs, and beneficiaries–involved in federally
funded financial agreements under these programs. [Footnote 4] For
example, if a beneficiary objects to the religious nature of a service
provider, the state or locality must make available an alternative
provider that is without religious affiliation.
Because the Congress has recently considered enacting charitable choice
provisions in other programs, you asked us to report on how current
provisions have been implemented. Specifically, you asked:
* What is known about the extent and nature of financial agreements
between FBOs and government entities nationally and in selected states?
* What factors have constrained or complicated financial agreements
with FBOs?
* How have the federal charitable choice provisions intended to provide
safeguards for various parties been implemented and what, if any,
problems have arisen?
* How are FBOs being held accountable for performance and what
information is available regarding their performance?
To obtain a national perspective on charitable choice, we analyzed the
results of our 50-state survey of TANF contracting, [Footnote 5]
interviewed federal officials who oversee programs with charitable
choice provisions, and reviewed federal agency reports on barriers to
contracting with FBOs and the implementation of charitable choice
provisions. To obtain more specific information about how charitable
choice has been implemented, we visited 5 states”Georgia, Indiana,
Texas, Virginia, and Washington” and conducted telephone interviews
with faith-based liaisons established in 15 states. We selected these 5
states to obtain a range in the levels of both state government
activities with regard to faith-based initiatives and contracting with
FBOs, as well as geographic dispersion. In each state, we interviewed
state and local government officials who administered programs with
charitable choice provisions, representatives of FBOs, and
representatives of agencies involved in contracting for social
services. We performed our work between September 2001 and July 2002 in
accordance with generally accepted government auditing standards. For
more details on our scope and methodology, see appendix I.
Results in Brief:
Overall, faith-based organizations receive a small proportion of the
government funding provided to nongovernmental contractors, according
to results from our national TANF survey and the interviews we
conducted in five states. Our national survey found that contracts with
faith-based organizations accounted for 8 percent (or $80 million) of
the $1 billion in federal and state TANF funds spent by state
governments on contracts with nongovernmental entities in 2001. The
proportion of these funds contracted with FBOs ranges from 0 to 32
percent across states. FBOs also received a small proportion of the
competitive grant portion of Welfare-to-Work funds in recent years;
however, national data are not available for the remaining portion of
these funds. National data are also not available on the magnitude of
contracting with FBOs for Community Service Block Grant and Substance
Abuse Prevention and Treatment Block Grant programs. However, we were
able to obtain data on contracts with FBOs using these funds in the
five states we visited and found that these FBOs receive small amounts
of these funds as well. Almost all FBOs we visited had nonprofit tax-
exempt status and most were organizations that had contracted with the
government before charitable choice. While the size and structure of
these FBOs varied, most were affiliated with Christian denominations
and most contracted to provide TANF-funded services. Under these
contracts, FBOs provided numerous services in line with the key uses of
each program‘s funds and sometimes provided additional services. For
example, while more FBOs provided services such as job preparation,
several of the FBOs provided additional services, such as mentoring or
fatherhood training.
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 FBOs‘ lack of awareness of funding opportunities, limited
administrative and financial capacity, inexperience with government
contracting, and beliefs about the separation of church and state.
However, many of these limitations are not unique to FBOs but are
common to small organizations with little or no experience in seeking
government contracts. Small FBOs are unaware of funding opportunities
unless they have past experience with the government, according to some
FBO and government officials we interviewed. In addition, FBOs‘ limited
capacity for dealing with the complex administrative and financial
requirements of government contracting places them at a disadvantage
when competing against larger, more experienced providers. Although
officials in the states we visited reported no legal barriers to
prevent religious organizations from partnering with the government,
some officials noted that their history of a strong separation of
church and state might lead all parties to be cautious about
collaboration. In the states we visited, government agencies differed
in their approaches to identification and removal of constraints that
can limit financial contracting between FBOs and government. Indiana,
Texas, and Virginia have actively addressed such constraints by
providing FBOs with broader access to information and educational
assistance in pre-contracting procedures, while other states have been
less active in addressing constraints. Federal agencies have also taken
steps to address constraints by establishing funding for small faith-
based and community organizations to develop or expand model social
service programs.
State and local officials in the five states we visited 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. Certain charitable choice safeguards
are subject to interpretation, and federal agencies have issued little
guidance to states and localities explaining how to interpret these
provisions. Because of this lack of guidance, some officials expressed
confusion about a few of the safeguards, namely, those concerning what
constitutes prohibited religious activities and whether FBOs can hire
on the basis of faith. For example, several state and local officials
told us that prayer is not allowed during publicly funded services,
while many FBOs told us that voluntary prayer during such activities is
permissible. Another consequence of this lack of guidance is that state
implementation of charitable choice rules differed. Some states and
localities did outreach activities or included safeguard language in
requests for proposals, while others did not explicitly communicate
safeguards to FBOs and clients. Although officials in the states we
visited reported receiving very few complaints from clients receiving
services from FBOs, the incidence of safeguard violations is unknown.
Most state and local agencies rely on complaints and grievance
procedures to identify discrimination or proselytizing, and in some
cases clients and FBOs may not be aware of their protections under
charitable choice.
Faith-based organizations are held accountable for performance in the
same way as other organizations contracting with the government,
according to state and local officials in the five states we visited.
However, little information is available to compare the performance of
FBOs to that of other organizations. Government officials in these
states said that they held all contractors accountable on the basis of
the provisions of their contracts and monitored all contractors in a
consistent manner. However, comparative information on the contractors‘
performance was unavailable for several reasons. Some types of
contracts did not specify performance outcomes, and even when they did,
some state and local officials said that comparative performance
information was unavailable. In those few cases where contractors
shared the same specified performance outcomes, state and local
officials had not compared the performance of FBOs to that of other
contractors. Most state and local officials believed FBOs performed at
least as well as other organizations overall, even though they did not
provide data to support that belief. Two university-based research
studies are currently underway to provide information on the
performance of FBOs in delivering social services.
We are making a recommendation in this report to the Secretary of the
Department of Health and Human Services (HHS) to issue guidance to
state and local agencies on charitable choice safeguards that have been
found to be unclear or confusing. HHS agreed with our recommendation
and said that it is in the process of developing and issuing guidance.
Background:
To increase the involvement of religious organizations in the delivery
of social services, the Congress included charitable choice provisions
in the legislation for several federal programs. These provisions were
designed to remove legal or perceived barriers that religious
organizations might face in contracting with the federal government.
First enacted in 1996, charitable choice provisions apply to
administrators, service providers, and recipients of TANF and WTW
funds, as established through PRWORA. Subsequently, the Congress
included charitable choice provisions in the 1998 reauthorization of
the CSBG program and the amendments to the Public Health Services Act
in 2000 affecting the SAPT block grant program.
Program Funding:
Funding levels for programs with charitable choice provisions vary
considerably, with TANF having the highest level of funding (see table
1). These programs allocate funds in a variety of ways. TANF, CSBG, and
SAPT are block grants, which are distributed in lump sums to states.
WTW has two funding streams, one of which is comprised of state formula
grants that are mostly passed on to localities and the other
representing a smaller portion of funds called national competitive
grants, which the Department of Labor awarded directly to local
applicants. Most federal funding for these programs is administered by
state or local government entities, which have the ability to contract
with social service providers, including religious organizations.
Table 1: Funding and Objectives of Programs with Charitable Choice
Provisions, Fiscal Year 2001:
Programs: TANF;
Federal funding:$16.5 billion[A];
Key uses of program funds: Providing assistance to needy families,
including promoting job preparation, work, and marriage; preventing and
reducing out-of-wedlock pregnancies; and encouraging the formation and
maintenance of two-parent families;
Administration of funds: TANF is a block grant to states, which can
choose to administer TANF funds at the state level, local level, or
both.
Programs: WTW;
Federal funding:$3 billion for FY 1998-99[B];
Key uses of program funds: Grants were designed to focus on helping
long-term welfare recipients find unsubsidized employment;
Administration of funds: Seventy-five percent of WTW funds were
distributed to states through formula grants to pass on to local
workforce boards through sub-grants. Twenty-five percent of WTW funds
were designated for competitive grants, which were administered at the
federal level.
Programs: SAPT;
Federal funding:$1.7 billion;
Key uses of program funds: Substance abuse prevention and treatment
services for persons at risk of using or abusing alcohol, tobacco, and
illicit drugs;
Administration of funds: SAPT is a block grant to states, which have
broad discretion on how they distribute funds”so long as these funds
are passed on to a public or nonprofit entity.
Programs: CSBG;
Federal funding:$600 million;
Key uses of program funds: CSBG funds are used for activities designed
to have a measurable and potentially major impact on causes of poverty.
The law envisions a wide variety of activities undertaken on behalf of
low-income families and individuals. Examples of CSBG-funded services
include emergency assistance, transportation, and domestic violence
crisis assistance;
Administration of funds: States are required to pass through at least
90 percent of their federal block grant allotments to eligible
entities”primarily community action agencies”to provide or subcontract
out services.
[A] PRWORA authorized $16.5 billion in federal TANF funding to states
each year through fiscal year 2002. In addition, PRWORA includes a
maintenance-of-effort provision, which requires states to provide 75 to
80 percent of their historic level of funding.
[B] While additional funds were not authorized beyond this time period,
WTW grantees (both competitive and formula) have a maximum of 5 years
from their award date to expend their funds.
[End of table]
Charitable Choice Safeguards:
In addition to establishing that FBOs can compete for public funds
while retaining their religious nature, charitable choice provisions
are intended to safeguard the interests of the various parties involved
in financial agreements to provide services (see table 2). While
charitable choice provisions vary somewhat by program, they all share
common themes of protecting religious autonomy among service providers,
safeguarding the interests of beneficiaries of federally funded
services, and ensuring that all contracting agencies, including
religious organizations, are held financially accountable.
Table 2: Charitable Choice Safeguards and the Key Parties They Are
Designed to Protect:
Safeguards: Government must allow religious organizations to compete
for, or receive, federal funding for the provision of social services
on the same basis as any other nongovernmental provider;
Government entities: [Empty];
FBOs: [Check];
Beneficiaries: [Empty].
Safeguards: If a beneficiary objects to the religious nature of a
provider, the state or locality must make available an
alternative (nonreligious) accessible provider;
Government entities: [Empty];
FBOs: [Empty];
Beneficiaries: [Check].
Safeguards: Government is prohibited from requiring an FBO to change
its form of internal governance or to remove religious art, icons, and
symbols;
Government entities: [Empty];
FBOs: [Check];
Beneficiaries: [Empty].
Safeguards: FBOs are not required to separate their religious nature
from their social service activities to receive government funding.
Government entities: [Empty];
FBOs: [Check];
Beneficiaries: [Empty].
Safeguards: FBOs retain the ability to make employment decisions on
religious grounds, even after receiving federal funds.
Government entities: [Empty];
FBOs: [Check];
Beneficiaries: [Empty].
Safeguards: FBOs are subject to the same financial audit regulations
for federal funds as are other nongovernmental organizations.
Government entities: [Check];
FBOs: [Empty];
Beneficiaries: [Empty].
Safeguards: FBOs must not use public funds received directly for the
purpose of worship, religious instruction, or proselytizing;
Government entities: [Check];
FBOs: [Empty];
Beneficiaries: [Check].
Safeguards: FBOs cannot discriminate on the basis of religion in
providing services to clients.
Government entities: [Empty];
FBOs: [Empty];
Beneficiaries: [Check].
[End of table]
FBOs Received a Small Proportion of Contracted Funds and Most Had
Previously Contracted with the Government:
Overall, FBOs contracted for a small proportion of the government
funding available to nongovernmental contractors under the four
programs we examined. Contracts with FBOs accounted for 8 percent (or
about $80 million) of the $1 billion in federal and state TANF funds
spent by state governments on contracts with nongovernmental entities
in 2001, and 2 percent (or about $16 million) of the $712 million
Welfare-to-Work competitive grant funds in fiscal years 1998 and 1999.
National data are not available on the proportion of contracted funds
FBOs received for CSBG, SAPT, and Welfare-to-Work formula grants.
However, state data indicate that FBOs received a small proportion of
CSBG and SAPT funds in the five states we visited. All FBOs that we
visited had tax-exempt status and most were incorporated separately
from religious institutions. In addition, a majority had established
contracts with the government before the passage of charitable choice
provisions in legislation; most were affiliated with Christian
denominations; and most contracted for TANF funds. Under the contracts
we examined, FBOs provided an array of services in line with the key
uses of each program‘s funds and sometimes provided additional services
such as mentoring or fatherhood training.
Contracts with FBOs Constitute a Small Proportion of Government
Contracting:
Contracting with FBOs constituted a relatively small proportion of all
contracting with nongovernmental entities using federal and state TANF
funds in 2001, according to our national survey. TANF contracting
occurs only at the state level in 24 states, only at the local level in
5 states, at both levels in 20 other states, and in the District of
Columbia. TANF contracting does not occur in South Dakota. The majority
of the approximately $1 billion in federal and state TANF funds spent
by state governments on contracts with nongovernmental entities
nationwide went to secular nonprofit organizations, as shown in figure
1. In contrast, contracts with FBOs accounted for 8 percent of the
contracted funds.
Figure 1: Percentage of Federal and State TANF Funds and TANF
Contracts, by Type of Contractors for State-Level Contracting, 2001:
[See PDF for image]
This figure contains two pie-charts depicting the following
information:
Federal and state TANF funds (total = $1.0 billion):
Secular nonprofit organization: 79%;
For-profit organizations: 13%;
Faith-base organizations (nonprofit): 8%.
Number of TANF contracts (total = 5,277 contracts):
Secular nonprofit organization: 66%;
For-profit organizations: 27%;
Faith-base organizations (nonprofit): 7%.
Note: Figure 1 provides information on state-level contracting only and
does not include local contracts. Our national TANF contracting survey
also identified 1,517 TANF contracts at the local level, which
accounted for over $500 million in federal and state funds.
Source: GAO‘s national survey of TANF contracting.
[End of figure]
While FBOs received a small proportion of federal and state TANF funds
contracted out in 2001 at the state level, this proportion varied
considerably across states, as shown in table 3. New Jersey spent over
32 percent of these funds on contracts with FBOs. Nine states and the
District of Columbia spent more than 15 percent of these federal and
state TANF funds on contracts with FBOs. In contrast, 23 states awarded
to FBOs less than 5 percent of the federal and state TANF funds they
contracted out to nongovernmental organizations. While table 3 depicts
contracting by state governments, it does not include information on
contracting by local entities. In states such as California, New York,
and Texas, TANF contracting occurs predominately at the local level.
Our national survey of TANF contracting identified more than $500
million in local government contracts with nongovernmental entities.
About 8 percent of these funds were with FBOs. [Footnote 6]
Table 3: State-level TANF Contracting with FBOs, 2001 (Dollars in
millions):
State: Alabama;
Total value of TANF contracts between state and nongovernmental
entities: $2.9;
Percentage of contracted funds with FBOs: 3;
Total number of contracts between state and nongovernmental entities:
24;
Percentage of contracts with FBOs: 21.
State: Alaska;
Total value of TANF contracts between state and nongovernmental
entities: $1.3;
Percentage of contracted funds with FBOs: 0;
Total number of contracts between state and nongovernmental entities:
2;
Percentage of contracts with FBOs: 0.
State: Arizona[A];
Total value of TANF contracts between state and nongovernmental
entities: $13.7;
Percentage of contracted funds with FBOs: 3;
Total number of contracts between state and nongovernmental entities:
120;
Percentage of contracts with FBOs: 4.
State: Arkansas[A];
Total value of TANF contracts between state and nongovernmental
entities: $4.1;
Percentage of contracted funds with FBOs: 0;
Total number of contracts between state and nongovernmental entities:
10;
Percentage of contracts with FBOs: 0.
State: California[A];
Total value of TANF contracts between state and nongovernmental
entities: $0.7;
Percentage of contracted funds with FBOs: 0;
Total number of contracts between state and nongovernmental entities:
5;
Percentage of contracts with FBOs: 0.
State: Connecticut[A];
Total value of TANF contracts between state and nongovernmental
entities: $1.7;
Percentage of contracted funds with FBOs: 0;
Total number of contracts between state and nongovernmental entities:
2;
Percentage of contracts with FBOs: 0.
State: Delaware;
Total value of TANF contracts between state and nongovernmental
entities: $5.5;
Percentage of contracted funds with FBOs: 19;
Total number of contracts between state and nongovernmental entities:
8;
Percentage of contracts with FBOs: 25.
State: District of Columbia;
Total value of TANF contracts between state and nongovernmental
entities: $46.0;
Percentage of contracted funds with FBOs: 19;
Total number of contracts between state and nongovernmental entities:
10;
Percentage of contracts with FBOs: 20.
State: Georgia[A];
Total value of TANF contracts between state and nongovernmental
entities: $23.6;
Percentage of contracted funds with FBOs: 1;
Total number of contracts between state and nongovernmental entities:
123;
Percentage of contracts with FBOs: 6.
State: Hawaii;
Total value of TANF contracts between state and nongovernmental
entities: $0.7;
Percentage of contracted funds with FBOs: 0;
Total number of contracts between state and nongovernmental entities:
2;
Percentage of contracts with FBOs: 0.
State: Idaho;
Total value of TANF contracts between state and nongovernmental
entities: $17.3;
Percentage of contracted funds with FBOs: 1;
Total number of contracts between state and nongovernmental entities:
22;
Percentage of contracts with FBOs: 5.
State: Illinois;
Total value of TANF contracts between state and nongovernmental
entities: $111.9;
Percentage of contracted funds with FBOs: 12;
Total number of contracts between state and nongovernmental entities:
1,989;
Percentage of contracts with FBOs: 7.
State: Indiana;
Total value of TANF contracts between state and nongovernmental
entities: $23.3;
Percentage of contracted funds with FBOs: 15;
Total number of contracts between state and nongovernmental entities:
223;
Percentage of contracts with FBOs: 3.
State: Iowa;
Total value of TANF contracts between state and nongovernmental
entities: $1.8;
Percentage of contracted funds with FBOs: 24;
Total number of contracts between state and nongovernmental entities:
23;
Percentage of contracts with FBOs: 13.
State: Kansas;
Total value of TANF contracts between state and nongovernmental
entities: $2.1;
Percentage of contracted funds with FBOs: 19;
Total number of contracts between state and nongovernmental entities:
83;
Percentage of contracts with FBOs: 11.
State: Kentucky[A];
Total value of TANF contracts between state and nongovernmental
entities: $3.2;
Percentage of contracted funds with FBOs: 0;
Total number of contracts between state and nongovernmental entities:
8314Percentage of contracts with FBOs: o.
State: Louisiana;
Total value of TANF contracts between state and nongovernmental
entities: $11.5;
Percentage of contracted funds with FBOs: 15;
Total number of contracts between state and nongovernmental entities:
159;
Percentage of contracts with FBOs: 13.
State: Maine;
Total value of TANF contracts between state and nongovernmental
entities: $3.1;
Percentage of contracted funds with FBOs: 3;
Total number of contracts between state and nongovernmental entities:
12;
Percentage of contracts with FBOs: 17.
State: Massachusetts[A];
Total value of TANF contracts between state and nongovernmental
entities: $64.1;
Percentage of contracted funds with FBOs: 5;
Total number of contracts between state and nongovernmental entities:
159;
Percentage of contracts with FBOs: 8.
State: Michigan;
Total value of TANF contracts between state and nongovernmental
entities: $52.8;
Percentage of contracted funds with FBOs: 17;
Total number of contracts between state and nongovernmental entities:
384;
Percentage of contracts with FBOs: 16.
State: Minnesota[A];
Total value of TANF contracts between state and nongovernmental
entities: $4.7;
Percentage of contracted funds with FBOs: 0;
Total number of contracts between state and nongovernmental entities:
27;
Percentage of contracts with FBOs: 0.
State: Mississippi[A];
Total value of TANF contracts between state and nongovernmental
entities: $49.0;
Percentage of contracted funds with FBOs: [B];
Total number of contracts between state and nongovernmental entities:
475;
Percentage of contracts with FBOs: [B].
State: Missouri[A];
Total value of TANF contracts between state and nongovernmental
entities: $12.7;
Percentage of contracted funds with FBOs: 11;
Total number of contracts between state and nongovernmental entities:
118;
Percentage of contracts with FBOs: 13.
State: Montana;
Total value of TANF contracts between state and nongovernmental
entities: $7.5;
Percentage of contracted funds with FBOs: 0;
Total number of contracts between state and nongovernmental entities:
14;
Percentage of contracts with FBOs: 0.
State: Nebraska;
Total value of TANF contracts between state and nongovernmental
entities: $7.1;
Percentage of contracted funds with FBOs: 0;
Total number of contracts between state and nongovernmental entities:
12;
Percentage of contracts with FBOs: 0.
State: Nevada[A];
Total value of TANF contracts between state and nongovernmental
entities: $4.1;
Percentage of contracted funds with FBOs: 0[C];
Total number of contracts between state and nongovernmental entities:
43;
Percentage of contracts with FBOs: 5.
State: New Hampshire;
Total value of TANF contracts between state and nongovernmental
entities: $3.5;
Percentage of contracted funds with FBOs: 0;
Total number of contracts between state and nongovernmental entities:
10;
Percentage of contracts with FBOs: 0.
State: New Jersey[A];
Total value of TANF contracts between state and nongovernmental
entities: $32.8;
Percentage of contracted funds with FBOs: 32;
Total number of contracts between state and nongovernmental entities:
22;
Percentage of contracts with FBOs: 5.
State: New York[A];
Total value of TANF contracts between state and nongovernmental
entities: $45.3;
Percentage of contracted funds with FBOs: 13;
Total number of contracts between state and nongovernmental entities:
159;
Percentage of contracts with FBOs: 13.
State: North Carolina[A];
Total value of TANF contracts between state and nongovernmental
entities: $2.8;
Percentage of contracted funds with FBOs: 21;
Total number of contracts between state and nongovernmental entities:
24;
Percentage of contracts with FBOs: 25.
State: North Dakota;
Total value of TANF contracts between state and nongovernmental
entities: $1.4;
Percentage of contracted funds with FBOs: 29;
Total number of contracts between state and nongovernmental entities:
3;
Percentage of contracts with FBOs: 33.
State: Oklahoma;
Total value of TANF contracts between state and nongovernmental
entities: $2.6;
Percentage of contracted funds with FBOs: 21;
Total number of contracts between state and nongovernmental entities:
37;
Percentage of contracts with FBOs: 8.
State: Oregon;
Total value of TANF contracts between state and nongovernmental
entities: $0.9;
Percentage of contracted funds with FBOs: 7;
Total number of contracts between state and nongovernmental entities:
35;
Percentage of contracts with FBOs: 11.
State: Pennsylvania[A];
Total value of TANF contracts between state and nongovernmental
entities: $157.8;
Percentage of contracted funds with FBOs: 2;
Total number of contracts between state and nongovernmental entities:
164;
Percentage of contracts with FBOs: 6.
State: Rhode Island;
Total value of TANF contracts between state and nongovernmental
entities: $5.3;
Percentage of contracted funds with FBOs: 13;
Total number of contracts between state and nongovernmental entities:
63;
Percentage of contracts with FBOs: 8.
State: South Carolina[A];
Total value of TANF contracts between state and nongovernmental
entities: $15.4;
Percentage of contracted funds with FBOs: 2;
Total number of contracts between state and nongovernmental entities:
16;
Percentage of contracts with FBOs: 13.
State: Tennessee;
Total value of TANF contracts between state and nongovernmental
entities: $41.9;
Percentage of contracted funds with FBOs: 7;
Total number of contracts between state and nongovernmental entities:
56;
Percentage of contracts with FBOs: 11.
State: Texas[A];
Total value of TANF contracts between state and nongovernmental
entities: $0.4;
Percentage of contracted funds with FBOs: 0;
Total number of contracts between state and nongovernmental entities:
1;
Percentage of contracts with FBOs: 0.
State: Utah[A];
Total value of TANF contracts between state and nongovernmental
entities: $3.9;
Percentage of contracted funds with FBOs: 0;
Total number of contracts between state and nongovernmental entities:
197;
Percentage of contracts with FBOs: 0.
State: Vermont;
Total value of TANF contracts between state and nongovernmental
entities: $6.6;
Percentage of contracted funds with FBOs: 6;
Total number of contracts between state and nongovernmental entities:
36;
Percentage of contracts with FBOs: 3.
State: Virginia[A];
Total value of TANF contracts between state and nongovernmental
entities: $6.1;
Percentage of contracted funds with FBOs: 1;
Total number of contracts between state and nongovernmental entities:
104;
Percentage of contracts with FBOs: 3.
State: Washington[A];
Total value of TANF contracts between state and nongovernmental
entities: $33.2;
Percentage of contracted funds with FBOs: 23;
Total number of contracts between state and nongovernmental entities:
152;
Percentage of contracts with FBOs: 8.
State: West Virginia;
Total value of TANF contracts between state and nongovernmental
entities: $10.8;
Percentage of contracted funds with FBOs: 7;
Total number of contracts between state and nongovernmental entities:
39;
Percentage of contracts with FBOs: 13.
State: Wisconsin;
Total value of TANF contracts between state and nongovernmental
entities: $152.9;
Percentage of contracted funds with FBOs: 1;
Total number of contracts between state and nongovernmental entities:
95;
Percentage of contracts with FBOs: 4.
State: Wyoming;
Total value of TANF contracts between state and nongovernmental
entities: $0.4;
Percentage of contracted funds with FBOs: 0;
Total number of contracts between state and nongovernmental entities:
1;
Percentage of contracts with FBOs: 0.
Note: Colorado, Florida, Maryland, New Mexico, Ohio, and South Dakota
are not included in table 3 because they do not contract for TANF
services at the state level.
[A] TANF contracting in these states occurs at both the state and local
level. Table 3 provides data on TANF contracts by state government
entities only and does not include data on local-level TANF contracts.
[B] State officials did not know how much of their TANF contracts and
funds went to FBOs.
[C] 0.1 percent.
Source: GAO‘s national survey of TANF contracting.
[End of table]
In addition, national data show that a small proportion of WTW
competitive grant funds went to FBOs. According to Labor, 6 of 191
contracts for these funds went to FBOs in fiscal years 1998 and 1999;
these contracts totaled $16.2 million, or approximately 2 percent of
WTW competitive grant funds in those years. [Footnote 7]
National data are not available to indicate the magnitude of
contracting with FBOs in other charitable choice programs we examined.
Labor did not have information about the proportion of WTW formula
grants that went to FBOs. States administer these grant funds through
local entities. In addition, HHS has not compiled national data on the
level of contracting with FBOs using CSBG and SAPT funds.
Although national information is not available, in the five states we
visited we found that FBOs received 9 percent or less of SAPT funds
contracted out by states. In addition, FBOs represented between 2 and
20 percent of the organizations licensed or certified by these five
states to provide substance abuse treatment services, as shown in table
4.
Table 4: Contracting with FBOs Using SAPT Funds, Federal Fiscal Year
2001 (Dollars in millions):
State: Georgia;
Total funds contracted out to nongovernmental entities: $29.4;
Percentage of funds contracted with FBOs: 7;
Number of licensed treatment providers eligible to receive funds:
244[A];
Percentage of licensed treatment providers eligible to receive funds
that are FBOs: 5.
State: Indiana[B]:
Total funds contracted out to nongovernmental entities: $23.6;
Percentage of funds contracted with FBOs: 9;
Number of licensed treatment providers eligible to receive funds:
25[C];
Percentage of licensed treatment providers eligible to receive funds
that are FBOs: 20.
State: Texas[D]:
Total funds contracted out to nongovernmental entities: $68.9;
Percentage of funds contracted with FBOs: 5;
Number of licensed treatment providers eligible to receive funds: 322;
Percentage of licensed treatment providers eligible to receive funds
that are FBOs: 2.
State: Virginia[B]:
Total funds contracted out to nongovernmental entities: $38.4;
Percentage of funds contracted with FBOs: 0[E];
Number of licensed treatment providers eligible to receive funds: 234;
Percentage of licensed treatment providers eligible to receive funds
that are FBOs: [F].
State: Washington; $33.8 3 519
Total funds contracted out to nongovernmental entities: $33.8;
Percentage of funds contracted with FBOs: 3;
Number of licensed treatment providers eligible to receive funds: 519;
Percentage of licensed treatment providers eligible to receive funds
that are FBOs: 8.
[A] Includes multiple service sites for some service contractors.
[B] Data provided by Indiana and Virginia are for state fiscal year
2002 (7/1/2001 to 6/30/2002).
[C] Indiana subcontracts to providers through 25 certified
organizations.
[D] Data provided by Texas are for 9/1/2000 to 8/30/2001.
[E] 0.2 percent.
[F] State officials could not provide the number of licensed treatment
providers that are FBOs.
Source: Data provided by state-level program officials in five states.
[End of table]
In addition, in the five states we visited, FBOs received a small
proportion of the overall CSBG funds passed through by states. States
allocate these funds to ’eligible entities,“ primarily community action
agencies (CAAs), which include mostly private, nonprofit organizations
but also some public agencies. None of the eligible entities in the
five states we visited were FBOs. However, some of them subcontracted
with other providers, including FBOs, for services. In Texas and
Washington, FBOs received more than half of these subcontracted funds,
as shown in table 5.
Table 5: Contracting with FBOs Using CSBG Funds, Federal Fiscal Year
2001:
State: Georgia;
CSBG funds passed through by the state to CAAs: $14,429,044;
Funds subcontracted by CAAs to nongovernmental entities: $211,687;
Percent of funds subcontracted by CAAs to FBOs: 2.
State: Indiana[A];
CSBG funds passed through by the state to CAAs: $8,801,452;
Funds subcontracted by CAAs to nongovernmental entities: $410,043;
Percent of funds subcontracted by CAAs to FBOs: 14.
State: Texas;
CSBG funds passed through by the state to CAAs: $25,847,538;
Funds subcontracted by CAAs to nongovernmental entities: $1,333,809;
Percent of funds subcontracted by CAAs to FBOs: 55.
State: Virginia[A];
CSBG funds passed through by the state to CAAs: $8,309,697;
Funds subcontracted by CAAs to nongovernmental entities: [B];
Percent of funds subcontracted by CAAs to FBOs: [B].
State: Washington[A];
CSBG funds passed through by the state to CAAs: $6,291,396;
Funds subcontracted by CAAs to nongovernmental entities: $582,086;
Percent of funds subcontracted by CAAs to FBOs: 69.
[A] While we requested data for federal fiscal year 2001, Indiana and
Washington officials provided calendar year 2001 figures and Virginia
provided state fiscal year 2001 (7/1/00-6/30/01) figures.
[B] Virginia state officials could not provide the total amount of CSBG
funds subcontracted by CAAs.
Source: Data provided by state-level program officials in five states.
[End of table]
Most FBOs We Visited Were Incorporated Separately from Religious
Institutions and a Majority Previously Had Government Contracts:
All of the FBOs we visited had tax-exempt status; most were
incorporated separately from religious institutions; and a majority of
them had a fairly long history of contracting with the government.
While 31 of the 35 FBO contractors we visited had been established to
be independent of religious institutions, all of them had tax-exempt
status under section 501(c)(3) of the Internal Revenue Code. Several of
these FBOs told us that they needed this status to compete for
nongovernmental sources of funding, such as funding from private
foundations. Some FBOs noted that this status established them as a
legal entity separate from a church so that the church would be
protected from liability for the services the FBO offered. Moreover,
some FBO officials told us that 501(c)(3) status gave their program
added credibility and an established presence in the community. Of the
35 FBO contractors we visited, 21 had contracted with the government
before the passage of charitable choice legislation in the relevant
programs. One FBO had provided services through government contracts
since 1913.
The FBOs we selected for interviews in the five states we visited
varied in size and structure but shared some commonalities. While some
FBOs were very small, operating on a budget of less than $200,000,
others had large annual budgets, as high as $60 million. Some of the
FBOs we visited operated independently; some were multidenominational
coalitions of churches; and others were affiliated with a national
religious organization, such as Catholic Charities, the Association of
Jewish Family & Children‘s Services, or the Salvation Army. Twenty-nine
of the 35 FBOs were affiliated with the Christian faith and included
various Christian denominations, for example, Baptist, Methodist, and
Lutheran. Finally, about two-thirds of these FBOs contracted for TANF-
funded services.
FBOs we visited contracted for services that matched the key uses of
each program‘s funds and sometimes included additional features. While
more FBOs provided services closer to the key uses of TANF program
funds, such as job preparation, several of the FBOs contracting for
TANF services included fatherhood programs or forms of mentoring in
their programs. FBOs that contracted for WTW funds mostly provided job
training and placement; one also helped clients find daycare services.
FBOs contracting for SAPT funds provided prevention and treatment of
substance abuse. The two FBOs that contracted for CSBG funds offered
services that included parent education, case management for families
with a variety of needs, and medical services.
Limited Awareness, Limited Capacity, and Inexperience Constrain Some
FBOs from Government Contracting:
While charitable choice has created opportunities for FBOs, several
factors continue to constrain some FBOs from contracting with the
government. These factors include FBOs‘ limited awareness of funding
opportunities, limited administrative and financial capacity,
inexperience with government contracting, and beliefs about the
separation of church and state. However, most of these limitations are
not unique to FBOs but are common to small, inexperienced organizations
seeking to enter into contracts with government. Although most
officials in the states we visited reported no legal barriers to
prevent religious organizations from partnering with government, some
officials noted that their history of a strong separation of church and
state might lead all parties to be cautious about collaboration.
Government agencies in the states we visited differed in their
approaches to identification and removal of constraints that can limit
financial contracting between FBOs and government. Most states we
visited have broadened access to information and provided assistance
for FBOs, while others have been less active in identifying and
addressing constraints. Federal agencies have also taken steps to
address constraints by establishing funding for small faith-based and
community organizations to develop or expand model social service
programs.
Factors That Constrain FBOs in Government Contracting Include Their
Limited Awareness, Limited Capacity, and Inexperience with Government:
Small FBOs are generally unaware of funding opportunities unless they
have past experience with government, according to some FBO and
government officials we interviewed. Notices about funding
opportunities are sent to current provider mailing lists, to
newspapers, and sometimes to agency Web sites. Because state and local
governments are not required to promote a broader awareness of funding
opportunities for new providers under current charitable choice
provisions, government agencies in less active states have not taken
steps to disseminate information about funding opportunities to FBOs.
As a result, potential service providers that are not on current
notification lists, including FBOs, may remain unaware of upcoming
funding opportunities while experienced providers have advance notice.
Moreover, small, inexperienced FBOs are disadvantaged by their limited
administrative capacity, according to many government and FBO officials
we interviewed. Small FBO providers often lack the administrative
resources necessary to deal with the complex paperwork requirements of
government contracting. Local program officials said that some new FBO
providers may have never submitted a budget, or may overestimate their
capacity to provide services, or may have difficulty with reporting
requirements. Some small FBOs we interviewed rely on one person”who may
have other duties”or a small number of staff and volunteers, to perform
administrative tasks. Government officials told us that small faith-
based contractors inexperienced in government contracting often
required administrative and technical assistance.
Similarly, FBO officials have expressed concerns about the financial
constraints of government contracting. Some FBO officials we
interviewed reported experiencing cash flow problems resulting from
start-up costs and payment delays. In some cases, their churches helped
with start-up funds, or other expenses, including overhead and indirect
assistance. Furthermore, in a March 2001 survey conducted by the
Georgia Faith-Based Liaison, [Footnote 8] religious leaders reported
that while they were interested in government contracting, they had
concerns regarding their limited financial capacity to manage publicly
funded programs. These same leaders also expressed concerns about their
financial capacity if they were to offer child-care or social services
for welfare clients because of the risks associated with payment
delays.
Most state and local officials in the states we visited reported that
no legal barriers exist to prevent FBOs from contracting with the
government in programs with charitable choice provisions. However, some
officials noted that perceptions about the separation of church and
state might cause both FBO and government officials to be cautious
about entering into contracts. One state lawmaker in Georgia identified
the state‘s constitution as one source of this perception, noting that
it contains language forbidding the funding of religious organizations
with state funds. Because of confusion over whether the state
constitution also applied to federal funds, Georgia adopted a law that
specified that charitable choice allowed religious organizations to
receive federal funding.
Most government officials we interviewed told us that state licensure
or certification requirements for substance abuse treatment providers
do not restrict religious organizations from participating in publicly
funded treatment programs. However, in all of the states we visited,
substance abuse treatment providers are required to be licensed or
certified in order to be eligible for publicly funded contracts.
Government officials noted that because the health and safety
requirements attached to licensing can be costly, they might pose a
barrier to small FBOs that want to be licensed to offer this service.
To address this, lawmakers in the state of Washington proposed easing
licensing requirements for FBO substance abuse treatment providers.
However, this proposal was not approved because of concerns that this
would lower standards for FBO providers.
Government and FBO officials we interviewed in several states reported
that some FBOs prefer not to partner with government for various
reasons. For example, some faith-based providers do not want to
separate their religion from their delivery of services. In a recent
survey conducted by Oklahoma‘s Office of Faith-Based and Community
Initiative to identify barriers to collaboration, religious leaders
reported that they were concerned about potential erosion of their
religious mission, government intrusion into affairs of the
congregation, and excessive bureaucracy.
States Vary in Their Approach to Addressing Constraints:
While states we visited differed in their approaches, some states have
taken more active strategies toward addressing factors that constrain
FBOs from government contracting. Some states, such as Texas and
Virginia, established task forces to advise the governor or legislature
about actions for improving government collaboration with FBOs. To
promote awareness and facilitate collaborations with FBOs, 20 states
[Footnote 9] have appointed faith-based liaisons since the enactment of
charitable choice provisions in the current law. Four of the five
states we visited directed outreach activities to engage religious
leaders and government officials in discussions of the perceived
barriers to collaboration and to promote awareness of funding
opportunities.
Some states took steps to strengthen the administrative capacity of
FBOs by providing informational opportunities and developing
educational material for FBOs unfamiliar with government contracting.
Indiana, Virginia, and Texas conducted informational sessions and
workshops for FBOs. In addition, Virginia and Indiana created
educational handbooks dedicated to new faith-based social service
providers with information on topics such as applying for government
funding, writing grants, and forming a nonprofit, tax-exempt 501(c)(3)
organization. Some state and local officials we interviewed told us
that they offer assistance and administrative information to any small,
new provider during the pre-contracting phase.
Other states, which we did not visit, reported that they created
separate funding for their faith-based initiatives. New Jersey set up
its own Office of Faith-Based and Community Initiative and funded it
using only state funds, according to the New Jersey faith-based
liaison. This office began awarding grants for services such as day
care, youth mentoring, and substance abuse treatment to FBOs in 1998
and plans to award $2.5 million in grants this year to faith-based
providers. North Carolina developed a ’Communities of Faith
Initiatives,“ which set aside $2.45 million in TANF funds for its Faith-
Demonstration awards in 1999 and 2000 to contract with various FBOs for
job retention and follow-up demonstration pilots.
Federal Agencies Have Also Taken Actions to Address Constraints:
Federal agencies have also acted to identify and address constraints to
government collaborations with FBOs. President Bush issued two
executive orders in January 2001, establishing the White House Office
of Faith-Based and Community Initiatives and Centers for Faith-Based
and Community Initiatives in five federal agencies. [Footnote 10] These
agencies have reported on barriers to collaboration with FBOs and
outlined recommendations to address some of the barriers. Moreover, a
Compassion Capital Fund of $30 million was approved in the fiscal year
2002 budget as part of the Labor, HHS, and Education appropriations.
[Footnote 11] The funds are to be used for grants to charitable
organizations to emulate model social service programs and encourage
research on the best practices of social services organizations. In
addition, Labor established another funding source to enhance
collaborations with faith-based and community providers. Labor‘s
Employment and Training Administration announced on April 17, 2002, the
availability of grant funding geared toward helping faith-based and
community-based organizations participate in the workforce development
system.
Understanding and Implementation of Charitable Choice Safeguards Vary
and Incidence of Violations Is Unknown:
In the five states we visited, understanding and implementation of
charitable choice safeguards differed, and the incidence of problems
involving safeguards is unknown. A few of the safeguard provisions
specified in federal law are subject to interpretation, and federal
agencies have issued limited guidance on how to interpret them. As a
result, some government and FBO officials expressed confusion
concerning two matters: (1) allowable activities under the prohibition
on the use of federal funds for religious instruction or proselytizing
and (2) FBOs‘ ability to hire on the basis of faith. State and local
government entities also differed in how they interpret the charitable
choice safeguards and their approaches to communicating them to FBOs.
Officials in the states we visited reported receiving few complaints
from FBO clients. These officials relied on complaints and grievance
procedures to identify discrimination or proselytizing, and in some
cases FBOs and clients may not be aware of the charitable choice
safeguards. Therefore, violations of the safeguard requirements may go
unreported or undetected.
Federal Agencies Have Issued Limited Guidance on Safeguards:
In the 6 years since charitable choice provisions were passed as part
of PRWORA, federal agencies have issued limited guidance to state
agencies concerning charitable choice safeguards”such as the
prohibition on the use of federal funds for religious instruction or
proselytizing”and how they should be implemented. Even though HHS has
recently created a charitable choice Web site outlining most of the
safeguards and has sponsored workshops featuring charitable choice
issues, it has not issued guidance to states on the meaning of the
provisions designed to safeguard parties involved in government
contracting. According to an HHS official, although they have drafted
guidance for charitable choice provisions as they apply to substance
abuse prevention and treatment programs, this document has not been
released. HHS officials told us that the agency did not write
regulatory language concerning charitable choice and TANF because
PRWORA specifically limits HHS from regulating the conduct of states
under TANF, except as expressly provided in the law. While PRWORA
includes charitable choice provisions, the law does not indicate that
HHS may prescribe how states must implement these provisions. With
respect to CSBG funds, HHS‘s Office of Community Services has
distributed an information memorandum to states communicating the
safeguards as they are listed in the CSBG law, but this memorandum does
not offer guidance on how states should interpret the safeguard
provisions. Finally, Labor‘s solicitation of grant applications for WTW
competitive grants specifically mentioned that FBOs were eligible to
apply for the funds, but Labor did not issue guidance concerning
charitable choice safeguards. Labor reported that in the case of WTW
formula grants, the only information it gave to states was to note
charitable choice provisions in the planning guidance it issued
initially for the program.
Officials Implementing Charitable Choice Provisions Differed in Their
Understanding of Certain Safeguards:
Most state and local officials we interviewed knew that charitable
choice provisions were meant to allow FBOs to participate in the
contracting process on the same basis as other organizations and
understood that the law prohibits the use of public funds for religious
worship, instruction, or proselytizing; however, they often differed in
their understanding of allowable religious activities. Several state
and local officials reported that prayer was not allowed in the
delivery of publicly funded social services, while many FBO officials
said that voluntary prayer was permissible during such services. PRWORA
and other laws with charitable choice provisions do not define what
constitutes proselytizing or religious worship and federal guidance
concerning this matter has not been issued to state and local
government entities. Without guidance from HHS, consistency in
interpretations is unlikely.
Some state, local, and FBO officials we interviewed were unaware of the
charitable choice safeguard allowing religious organizations to retain
limited exception to federal employment discrimination law. This
safeguard exempts religious organizations from the prohibition against
discrimination on the basis of religion in employment decisions, even
when they receive federal funds. For example, even though the law
allows FBOs to make hiring decisions on the basis of faith, one
government official said that the boilerplate language in the agency‘s
contracts with service providers specifically indicates that providers
are not allowed to discriminate in employment decisions on the basis of
religion. Other state and local officials we interviewed were aware of
this safeguard, but some perceived it to be in conflict with local
antidiscrimination laws. In particular, one local agency official said
that up to 17 percent of the local population consisted of sexual
minorities and expressed concern that they would be discriminated
against in both the hiring and the delivery of services. In contrast,
almost all FBO officials we interviewed said that they do not consider
faith when making hiring decisions for any of their organizations‘
positions. In addition, all FBO officials we interviewed said they do
not consider the faith of the client in the delivery of their services.
States and Localities Varied in the Extent to Which They Communicated
Information about the Safeguards:
Some states were more active than others in communicating charitable
choice safeguards to the various parties involved in contracting. For
example, the state of Virginia enacted legislation to include all
charitable choice provisions in Virginia‘s procurement law. These
provisions were included in its technical assistance handbook for
faith- and community-based organizations and used as a curriculum for
educating over 1,000 representatives from faith- and community-based
groups on charitable choice safeguards, such as the FBOs‘ right to
display religious symbols. Virginia also distributed a statement that
local agencies under Virginia procurement law [Footnote 12] must give
to all clients informing them of their right to an alternative
(nonreligious) provider under charitable choice. Indiana‘s Family and
Social Services Administration implemented a similar practice.
States also communicated the safeguards by including various charitable
choice provisions in contracts or requests for proposals (RFP). State
and local government contracting entities in Indiana, Virginia, and
Texas included information in their TANF RFPs specifically stating that
FBOs were eligible to apply for federal funds. [Footnote 13] The
Indiana Family and Social Services Administration‘s Indiana Manpower
Placement and Comprehensive Training Program and the Texas Department
of Human Services included all charitable choice safeguards in their
contracts with TANF service providers. Georgia has recently passed
legislation to implement charitable choice provisions; however, both
Georgia and Washington do not currently include any charitable choice
language in their TANF contracts or RFPs. Washington state officials
said that after reviewing the charitable choice statutory provisions,
they decided that no action was required because they already
contracted with FBOs.
Government officials said that in practice, safeguards were most often
verbally communicated, many times through technical assistance
workshops or bidders‘ conferences. However, most of the FBOs we
interviewed said that the contracting agency had not explained the
provisions to them. In addition, few local and FBO officials we
interviewed recalled receiving any guidance on the safeguards, informal
or otherwise, from state or local officials, respectively.
Incidence of Violations of Safeguard Requirements Is Unknown:
In the five states we visited, government officials reported few
problems concerning FBO use of federal funds for proselytizing,
discrimination against clients, or client requests for alternative
(nonreligious) providers; however, the incidence of violations of these
safeguard requirements is unknown. FBOs we interviewed did not report
any intrusive government behavior that interfered with their ability to
retain their religious nature under charitable choice. These FBOs often
displayed religious symbols and none said that government officials
restricted this ability under charitable choice by asking them to
remove religious icons. In Texas, one lawsuit was filed against an FBO
for allegedly using public funds to purchase bibles for a charitable
choice program, and the case was dismissed in federal court. However,
almost all of the government and FBO officials we interviewed said that
they had not received any complaints from clients about the religious
nature of an FBO.
Officials in the five states we visited also said that few clients had
asked for an alternative (nonreligious) provider, one of the charitable
choice protections afforded to clients who object to receiving services
from a religious organization. However, only two of the five states we
visited, Indiana and Virginia, issued written guidance to inform
clients that they had this right to an alternative (nonreligious)
provider, and these two states only recently issued such guidance.
Texas includes such information in its TANF contracts, but requires
that the provider communicate this information to the client. Failure
to communicate information about this safeguard to clients raises the
possibility that some clients who may prefer to receive services from a
nonreligious provider may not be aware of their right to do so.
The majority of state and local agencies relied on complaint-based
systems to identify violations of the charitable choice safeguard
requirements. Agency officials typically monitored financial and
programmatic aspects of the services. A few officials said that any
’red flags“ would show up during regular programmatic monitoring, and
that such indications would be the basis for further investigation.
Nonetheless, it is not clear whether there are violations of the
safeguard requirements that go unreported or undetected because clients
and FBOs may not be aware of the safeguard provisions.
FBOs Are Held Accountable for Performance in the Same Way As Non-FBOs,
but Comparative Performance Information Is Unavailable:
FBOs are held accountable for performance in the same way as other
organizations that contract with the government, according to state and
local officials in the five states we visited. Most officials said that
all contractors are held accountable on the basis of the same
standards, such as those contained in the contract language. None of
the officials said that FBOs are held to a different standard, either
higher or lower, compared to other contractors. Most agencies
responsible for monitoring contractors said that they monitored all
contracting organizations in the same way, whether faith-based or not.
None of the state and local officials we interviewed said that they
monitored FBOs differently from other organizations. Monitoring
activities included program audits, financial audits, and regular
performance reports from FBOs.
Although FBOs are held accountable for performance in the same way as
non-FBOs, comparative information on contractor performance is
unavailable for several reasons. One reason is that cost-reimbursement
contracts, used by many of the agencies in the five states visited, pay
contractors on the basis of the allowable costs they incur in providing
services, rather than performance outcomes”the results expected to
follow from a service. In contrast, performance-based contracts, which
were used by some of the agencies visited, pay contractors on the basis
of the degree to which the services performed meet the outcomes set
forth in the contract. Examples of such performance outcomes include
the percentages of clients that obtain or retain employment for a
specified period of time.
However, even when contracts specified expected outcomes, some state
and local officials said that comparative information on contractor
performance was unavailable. In the five states, specified performance
outcomes sometimes varied with each contractor individually, often
because contractors either provided different services or the same
services to different populations. In Indiana, for example, TANF
contractors proposed their performance outcomes as part of the bidding
process on the basis of the local agency‘s needs. While specified
performance outcomes sometimes differed on the basis of the services
provided and the populations served, none of the state and local
officials told us that these performance outcomes varied according to
whether the contractor was faith based.
While contractors shared the same specified performance outcomes in a
few cases, state and local officials had not compared the performance
of FBOs to that of other contractors. Many officials told us that they
did not track the performance of FBOs as a group at all. For example,
one state-level agency tracked substance abuse treatment outcomes by
providers but had not identified which contractors were FBOs.
Most state and local officials that provided their opinion believed
that their FBO service providers performed as well as or better than
other organizations overall, even though they did not provide data
regarding FBO performance. Research efforts are currently under way to
provide information on the performance of FBOs in delivering social
services. Researchers at Indiana University-Purdue University
Indianapolis are conducting a 3-year evaluation comparing the
performance of FBOs and non-FBOs in Indiana, Massachusetts, and North
Carolina. Researchers expect to complete the study in 2003. In
addition, in February 2002, The Pew Charitable Trusts awarded a $6.3
million grant to the Rockefeller Institute of Government, based at the
State University of New York in Albany, to study the capacity and
effectiveness of FBOs in providing social services and other issues.
Conclusions:
While HHS and Labor have taken steps to increase awareness of funding
opportunities for religious and community organizations, state and
local government officials and FBO officials continue to differ in their
understanding of charitable choice rules, particularly regarding
specific safeguards designed to protect the various parties involved in
financial arrangements, including FBOs and clients. In addition,
clients are sometimes not being informed about the safeguards that are
specifically designed to protect them. This is a problem because
government entities generally rely on complaints from clients to
enforce such safeguards. When all parties are not fully aware of their
rights and responsibilities under charitable choice provisions,
violations of these rights may go undetected and unreported.
While HHS officials said that they interpret PRWORA to mean that the
agency does not have the authority to issue regulations on charitable
choice for TANF programs, HHS does have the authority to issue other
forms of guidance to states for TANF programs. Additional guidance to
clarify the safeguards and suggest ways in which they can be
implemented would promote greater consistency in the way that
government agencies meet their responsibilities in implementing
charitable choice provisions. Without guidance from HHS, consistency in
the interpretation of charitable choice provisions is unlikely. Because
the WTW funds were not reauthorized and all funds have been distributed
to grantees, the issuance of guidance by Labor to states is no longer
needed.
Recommendation for Executive Action:
In order to promote greater consistency of interpretation and
implementation of charitable choice provisions, we recommend that the
Secretary of HHS issue guidance to the appropriate state and local
agencies administering TANF, CSBG, and SAPT 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.
Agency Comments:
We provided a draft of this report to HHS and Labor for their review.
HHS agreed with our recommendation and said that it is in the process
of developing and issuing guidance to the appropriate state and local
agencies administering these programs. HHS also provided detailed
information on how it plans to use the $30 million Compassion Capital
Fund, which is intended to assist FBOs and community-based
organizations. HHS‘s comments are reprinted in appendix II. Labor had
no formal comments. HHS and Labor also provided technical comments that
we incorporated as appropriate.
As arranged with your offices, unless you publicly announce its
contents earlier, we plan no further distribution of this report until
30 days from its issue date. At that time, we will send copies of this
report to the Secretary of Health and Human Services, the Secretary of
Labor, appropriate congressional committees, and other interested
parties. We will also make copies available to others upon request. In
addition, the report will be available at no charge on the GAO Web site
at [hyperlink, http://www.gao.gov].
If you or your staffs have any questions about this report, please
contact me at (202) 512-7215. Other contacts and staff acknowledgments
are listed in appendix III.
Signed by:
Sigurd R. Nilsen:
Director:
Education, Workforce, and Income Security Issues:
[End of section]
Appendix I: Scope and Methodology:
To obtain specific information about how charitable choice has been
implemented, we visited 5 states”Georgia, Indiana, Texas, Virginia, and
Washington. We selected these states to obtain a range in the levels of
both state government activities with regard to faith-based initiatives
and contracting with faith-based organizations, as well as geographic
dispersion. In addition, we did telephone interviews with faith-based
liaisons established in 15 states (these were all of the liaisons that
had been established as of September 2001).
To identify what is known about the extent and nature of faith-based
organization (FBO) contracting, we compiled information from several
sources. We analyzed results from our national survey of Temporary
Assistance for Needy Families (TANF) contracting of all 50 states, the
District of Columbia, and the 10 counties with the largest federal TANF-
funding allocations in each of the 13 states that locally administer
their TANF programs. In addition, we interviewed state and local
program officials that administer TANF, Welfare-to-Work (WTW),
Community Services Block Grant (CSBG), and Substance Abuse Prevention
and Treatment (SAPT) funded programs in the states we visited. Finally,
we analyzed documents and data provided to us by federal, state, and
local officials.
To identify the extent of FBO contracting in the WTW program, we
obtained national information from the Department of Labor, which
oversees this program. [Footnote 14] To identify the extent of FBO
contracting in the SAPT block grant programs in the 5 states visited,
we contacted state officials responsible for these programs to obtain
data on certified substance abuse treatment providers eligible to
receive federal funds and contracting under this program. To identify
the extent of FBO contracting in the CSBG programs in these states, we
contacted state officials responsible for CSBG funded programs to
obtain data on FBO contracting and subcontracting. To identify the
nature of services provided in the four programs, we contacted federal,
state and local officials overseeing these programs. In addition, we
visited FBOs that contracted with the government and some that did not
have contracts. We also reviewed relevant documents related to the
contracting process.
To obtain information on the implementation of charitable choice,
including factors that constrain FBOs in contracting with the
government, implementing safeguard provisions, and the performance of
FBOs, we met with officials at the Departments of Health and Human
Services and Labor in Washington, D.C., that oversee the TANF, WTW,
CSBG, and SAPT programs. We conducted telephone interviews with faith-
based liaisons in 15 states and on-site interviews with state and local
officials in various locations in Georgia, Indiana, Texas, Virginia,
and Washington. To obtain the perspective of FBOs, we also interviewed
FBO officials that have had contracts with the government under these
programs, as well as some that do not have contracts with the
government. In addition, we interviewed researchers that have conducted
related studies on charitable choice implementation and the relative
performance of FBOs. We also reviewed audit reports for the two federal
agencies that oversee these programs. Finally, we analyzed documents
that we obtained from federal, state, and local officials, including
contracts, guidance, and communications regarding charitable choice
implementation.
[End of section]
Appendix II: Comments from the Department of Health and Human Services:
Department Of Health & Human Services:
Office of Inspector General:
Washington, D.C. 20201:
August 26, 2002:
Mr. Sigurd R. Nilsen:
Director, Education, Workforce, and Income Security Issues:
United States General Accounting Office:
Washington, D.C. 20548:
Dear Mr. Nilsen:
Enclosed are the department's comments on your draft report entitled,
"Charitable Choice: Federal Guidance on Statutory Provisions Could
Improve Consistency of Implementation." The comments represent the
tentative position of the department and are subject to reevaluation
when the final version of this report is received.
The department also provided several technical comments directly to
your staff.
The department appreciates the opportunity to comment on this draft
report before its publication.
Sincerely,
Signed by:
Janet Rehnquist:
Inspector General:
Enclosure:
The Office of Inspector General (OIG) is transmitting the department's
response to this draft report in our capacity as the department's
designated focal point and coordinator for General Accounting Office
reports. The OIG has not conducted an independent assessment of these
comments and therefore expresses no opinion on them.
Comments of the Department of Health and Human Services on the General
Accounting Office's Draft Report, "Charitable Choice: Federal Guidance
on Statutory Provisions Could Improve Consistency of Implementation"
(GAO-02-887):
The Department of Health and Human Services appreciates the opportunity
to comment on this draft report.
GAO Recommendation for Executive Action:
In order to promote greater consistency of interpretation and
implementation of charitable choice provisions, we recommend that the
Secretary of HHS issue guidance to the appropriate state and local
agencies administering TANF, CSBG, and SAPT 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 (non-
religious) provider. In particular, this guidance should offer
clarification concerning allowable activities that a religious
organization may engage in while retaining its religious nature.
HHS Response:
The Department of Health and Human Services (HHS) agrees with the GAO's
recommendation and is in the process of developing and issuing guidance
to the appropriate state and local agencies administering Temporary
Assistance for Needy Families (TANF), Community Service Block Grant
(CSBG), and Substance Abuse and Mental Health Services Administration
(SAMHSA)-funded Substance Abuse Services programs on charitable choice
provisions. The Administration for Children and Families is updating
its guidance to states and grantees, and SAMHSA is in the final stages
of developing guidance to states and grantees to implement Charitable
Choice laws enacted as part of SAMHSA's fiscal year 2000
reauthorization and appropriation.
The HHS recently began administering the Compassion Capital Fund (CCF),
which will also provide substantial guidance and assistance to faith-
based organizations (FBOs) and community-based organizations (CBOs) as
they provide social services to those in need under charitable choice
provisions. The CCF is a $30 million fund that Congress
appropriated to HHS in January 2002 and represents the first federal
funds specifically targeted to assist the grassroots organizations that
are the focus of the Administration's faith-based and community
initiative. The CCF will be used to support four activities: a
technical assistance demonstration program, a National Resource Center,
research regarding best practices and services of intermediary
organizations, and field-initiated research grants.
Under the demonstration program, nearly $25 million will be awarded to
15-25 "intermediary organizations," which will in turn help smaller
organizations operate and manage their programs effectively, access
funding from varied sources, develop and train staff, expand the types
and reach of social services programs in their communities, and
replicate promising programs. These intermediary organizations will
also issue sub-awards directly to qualified FBOs/CBOs to expand or
replicate promising programs in targeted areas.
Approximately $2 million will be used to establish a National Resource
Center, which will serve as a national repository and clearinghouse for
technical assistance and training resources for FBOs/CBOs. The Center
will ensure that intermediary organizations funded under CCF are
equipped with the information and training necessary to offer guidance
and assistance to FBOs/CBOs.
The CCF also will support research regarding the practices of
intermediary organizations and appropriate methods for evaluating their
quality and effectiveness. Approximately $1.6 million will support
research on the services and practices of intermediary organizations
and the FBOs/CBOs they serve. Approximately $1 million will be awarded
to 5 to 8 organizations to support short-term research projects that
will improve the knowledge base of the activities and practices of
various types of FBOs/CBOs.
[End of section]
Appendix III: GAO Contacts and Staff Acknowledgments:
GAO Contacts:
Andrew Sherrill (202) 512-7252:
Anna M. Kelley (617) 565-7499:
Staff Acknowledgments:
In addition to the above contacts, Mary E. Abdella, Richard P. Burkard,
Jennifer A. Eichberger, Randall C. Fasnacht, and Nico Sloss made
important contributions to this report.
[End of section]
Related GAO Products:
Charitable Choice: Overview of Research Findings on Implementation. GAO-
02-337. Washington, D.C.: January 18, 2002.
Regulatory Programs: Balancing Federal and State Responsibilities for
Standard Setting and Implementation. GAO-02-495. Washington, D.C.:
March 20, 2002.
Welfare Reform: Federal Oversight of State and Local Contracting Can Be
Strengthened. GAO-02-661. Washington, D.C.: June 11, 2002.
Welfare Reform: States Provide TANF-Funded Services to Many Low-Income
Families Who Do Not Receive Cash Assistance. GAO-02-564. Washington,
D.C.: April 5, 2002.
Welfare Reform: More Coordinated Federal Effort Could Help States and
Localities Move TANF Recipients With Impairments Toward Employment. GAO-
02-37. Washington, D.C.: October 31, 2001.
Welfare Reform: Progress in Meeting Work-Focused TANF Goals. GAO-01-
522T. Washington, D.C.: March 15, 2001.
Welfare Reform: Moving Hard-to-Employ Recipients into the Workforce.
GAO-01-368. Washington, D.C.: March 15, 2001.
Welfare Reform: Data Available to Assess TANF‘s Progress. GAO-01-298.
Washington, D.C.: February 28, 2001.
Drug Abuse: Research Shows Treatment Is Effective, but Benefits May Be
Overstated. GAO/HEHS-98-72. Washington, D.C.: March 27, 1998.
[End of section]
Footnotes:
[1] This was based on a number of Supreme Court opinions, which
interpreted the First Amendment and addressed the eligibility of
religious organizations to receive federal funds. See Committee for
Public Education v. Nyquist, 413 U.S. 756 (1973).
[2] P.L. 104-193, sec. 104, Aug. 22, 1996.
[3] The federal legislation applies to charitable, religious, or
private organizations, but does not specifically define the term
religious organization.
[4] Financial agreements include contracts, grants, and memorandums of
understanding.
[5] U.S. General Accounting Office, Welfare Reform: Federal Oversight
of State and Local Contracting Can Be Strengthened, GAO-02-661
(Washington, D.C.: June 11, 2002).
[6] While our national survey of TANF contracting provides
comprehensive information on contracting at the state level, it
provides incomplete and nonrepresentative information on local
contracting. For additional information on the scope and methodology of
the survey, see appendixes I and II of U.S. General Accounting Office,
Welfare Reform: Federal Oversight of State and Local Contracting Can Be
Strengthened, GAO-02-661 (Washington, D.C.: June 11, 2002).
[7] Department of Labor Report to White House Office of Faith-Based and
Community Initiatives.
[8] National Center for Strategic Nonprofit Planning and Community
Leadership, Planning for the Implementation of Charitable Choice: Faith-
Based Forums & Community Dialogue, A Forum for Georgia‘s Faith Leaders,
March 2001.
[9] The states are Arizona, Arkansas, California, Colorado, Georgia,
Illinois, Indiana, Kansas, Maryland, Michigan, Montana, New Jersey, New
York, North Carolina, Ohio, Oklahoma, Pennsylvania, South Carolina,
Texas, and Virginia. This information was compiled by the Center for
Public Justice as of July 2002. See [hyperlink,
http://www.cpjustice.org/charitablechoice/faithbystate].
[10] The five agencies are the Departments of Education, Housing and
Urban Development, Labor, Justice, and HHS.
[11] P.L. 107-116.
[12] Only localities with their own procurement law are not required to
distribute this statement.
[13] We selected the TANF program for this analysis because charitable
choice provisions have applied to TANF longer than they have any other
program, allowing TANF officials more time to implement charitable
choice safeguards in contracting documents. Our analysis is based on
the contracts and RFPs we obtained from contracting officials we
interviewed and, therefore, may not be representative of all the TANF
contracts and RFPs in each state.
[14] Labor provided us with a draft copy of its Report to the White
House Office of Faith-Based and Community Initiatives on charitable
choice implementation, which described the amount of competitive grant
funding awarded to FBOs. In addition, we obtained information from
state officials about their formula grant disbursements to FBOs.
[End of section]
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