AMY L. SHERMAN, Ph.D.
Senior Fellow, Welfare Policy Center, Hudson Institute
Oversight Hearing on "State and Local Implementation of Existing Charitable Choice Programs"
Subcommittee on the Constitution
U.S. House of Representatives' Committee on the Judiciary
April 24, 2001
Thank you for this opportunity to comment on the implementation of existing Charitable Choice programs. My remarks are based on observations and analysis from the research I have been conducting on this subject for the past four years. First, I will make some general comments based on my study of charitable choice implementation in nine states (CA, IL, MA, MI, MS, NY, TX, VA, and WI) and then offer some specific comments on several topics of interest to this subcommittee.
Charitable Choice aims to create a level playing field between secular and religious service providers competing for public funding and was designed in part to facilitate increased government-faith collaboration without compromising the religious character of the service providers or abridging the civil liberties of clients. Based on my study of charitable choice implementation in the nine states, I concluded that charitable choice is accomplishing those aims:
First, it has made church-state collaboration plausible to public officials and religious leaders. Charitable choice has served as a "green light" to public officials who now feel more comfortable reaching out to the faith sector because "Washington has given its blessing" to such collaboration. Meanwhile, religious leaders who mistakenly believed that the principle of separation of church and state made financial collaboration improper have discovered within charitable choice a formal approval of such collaboration.
Second, interviews with faith and government representatives working collaboratively indicated that religious groups accepting government funding are not having to sell their souls, and clients' civil rights are being respected. The study uncovered almost no examples of faith-based organizations (FBOs) that felt their religious expression had been "squelched" in their collaborative relationship with government. Also, out of the thousands of service recipients engaged in programs offered by FBOs collaborating with government, interviewees reported only two complaints by clients who felt uncomfortable with the religious organization from which they received help. In both cases -- in accordance with the charitable choice guidelines -- the clients simply opted out of the faith-based program and enrolled in a similar program operated by a secular provider.
Third, Charitable Choice is stimulating new partnerships. Over half of the FBOs currently receiving government funding to underwrite new initiatives to serve the poor in the nine states I examined had no previous history of government contracting. Thus, the traditional social services network is being broadened with the inclusion of "new players." Moreover, and importantly, these new players are doing new things. That is, in their collaboration with government, churches and FBOs are offering low-income citizens services they had not previously offered. In most instances, these religious groups have shifted from merely providing commodities to the poor (e.g., used clothing or free groceries) to working with struggling individuals intensively, face-to-face, through mentoring and job training programs.
The bottom line, in terms of the news from the frontlines of the implementation of charitable choice is simply this: so far, so good.
Allow me now to comment on several specific topics of interest to this hearing.
First, what is the scope of state and local efforts to implement charitable choice in terms of writing contracts with faith-based organizations?
With regard to my study of the nine states, I uncovered 84 examples of financial collaborations crafted since 1996. (1) The total dollar amount of these contracts equaled approximately $7,518,667 and through these initiatives approximately 3,000 lower-income citizens were being served. (2) (See Table A.) Notably, 57 percent of these collaborations were between government agencies and FBOs that had had no previous history of receiving government funds; thus my earlier comment that charitable choice has indeed brought "new players" into the arena of government-supported social services. WI, CA, TX, and MI were the most active states in fostering new collaborations with FBOs, and the most common types of social services the FBOs were offering were mentoring and job training.
In addition to activities in these nine states, I have uncovered examples of charitable choice collaborations in seven other states: AR, IN, MD, NC, OH, WA, and WV. The total amount of contracting with FBOs I uncovered for these states equaled $60,669,000. I have not done an exhaustive survey and thus cannot say with certainty whether charitable choice contracting is also occurring in additional states. According to a recent survey of states conducted by the Associated Press, 31 states and the District of Columbia have awarded no government contracts "to religious groups who would have not been eligible" prior to charitable choice. (3) Based on the knowledge available, it is reasonable to conclude that roughly two-thirds of states have not pursued new financial contracting opportunities with FBOs under charitable choice. Such a conclusion also fits with what we know about charitable choicecompliance by the states. According to the Center for Public Justice's National Charitable Choice Report Card, 37 states and the District of Columbia received a failing grade of "F." This grade indicates that these states have not made the necessary changes in their procurement procedures and contracting language that would bring them into compliance with the charitable choice guidelines. (4)
Table B provides some data drawn from a variety of news reports concerning additional contracting activities occurring in the nine states and other states. For all the states except MD, NC, and WV, these figures concern the total amount of contracting with FBOs; i.e., they count not only those contracts written with organizations new to formal public collaboration but also those with a history of receiving government funds. As Table B indicates, the total of these contracts comes to $60,669,000.
Thus, I estimate that the total amount of contracts in these 15 states, written both with FBOs new to financial collaboration with government and FBOs with previous government contracts, equals approximately $68,187,667.000. (5)
However, the figures we are most interested in when we pose the question, "How much charitable choice contracting is actually happening?," are those that tell us about the scope of contractingwith FBOs that are new to the arena of formal government collaboration. After all, Charitable Choice proposes to create a level playing field for faith-based providers of social services in the competition for public funding; it is about providing equal access to organizations that desire to preserve their religious identity and character when receiving public dollars. Therefore, in Table C, I have provided an estimate of the total of contracting between government agencies and these "new players" in the nine states of my original study. The grand total of such contracts for these nine states equaled $5,029,755. This means that, of funds undergirding all the financial contracts these nine states wrote with FBOs, approximately 67 percent of the dollars went to FBOs that were not part of the traditional -- some would say "old boys' network" of -- religiously affiliated social service providers.
Finally with regard to the scope of contracting, it should be noted that the vast majority of contracts uncovered in the study were those funded under the TANF
(Temporary Assistance to Needy Families) program. The rest were funded under the Department of Labor's Welfare to Work program. I found no instances of
contracts with FBOs written under the CSBG (Community Services Block Grant) or SAMHSA (Substance Abuse and Mental Health Services Administration)
programs (these are the other two federal funding streams currently regulated by charitable choice).
The second topic of interest concerns the nature of services being provided to the poor through these government-faith collaborations. By far in the
nine states studied, mentoring and job training efforts were the most popular programs being funded through contracts with "new" FBOs. From the information
available regarding contracting in other states besides those nine, again mentoring and job training services topped the list. That is not to say, however, that
these are the only services being offered. Under charitable choice, FBOs are also providing transportation services, life skills training, shelter and counseling for
the homeless, and substance abuse recovery programs.
Third, we can ask the question: What difference is charitable choice making? In other words, to what extent are states and communities contracting with FBOs that could have received private funds and provided the services without charitable choice?
This is not an easy question to answer in the absence of significant discussions with the leaders of FBOs that are involved in these contracts. What we can say, from the nine-state study, is that there were 71 contracts government agencies had written with FBOs that did not have a previous experience of accepting government funding. Out of those 71 contracts, 13 were to underwrite a new service that the FBO had not previous offered and 3 were with nontraditional FBOs who, as a result of their charitable choice contracts, significantly expanded an "old" service.
Regarding activities outside the nine states of the original study, it appears that charitable choice has stimulated new services by nontraditional FBOs in West
Virginia (Mission West Virginia) and in North Carolina (Faith Empowerment Coalition) and that it has stimulated a significant expansion of current services by
other nontraditional FBOs (e.g., Jobs Partnership in NC and Payne Memorial Outreach in MD).
Fourth, we can ask to what extent are states putting into place the necessary infrastructure for recruiting and managing faith-based involvement.
Table D lists some information relevant to this query. As it indicates, 14 states have formally designated staff persons to serve as liaisons to the faith community (AZ, AR, CA, CO, GA, MD, NJ, NY, NC, OH, OK, PA, TX, VA). Indiana has established Faithworks, an agency within the state's Family and Social Services Administration specifically designed to provide to FBOs technical assistance about contracting with government. Texas actually designates a staff person as a faith-based liaison in each of the DHS's ten regions; Texas has also put in place an accounting/reporting system to keep track of the number of contracts being written with FBOs by the Department of Human Services and by the Texas Workforce Commission. Virginia and North Carolina, in addition to their state-level liaison to the faith community, have designated regional or county-level faith-based liaisons.
In addition, some states have formally reached out to the faith community by sponsoring state-wide or regional conferences on the faith community role's in welfare reform. VA, CO, TX, NJ, IN, OH and PA are among those that have done this; OK and UT are currently planning such events.
In states that have pursued significant privatization of welfare service delivery, to discover how charitable choice is being implemented it is necessary to
examine the relationship between FBOs and those nongovernment entities that hold contracts with state government to administer welfare and/or operate "One
Stop" career centers. As regards this group, a few findings are notable. Wisconsin has formally encouraged private welfare contractors known as "Local Service
Providers" (LSPs) to subcontract with FBOs by making such subcontracting a "best practice" that state officials look for when reviewing the proposals of
competing LSPs. (6) Also, Florida's state Workforce Development Board is currently underwriting a dialogue between FBOs, business leaders, and individuals
from the One Stop Centers that has as its aim the production of a series of recommendations for the state as to how it can facilitate fruitful collaboration between
the state's One Stop Centers and the faith community.
Fifth and finally, we can ask what lessons have been learned thus far concerning the implementation of charitable choice.
The first two, most obvious lessons are that (1) there exists a great need to educate public officials about charitable choice and (2) public officials need to be held accountable to comply with charitable choice in their state policies and procedures. Charitable choice is the law and is not optional.
The other lessons may be less obvious. One is to recognize that direct financial collaboration between government entities and FBOs is just one means of cooperation. My nine-state study uncovered over 40 examples of creative, non-financial collaborations through which individuals in need were receiving important supportive services from FBOs. In addition, the fact that charitable choice provides equal access to FBOs in the competition for public funding does not mean that efforts to create othermeans of increasing resources to effective FBOs should not be simultaneously advanced. In other words, the existence of charitable choice does not diminish the importance of efforts to increase the use of vouchers in the social service arena or to encourage federal and state charity tax credits.
Moreover, in a significant number of cases (20), the financial relationship between the government and the FBO was an indirect one, mediated via a strategic intermediary organization. In these examples, government wrote a generally large contract with the intermediary organization (usually a large, administratively sophisticated nonprofit such as Goodwill) and then the intermediary organization wrote sub-contracts for specific services with smaller-sized FBOs. This arrangement was universally reported as a win-win situation. Government was enabled to write one large contract with an organization that it was confident had the technical expertise and experience to appropriately manage and administer the dollars, and small and mid-sized FBOs that would never have been able successfully to secure or administer a huge contract were able to partner with the intermediary and receive a modest and manageable amount of funding that supported their important and needed work. The FBO leaders from these arrangements that I interviewed also often volunteered that they were glad for the additional "distance" from government the indirect contracting mechanism afforded; they felt possible church/state tensions were diminished in this "arms-length" relationship.
A second less obvious lesson learned is that, despite significant media accounts to the contrary, conservative and Evangelical faith-based organizations are notably involved in charitable choice contracting. Fully 20 of the 84 financial collaborations engaged organizations labeling themselves conservative or Evangelical.
Third, the nine-state study uncovered no examples of a client being unable to exercise his or her right of receiving services from an alternative, secular provider. The charitable choice guidelines insist that states must provide a secular alternative for clients who do not desire to receive their services from a faith-based provider. Even in my interviews with public officials from rural areas, I did not hear of any examples of clients being unable to exercise this right because of the lack of a geographically accessible secular provider.
Fourth, it is clear that both public officials and faith-based leaders need to be more careful to incorporate the charitable choice guidelines into the language of their contracts. In many instances, the contracts written with the FBOs utilizing federal funds regulated by charitable choice were the standard, "boiler-plate" contracts used prior to the 1996 reforms. Such contracts do not include the formal language of the charitable choice provisions. As noted earlier, this failure to codify charitable choice in these contracts has not led to serious problems with respect to the rights of FBOs or service beneficiaries. Nonetheless, as government-faith collaborations continue to increase, it will be important for both parties to be more intentional in formalizing their working relationship according to the guidelines specified by charitable choice. Doing so will further minimize the likelihood of problems for either FBOs or clients.
Fifth, and finally, it is clear that charitable choice contracting is not a good option for all FBOs. Some lack the necessary administrative capacity for managing government contracts of any significant size. Others, based on their theological doctrines, cannot in good conscience accept government funding. Still others may so premise their community healing efforts on direct evangelism and proselytization that they would find it difficult to navigate the guidelines of charitable choice, which protect the religious character of FBOs receiving public funding but prohibit the expenditure of public dollars for purposes of sectarian worship or proselytization. However, for many other FBOs, collaborating with government may be a fruitful strategy that advances their mission and strengthens their community development projects and/or their initiatives to lovingly assist vulnerable citizens in achieving their highest potential.
In summary, it is important to note the tremendous current contribution FBOs and houses of worship currently make in strengthening America's social safety
net. Recent studies by Professor Ram Cnaan of the University of Pennsylvania (7) and Professors Carl Dudley and David Roozen of Hartford Seminary, (8) for
example, suggest that over 85 percent of congregations provide critical social services, from preschools to prison ministries, health clinics and tutoring
programs, to food pantries and literacy classes. Moreover, there is significant anecdotal evidence as to the effectiveness of FBOs in solving our most difficult
social problems (9) and growing empirical evidence of the importance of religion in the lives of at-risk youth in assisting them to escape the deleterious effects of
living in disordered and distressed neighborhoods. (10) In the era of welfare reform devolution, it is clear the strength of the faith sector must be tapped in the
great struggle against poverty. Charitable choice is one public effort of so doing -- certainly not the only effort needed -- but one that has thus far well-served the
interests of those whom many in our society consider "the least of these."
Financial Disclosure Statement of Dr. Amy. L. Sherman
I have not received any government funds to underwrite my research. Additionally, to my knowledge, the Hudson Institute's Welfare Policy Center, with which
I am affiliated, has not received government grants or contracts related to any of the work I perform. The Florida State Workforce Development Board has
written a contract with a faith-based organization called the Jobs Partnership and I have done some paid consulting for the Jobs Partnership in 2001 for which
the Hudson Institute has received $1250 and will receive an additional $1250 after June.
Amy L. Sherman
The Hudson Institute
Contracting Under Charitable Choice
Results from 9-State Study (research completed 8/99)
State Direct Contracts Indirect Contracts
CA $1,116,608 $771,000
IL $1,313,000 $490,000
MA $ 40,000 $300,000
MI $ 744,470 $ 10,000
MS NONE NONE
NY $1,860,705 NONE
TX $130,449 NONE
VA $114,568 1 (no $ info)
WI $385,867 $242,000
SUBTOTALS $5,705,667 $1,813,000
GRAND TOTAL = $7,518,667
(AP and other news accounts, 2001)
State Amount #
AR $ 1,000,000 est. 14
IN $3,500,000 40
MD at least $1,500,000 at least 1
MI $ 30,000,000 150 (11)
MO $ 1,005,000 12 est.
NC at least $363,000 at least 2
OH $17,000,000+ est. at least 31
TX $ 5,000,000 ('00-'01) 23
WA $ 951,000 (since '98) # not given
WVA $ 350,000 (at least) 1 (at least)
SUBTOTAL = at least $60,669,000
Charitable Choice Contracts with "New Players"
Results from 9-State Study
State Direct Contracts Indirect Contracts
CA $1,116,608 $771,000
IL $1,313,000 $490,000
MA $ 40,000 $300,000
MI $ 301,300 $ 10,000
MS NONE NONE
NY $ 150,000 NONE
TX $ 95,449 NONE
VA $114,568 1 (no $ info)
WI $ 85,830 $242,000
SUBTOTALS: $3,216,755 $1,813,000
GRAND TOTAL = $5,029,755
States' Efforts to Reach Out to FBOs
*14 states have formally designated a staff person(s) to serve as liaisons to the faith community (AZ, AR, CA, CO, GA, MD, NJ, NY, NC, OH, OK, PA, TX,
* VA, CO, TX, NJ, IN, OH and PA are among those that have sponsored state wide or regional info conferences
*OK and UT are currently planning such events
*IN and TX have formal systems for providing TA to FBOs
Monitoring/Tracking CC Implementation
*TX has a formal system
F-B Contracting in Context in WI
Region Name Total Contracting FB Contracting %
Ashland Region $2,273,703 $360,922 16%
Eau Claire Region $723,004 $41,400 6%
Green Bay Region $5,762,893 $920,088 (12) 16%
Milwaukee W-2 Agencies
Employment Solutions $10,038,462 $400,400 4%
YW-Works $3,112,353 $115,200 3.7%
OIC $41,545,000 $77,500 <1%
Maximus $1,491,084 $171,000 11.4%
UMOS $1,518,464 $92,465 6%
*Data provided by Wisconsin's Department of Workforce Development
1. That is, financial contracts underwritten by TANF or Welfare to Work funds (as these are regulated by Charitable Choice). The study did not examines FBO contracts written with HUD or other government funds not covered by Charitable Choice.
2. See Table A for more details.
3. "State participation in charitable choice," The Associated Press, Washington Dateline (March 20, 2001).It should be noted, however, that in four of the 31 states, at least one government contract with a faith-based organization under federal funding streams regulated by Charitable Choice have been identified.
4. "Charitable Choice Compliance: A National Report Card," (Annapolis, MD: The Center for Public Justice, 2000).
5. These figures, of course, do not tell us much about the relative amount of faith-based contracting occurring in these states. I.e., there are gaps in our knowledge about the proportion of contracts written with FBOs relative to the total amount of state contracting activity. See appendix A for a brief survey of contracting in WI that attempts to shed light on the relative amount of faith-based contracting there.
6. See Appendix A for details on FBO subcontracting in Wisconsin.
7. Ram A. Cnaan and Gaynor I. Yancey, "Our Hidden Safety Net," in E.J. Dionne and John J. DiIlulio, Jr., eds., What's God Got to Do with the American Experiment? (Washington, D.C.: The Brookings Institution, 2000) chapter 21.
8. Carl S. Dudley and David Roozen, "Faith Communities Today," (Hartford Institute for Religion Research at Hartford Seminary, March 2001).
9. See, for example, Amy L. Sherman, Restorers of Hope (Crossway Books, 1997); Ronald J. Sider, Just Generosity (Baker Books, 1999), and Robert L. Woodson, Sr., The Triumphs of Joseph (The Free Press, 1998).
10. See, for example, Byron R. Johnson, "A Better Kind of High," (University of Pennsylvania Center on Research on Religion and Urban Civil Society, 2001).
11. $2 million was awarded in 19 contracts to FBOs with no formal history of receiving government funds.
12. Does not include contracts with two FBOs that receive money on a per client basis.
The Charitable Choice Tracking Project
This Catalogue is a report from the Charitable Choice Tracking Project, an initiative of the Center for Public Justice. Researched and prepared in 1999, it offers a snapshot in time of how a growing number of faith communities across America are responding to the Charitable Choice provision from the 1996 federal welfare reform law.
The Charitable Choice Tracking Project is a two-year effort to study the implementation and impact of the Charitable Choice provision on government collaboration with faith-based organizations in social service delivery. The Tracking Project research team consists of Dr. Stanley Carlson-Thies, Director of Social Policy at the Center for Public Justice, and Stephen Lazarus, who serves as Research Associate. Project Advisors include Carl Esbeck, Director of the Center for Law and Religious Freedom at the Christian Legal Society; Stephen Monsma, Professor of Political Science at Pepperdine University; and Amy Sherman, Senior Fellow at the Welfare Policy Center of the Hudson Institute.
The Project consists of a nine-state mail survey of faith-based organizations and research into how state and local governments are complying with the Charitable Choice provision, as well as investigative studies of particular faith-based organizations and faith communities. It provides the first systematic examination of how states are implementing the Charitable Choice rules that accompany their welfare block grants. The Project also aims to document how the protections prescribed by Charitable Choice are affecting faith-based organizations and the people they serve. Major funding for this research was provided by the Smith Richardson Foundation, Inc.
The Center for Public Justice is a national, non-partisan, policy research and civic education organization, whose purpose is to serve God, advance justice, and transform public life through its mission of equipping citizens, developing leaders, and shaping public policy.
The Center for Public Justice
P.O. Box 48368
Washington, DC 20002-0368
ã Center for Public Justice 2000
The landmark 1996 federal welfare reform law establishes new rules for collaboration between government and the faith community in serving the poor. Called "Charitable Choice," these rules prohibit public officials from discriminating against religious social service providers seeking to compete for government contracts. They protect the religious integrity and character of faith-based organizations (FBOs) that accept government dollars by granting them important rights: to retain authority over their mission and governing board; to maintain a religious atmosphere in their facilities; and to select only staff who agree with their religious beliefs. They prohibit FBOs from using government funds for purposes of sectarian worship, instruction, or proselytization and ensure that service beneficiaries uncomfortable receiving aid from religious providers will be able to obtain help from alternative organizations. Charitable Choice creates a level playing field between secular and religious service providers competing for public funding, and, it is hoped, will facilitate increased government-faith collaboration without compromising the religious character of the service providers or abridging the civil liberties of clients.
Based on research in nine states completed in summer 1999, Charitable Choice is accomplishing these aims. Charitable Choice has made church-state collaboration plausible to public officials and religious leaders. Religious groups accepting government funding are not having to sell their souls, and clients' civil rights are being respected. Charitable Choice is also stimulating new collaborations. Over half of the FBOs currently working formally with government in new initiatives to serve the poor had no previous history of such relationships. The traditional social services network is being broadened with the inclusion of "new players," and, importantly, these new players are doing new things. That is, in their collaboration with government, churches and FBOs are offering low-income citizens services they had not previously offered. In most instances, these religious groups have shifted from merely providing commodities to the poor (e.g., used clothing or free groceries) to working with struggling individuals intensively, face-to-face, through mentoring and job training programs. The nine states surveyed for this study include: California, Illinois, Massachusetts, Michigan, Mississippi, New York, Texas, Virginia and Wisconsin.
Charitable Choice's impact has been modest, though notable. Strictly speaking, Charitable Choice applies only to financial relationships between government and social service providers. Research in the nine states reveals 84 new financial collaboratives since 1996. Yet many in government and the faith community use "Charitable Choice" in a broader sense, to denote all new forms of government-faith community collaborations under welfare reform. A total of 41 new non-financial relationships were identified in the nine states. Most of these initiatives began within the last year and a half. Although a grand total of 125 new financial and non-financial collaborations in nine states appears a small number, it reflects a significant amount of activity, involving hundreds of congregations and FBOs and thousands of welfare recipients. The new contracts with FBOs range from $5,000 to over $350,000.
While survey interviews indicated considerable enthusiasm among government and faith representatives for these new collaborations, interviews also revealed that few people in either community are well-educated about the specifics of Charitable Choice. Charitable Choice's detailed guidelines are being codified into formal contracts only in Texas and Wisconsin. In all states, much remains to be done to bring government administrative procedures and procurement policies into sync with the letter and spirit of Charitable Choice.