Indirect Government Funding

The rules of the faith-based initiative (the rules of both the Charitable Choice regulations and the Equal Treatment regulations) require that "inherently religious activities" such as prayer and scripture instruction be kept separate from social services that are funded "directly" by the government, such as when a government official awards a grant or contract to the faith-based organization. This separation is required by the First Amendment as interpreted by the US Supreme Court.

However, the Supreme Court has also ruled that if the government money is provided to a faith-based organization "indirectly" then religious activities do not have to be excluded from the social services supported by the government funds. In a typical "indirect" funding method such as is currently used widely in federally funded child care, the government awards a certificate or voucher to an eligible individual or family, who then selects the provider for the social service. After that organization has supplied the service, it turns the voucher or certificate over to the government and receives payment. In such "indirect" funding methods, it is the beneficiary, not the government, who selects the faith-based provider, so that the government is not responsible for any religious activities that might be in a social service that its funds support. (See the Constitutional/Legal section for more on this constitutional issue.)

Among the benefits of "indirect funding" or "beneficiary choice" is the freedom for faith-based providers to include, rather than exclude, religious activities from the services supported by government. Beneficiaries thereby receive more choices of types of services. And officials and the faith-based organizations are relieved of the burden of patrolling to ensure a sufficient separation between religious activities and the government-funded services.

"Indirect" funding was specifically authorized by the Charitable Choice provision adopted as part of welfare reform in 1996.

Access to Recovery

In his State of the Union message in 2003, President George W. Bush announced a new "indirect" funding program, Access to Recovery, which offered grants on a competitive basis to states that would create a voucher system to provide drug treatment and recovery support services to addicts. In 2004, 14 states and one tribe were awarded ATR grants to create such systems, which provide services additional to those already funded by the federal government. Because of the voucher payment system, faith-based organizations that provide services that include religion are eligible to become service providers.

Ohio Strengthening Families Initiative

In 2006, the Ohio Governor's Office of Faith-Based and Community Initiatives pioneered the Ohio Strengthening Families Initiatives, such uses a small percentage of the state's TANF welfare funds to provide mentors to several sets of beneficiaries. OSFI is designed so that the organizations that provide the volunteers to do the mentoring are paid by vouchers. This enables OSFI not only to include faith-based along with secular mentoring organizations but also to offer, along with secular mentoring, mentoring that includes a spiritual emphasis and religious activities to those who seek such help.