The Story Behind the Story: Why We Should be Wary of the Faith-Based Initiative

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Knute Rockne it wasn’t. Delivering the commencement address and picking up an honorary doctorate at Notre Dame this past May was President George W. Bush. His speech was a tedious sermon on the importance of his Administration’s plan to increase the numbers and significance of faith-based providers in the firmament of federal human service providers.
The president’s hymnal is a bill passed by the U.S. House of Representatives and making its way into the U.S. Senate to codify the administration’s faith-based plans. HR 7, the Community Solutions Act originally introduced by Republican Congressman J.C. Watts—a former Oklahoma Sooner running back—is full of major consequences for nonprofits, religious and secular. And the president’s lecture in front of the fans of the Fighting Irish tossed a challenge to organized philanthropy—foundations and corporate givers alike—about their upcoming role in making the faith-based initiative a reality.

President Bush announced his plan to convene a White House summit in the fall to “ask… corporate and philanthropic leaders throughout America… to discuss ways they can provide more support to community organizations—both secular and religious.” Nice inclusion of secular, but the purpose was more than clear. What can and should foundations do to support religious service providers being promoted by the Administration as the cures for our nation’s dilemmas of poverty and inequality?
The Bush entreaty to organized philanthropy is based in a game plan that blends charity and religion—with a dramatically reduced government role—for meeting the human service requirements of America’s needy families. The plan is backed by the president’s faith-based executive orders, issued early in his administration, and HR7, which would put the president’s writs into law. HR 7 neatly combines an egregious expansion of charitable choice with relatively benign charitable giving incentives such as the non-itemizer tax deduction and permission for IRA distributions for charitable purposes.

Who’s working to promote HR 7 and the president’s panoply of faith-based incentives? The newest addition to the already muscular array of conservative think tanks in this country is a 501(c)4 lobbying group, Americans for Community and Faith-Centered Enterprise, and a companion 501(c)3 nonprofit, the Foundation for Community and Faith-Centered Enterprise. The president and CEO will be the former president of the Bradley Foundation, Michael Joyce, personally recruited for this endeavor by Bush’s Cardinal Richelieu, Karl Rove. A wealthy Arizona restaurateur, Paul Fleming, founder of the P.F. Chang’s China Bistro Chinese restaurants, bankrolls both entities. In a charitable mood, Fleming contacted conservative Weekly Standard editor Bill Kristol for advice, Kristol connected him to the conservative Olin Foundation, Olin connected him to Joyce, and voila! a new conservative think tank with a political lobbying arm.

Joyce has been the nation’s preeminent and probably most effective conservative philanthropic leader, having co-founded the Philanthropy Roundtable, which facilitates and coordinates conservative foundation strategies. At Bradley, Joyce was a major champion of the administration’s faith-based efforts along with scores of other favorite conservative causes. Announcing the new think tank, Joyce took the former White House faith-based director John DiIulio (who resigned in August for health and personal reasons) to task for not being conservative enough. He was quoted in the Boston Globe (June 5, 2001) as saying, “to have a Democratic, Catholic, Italian guy out there doing battle with the good old boys…. that just doesn’t work.” Apparently, Joyce has no interest in winning over Catholic Charities or the Order of the Sons of Italy.

That has not deterred some national groups from tacitly or openly supporting HR 7, seeing it primarily as a vehicle to get the long sought charitable tax deduction for non-itemizers. Linking the non-itemizer as a “sweetener” to the politically radioactive charitable choice provisions seems to be of little concern to some of these organizations, or else they hope that the charitable choice will get watered down when HR7 is reviewed in conference with the now Democrat-controlled Senate.

Independent Sector and other charities have long supported an aggressive charitable tax deduction for non-itemizers (on top of the standard deduction), which IS has estimated would generate more than $14 billion a year in new charitable giving. While observers have debated the IS projections, the version of the non-itemizer in HR 7 passed by the House of

Representatives is guaranteed to generate next to nothing. The bill caps the non-itemizer deduction at $25 for individuals and $50 for couples, rising to $50 and $100 in 2004, $75 and $150 in 2007, and $100 for individuals and $200 for couples in 2010. In other words the value of the non-itemizer tax deduction, in terms of taxes paid, will be a grand total of $3.75 for individuals and $7.50 for couples. It is hard to imagine the charitable benefits from this measly, inconsequential incentive, and even harder to justify against the $6.37 billion that the non-itemizer will cost the U.S. Treasury in forgone tax revenues.
Nonetheless, it is important to note that charitable choice did not start with the president’s executive orders or Michael Joyce’s grants from Bradley to DiIulio’s pre-White House think tanks. Charitable choice was Section 104 in the welfare reform legislation endorsed and signed by President Clinton in 1996. Even presidential candidate Al Gore endorsed expanding the role of faith-based institutions in government service delivery along with faith-based doppelganger Bush. Former President Clinton agreed to an expansion of charitable choice in the Community Services Block Grant program in 1998 and approved charitable choice in drug treatment programs as an addendum to the Community Renewal and New Markets Empowerment legislation in December of 2000. Faith-based delivery of federal social programs is not a new phenomenon; witness the extensive presence of Catholic Charities and Lutheran Services of America with huge federal contract portfolios.

Bush and Joyce make it appear that faith-based providers have had the door slammed in their faces when applying to deliver government services. Far from it. All they have to do under current law—except for the charitable choice provisions in TANF and New Markets—is incorporate separately from their sponsoring religious organizations, refrain from religious activities and proselytizing as they deliver government-funded programs, and provide settings for the delivery of services free from religious symbols and doctrines. HR 7 would undo all of these provisions and more, to encompass federally-funded programs such as Community Development Block Grants (CDBG), the Older Americans Act, the Child Care Development Block Grant, and even GED training—a $250 billion windfall.

More ominously, the House approved language that would allow federal agencies to convert programs to “indirect assistance”—vouchers. Under this scheme, potential recipients of services could then take their vouchers to any agency they want, including those that openly intermingle service delivery and religious proselytizing. This is clearly a mechanism to bypass the “opt out” language in the direct funding portions of the bill—a service recipient can “opt out” of a religious program in favor of a secular alternative, one that might have to be provided as a parallel service by the religious group. With vouchers, it is a social service marketplace where religious providers can be as clerical as they want without having to design secular alternatives. This provision is one that keeps the religious right on board with HR 7. Michael Joyce, a longtime advocate of voucherization of public sector functions, has said that providing government services through vouchers is not only good policy for the poor, but for middle and upper class folks as well (Baltimore Sun, September 13, 1996).

In addition to HR 7, the president also requested $89 million for 2002 in the Health and Human Services budget for a “Compassion Capital Fund.” That sum would grow to $700 million over the next 10 years, supplemented by the president’s plan to get foundations and corporations to contribute to the fund. Strong-arming foundations at this fall’s White House summit (timed to occur after the birth of the Compassion Capital Fund) is a pretty obvious and now necessary strategy, since the House zeroed out the Fiscal Year 2002 appropriation for the Fund. Leaning on funders to put up the dollars for the faith-based fund, designed to provide seed funding, pay for capacity building, and support research on faith-based “best practices,” now becomes an administration priority.

The president’s Notre Dame speech highlighted his concern with alleged philanthropic discrimination against faith-based applicants. A hallmark of the White House’s faith-based initiative and the language of HR 7 is the excision of purported governmental discrimination against churches interested in providing governmental services. The extension of the concept to corporate charitable funders was an applause line at the South Bend commencement:

“Currently, six of the 10 largest corporate givers in America explicitly rule out or restrict donations to faith-based groups, regardless of their effectiveness. The federal government will not discriminate against faith-based organizations, and neither should corporate America.”

It isn’t a long road from corporate grantmakers to private foundations and community foundations. The cover story in the May/June 2001 issue of Philanthropy, the organ of the conservative Philanthropy Roundtable, cites the Bill and Melinda Gates Foundation, the David and Lucile Packard Foundation, and the W.K. Kellogg Foundation as among the largest funders “that flatly refuse to fund religion or programs that serve religious purposes.” The article cites spokespersons such as Heritage Foundation’s Joseph Loconte and Indiana University’s (and more recently, President Bush’s nominee to head the Corporation for National and Community Service) Leslie Lenkowsky predicting the faith-based initiative’s effect of “pull[ing] mainstream philanthropy back into a partnership with religion.” Lenkowsky calls this a “re-moralization of charity.”

The president’s initiative melds government and philanthropy to bolster the already quite healthy, thank you, capacities of faith-based providers with little or no deference to accountability.

The president’s—and DiIulio’s, for that matter—poster child is Habitat for Humanity, the generator of significant low-income homeowners nationally and around the world through the labor of church volunteers and the sweat equity of the eventual homeowners themselves. The president devoted the entire increase in HUD’s Fiscal Year 2002 budget for the National Community Development Initiative to Habitat, raising Habitat’s HUD-provided budget by almost one-third to over $4.4 million. At Notre Dame and in his June 9 weekly radio broadcast, he broadly hinted at a tripling of the allocation for Habitat and likeminded low-income housing providers in Fiscal 2003.
Habitat stands to do well. It was the 21st largest US nonprofit in the “NonProfit Times 100” (November, 2000), measured in total revenues and ninth in the “Philanthropy 400” ranking of nonprofits based on private support (Chronicle of Philanthropy, November, 2000), with revenues of $466.7 million (though only $17 million is from government sources). Perhaps the NPT third largest nonprofit, the Salvation Army, with $2.7 billion in revenues, feels discriminated against with a paltry $272 million in governmental support; or Catholic Charities at number six, which gets more than $1.3 billion of its $2.3 billion budget from governmental sources.

As an odd coincidence, the Salvation Army was almost responsible for the death of the Community Solutions Act. Some unknown hero in the Salvation Army leaked an internal memo describing a lobbying effort, costing over $100,000 per month, to promote the president’s faith-based initiative—in return for the White House legalizing hiring and benefit discrimination based on sexual preference (or rather protection against state and local prohibitions against such discrimination, particularly in the matter of domestic partner benefits). Whether the White House or the Salvation Army initiated the horse-trading remains in dispute; nonetheless, it does reveal what can happen when religious discrimination finds potential championship in a federal government directive.

Religion is still the largest recipient of charitable contributions in our society. Giving to religion received the largest absolute increase in gifts, up $4.3 billion between 1998 and 1999 and $3.06 billion between 1999 and 2000. In overall giving, including the donations of private individuals, religion raked in huge numbers, $81.8 billion in 1999. Without a doubt, these are underestimates, as giving to religiously-affiliated service providers gets counted as human services, not religion.
Despite evidence of the increasingly secular nature of our society, the American public has been extraordinarily generous in its giving to religion. According to the AAFRC Trust for Philanthropy, “giving to religion is almost nine times higher today than it was three decades ago.” While foundation grants and individual gifts for secular purposes jump and dip with changes in the stock market, donations to religion seem to be recession-proof. The Foundation Center’s most recent annual survey of 1,016 foundations, including 800 of the top 1,000 accounting for half of all foundation giving, shows a relatively small level of foundation giving for religion (2.3 percent of grants by dollar value, up from 2.0 percent in 1995).

Nevertheless, the Foundation Center’s survey may significantly underestimate religious giving. Smaller foundations undoubtedly give more to religion than large foundations. Even among the 1,016 foundations in the survey, the 100 largest gave 1.5 percent of their grant funding for religion compared to 3.4 percent for the 916 remaining. The trend of increased levels of giving for religion clearly applies to the 60,000 smaller foundations not in the survey. The 49 community foundations in the Foundation Center analysis gave 4.1 percent to religion. These were actually grants for the subject of religion, therefore not including grants to religiously affiliated human service or health providers.
Among the larger foundations, the Lilly Endowment is a major funder of religion, making 134 grants for $47.5 million in 1999 supporting religious studies, seminaries, and other expressly religious activities. As a prominent funder of community development, Lilly also funds various service providers that themselves are faith-based. Among the top five funders of religion, the only “mainstream” funder in 1999 was the Pew Charitable Trusts, surrounded by right-wing religious zealots such as the Koch Foundation, the Richard and Helen DeVos Foundation, and the Arthur S. DeMoss Foundation.

But among the top 50 in 1999, one would not have seen the Robert Wood Johnson Foundation, which had devoted $40 million since 1993 for the foundation-created “Faith in Action” program, a national volunteer movement encouraging religious congregations to provide assistance to aging and chronically ill individuals. In 2000, RWJ committed another $100 million to expand Faith in Action nationwide, which will be counted under human services rather than giving to religion. Bush and his faith-based legions may moan about small support from foundations, but the real total is classified and much higher than officially reported.

Can we anticipate the agenda for the Bush White House summit on philanthropy? It is not difficult to forecast some obvious themes:

• Put money into faith-based providers: Will mainstream and liberal foundations knuckle under to provide more support to religious service providers? The foundation establishment enthusiastically supported the “first” White House Conference on Philanthropy in October 1999, acquiescing to President Clinton’s content-less enchantment with high-tech and venture philanthropy wealth. But Clinton did not ask foundations to put money behind his favorite policy initiatives, and instead included as part of his State of the Union address two or three proposals near and dear to the Council on Foundations. This time around, President Bush will likely lean on foundations to put their dollars in the plate as well.
• Build their capacities: What deters some faith-based providers and religious congregations from entirely jumping on the Bush bandwagon is the fear of government regulations and reporting. Even with the minimal, reduced requirements of the Bush program, taking government money means having to tell—and probably justify—what you did with it. The overhead calculations in federal grants will not help faith-based groups build a back-office and administrative infrastructure from scratch. It’s an easy request for the White House to make of foundations.
• Fund what government cannot: The White House fears that some of the content of its faith-based agenda will be whittled down in the political process. University of Arizona researcher Mark Chaves thinks that the administration is promoting foundation funding for those activities that cannot be supported with public money—maybe the service delivery models embedded with high degrees of religious proselytizing. In the Aspen Institute’s Nonprofit Research News (Spring 2001), Chaves wonders, “Is that something a White House office should be doing?” Foundations will get the opportunity to answer in the fall.
• Fill in the gaps in governmental funding: There is no question that future funds for the Compassion Capital Fund will have to come, not from government coffers, but from compulsorily-compassionate corporate and foundation funders. Rev. Mark Scott, the associate director for community outreach at the White House’s faith-based initiatives office, hinted as much this past spring: “There has been talk about if it be (sic) a public/private kind of thing, so there could be matching private dollars.”
(The NonProfit Times, April 15, 2001). During the president’s campaign, faith-based advocates were more explicit about the proposed Fund’s adaptability for public and private contributions. No question, a large chunk of this $700 million fund, no matter what happens in the federal budget, will come from corporate and foundation contributors, else the Fund will suffer a rapid demise.
• Follow the federal funding cues: Every administration has its favored grant recipients. In this era of ubiquitous public-private partnership, federal grant flows leading private contri-butions will not be surprising. When the president unfailingly lauds Habitat for Humanity as his model for faith-based service delivery, will the foundation grantmakers be far behind with their grants?

During his faith-based commencement address in South Bend, President George W. Bush didn’t quite use the fabled deathbed line, “win one for the ‘Gipper’,” croaked by actor Ronald Reagan in “Knute Rockne, All-American.” But foundations cannot help but read the administration’s playbook as they gird themselves for the next four years of his faith-based funding crusade.

The House of Representatives has sent the Bush administration’s faith-based initiative to the Senate. Far from leveling the playing field, this legislation actually tilts it in favor of church-based providers. Rejecting the notion of extending to religious groups privileges and protections currently denied to nonprofits, Pablo Eisenberg offers the following list of talking points your Senators should consider.*

Lack of Public Accountability. Churches are customarily exempted from most of the disclosure requirements imposed on charitable organizations authorized under section 501(c)3 of the tax code. While church-based vendors would be required to maintain separate accounts, public funds for overhead costs might still underwrite religious activities. Additionally, submitting to an annual self-audit does little to assure public accountability. Finally, responsibility for monitoring programs would be subject to the varying standards of literally hundreds of state and local political jurisdictions.

Danger of Discrimination. Whereas churches providing services under government contract had previously established 501(c)3 entities for this work, provisions for direct funding under HR 7 would exempt recipient churches of responsibility for non-discriminatory hiring and termination, opening the way to screening and staff selection for religious and ideological beliefs.

Weakened Standards for Services. Church-based vendors could seek waivers from standards and regulations normally applied to secular organizations. Certification requirements, health and safety regulations and quality assurances would be subject to these waiver provisions. Politically, local elected officials would find such waivers difficult to deny.

Inadequate Complaint Procedures. Only after someone has complained, and “a reasonable period of time after the objection” has passed, would the government be required to offer an alternative provider. In many areas, an appropriate alternative may not be available.

Blurring Distinctions between Church and State. Although HR 7 ostensibly prohibits the use of federal funds for proselytizing, it will permit prominent display of spiritual art, icons and similar expressions of religious belief at the service delivery site. In addition, the bill would not bar on-site prayer services or similar practices if paid for by private sources and conducted before, or just after, the hours set aside for federally-supported activities.

Back-Door Voucherization. Portrayed as a means for expanding service options, “portable” vouchers to individuals could be used to circumvent federal restrictions on mixing secular (funded) and religious (non-funded) activities in the service setting.
*Talking points are based on an article by Pablo Eisenberg in the Chronicle of Philanthropy (August 23, 2001).

Rick Cohen is president of the National Committee for Responsive Philanthropy.