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Corrupting Charity 
Why Government Should Not Fund Faith-Based Charities 
by Michael Tanner
Michael Tanner is director of Health and Welfare Studies at the Cato Institute and the author of 
The End of Welfare:Fighting Poverty in a Civil Society.
No. 62
President George W. Bush has proposedthat faith-based charities be made eligible toreceive billions of dollars in federal grants toprovide social services. But doing so risks mix-ing government and charity in a way thatcould undermine the very things that havemade private charity so effective.Government dollars come with stringsattached and raise serious questions about theseparation of church and state. Charities thataccept government funds could find them-selves overwhelmed with paperwork and sub- ject to a host of federal regulations. The poten-tial for government meddling is tremendous,and, even if regulatory authority is not abused,regulation will require a redirection of scarceresources from charitable activities to admin-istrative functions. Officials of faith-basedcharities may end up spending more timereading the
Federal Register 
than the Bible.As they became increasingly dependent ongovernment money, faith-based charitiescould find their missions shifting, their reli-gious character lost, the very things that madethem so successful destroyed. In the end,Bush’s proposal may transform private chari-ties from institutions that change people’slives to mere providers of services, little morethan a government program in a clerical collar.Most important, the whole idea of charitycould become subtly corrupted; the differencebetween the welfare state and true charitycould be blurred.Charitable giving is at a record high; thereis no need to risk deepening the involvementof government and religious charity. PresidentBush should abandon his proposal and leavecharities to do what they do best.
March 22, 2001
 
Introduction
Faith-based charities have a long historyof transforming individual lives and helpingto raise people out of poverty and despair.Indeed, private charities are far more effectivethan government welfare programs at fulfill-ing those roles. They do more with less, andtheir success can be seen in tens of thousandsof former addicts, self-sufficient families, andothers who have turned their lives around.In light of this record of success, it seemsnatural for President Bush to want to encour-age those groups. But, in proposing that thefederal government distribute billions of dol-lars directly to faith-based charities in the formof grants and contracts for providing social ser-vices, he risks mixing government and charityin a way that could undermine the very thingsthat have made private charity so effective.Today, as Table 1 shows, private charitiesreceive about 30 percent of their funding fromgovernment.
1
Religious charities are far lesslikely than their secular counterparts to receivegovernment funds, but government fundingof religious charities is, nevertheless, extensive.On the front lines are local churches,mosques, and synagogues. There are morethan 350,000 religious congregations in theUnited States today, and a majority areinvolved in some type of charitable work.
2
A1998 survey of more than 1,200 religious con-gregations found that 57 percent wereengaged in social service delivery, most com-monly food-related projects, housing andshelter programs, and clothing distribution.Less frequently cited were health, education,domestic violence, substance abuse, job train-ing, and mentoring programs.
3
Only about 3percent of local congregations receive govern-ment funding for their charitable operations.
4
Beyond local churches are large nationalorganization with sectarian affiliations, suchas Catholic Charities, the Jewish Federations,Lutheran Social Services, and the SalvationArmy. Those organizations have been recipi-ents of public funds for many years and haveoften set up separate nonsectarian enterprisesfor their charitable works. Governmentgrants provide two-thirds of the funding forCatholic Charities USA, and the Jewish Boardof Family and Children Services receives 75percent of its funding from the government.
5
Finally, there are organizations that have areligious orientation but are not affiliated withany particular group. Some of them are large,though loosely knit, nationwide organizations,such as the International Union of GospelMissions. Others are small and communitybased. There is little reliable information avail-able on government funding of those groups.However, general indications are that theyreceive more government funding than dolocal religious congregations but less than thenationwide sectarian organizations.President Bush now calls for “putting thefederal government on the side of [these] vastarmies of compassion” by allow-ing faith-based charities tobecome eligible to receive billionsof dollars in additional federalgrants.
6
However, his proposalraises serious questions aboutthe separation of church andstate. Moreover, charities thataccept government funds couldfind themselves overwhelmedwith paperwork and subject to ahost of federal regulations. Asthey became increasingly depen-dent on government money,those charities could find their
2
Charities thataccept govern-ment funds couldfind themselvesoverwhelmedwith paperworkand subject to ahost of federalregulations.
Table 1Who Supports Charity?
Source of SupportPrecentagePrivate payments (dues, fees, etc.)43.5Government payments and grants29.4Private contributions17.7Other6.8Endowments2.6
Source: Joseph P. Shapiro and Jennifer Seter, “Welfare:The Myths of Charity,”
U.S. News & World Report 
,January 16, 1995.
 
missions shifting and their religious characterlost. The very things that made them so suc-cessful could be destroyed. Indeed, the wholeidea of charity could become subtly corrupted;the distinction between the coercive welfarestate and true charity based on voluntary giv-ing and love of one’s neighbor could be lost.
The Road to CharitableChoice
Since colonial times, faith-based organiza-tions in America have played a major role inproviding social services. For most of our his-tory, those organizations operated withoutsignificant access to government funds.
7
Indeed, there was traditionally a suspicion ofgovernment funding of religious institutions,even charitable ones. James Madison spokeeloquently for the Founders’ opposition to anestablished national church and governmentfunding of religion: “The appropriation offunds of the United States for the use andsupport of religious societies, [is] contrary tothe article of the Constitution which declaresthat ‘Congress shall make no law respecting areligious establishment.’”
8
Of course, before the adoption of theFourteenth Amendment, the Bill of Rightswas not generally held to apply to state gov-ernments, and several states had officialchurches and provided direct governmentfunding of religion. The last such provisionwas repealed in 1833, with the abolition ofMassachusetts’ general assessment for sup-port of Christian churches.
9
Thereafter, there was little governmentfunding of religious activities. The federalgovernment was largely uninvolved in chari-table activities, so the question of federalfunding of religion seldom arose.
10
And thestates, spurred in part by the virulently anti-Catholic Know-Nothing movement of the1840s, turned actively hostile to religiousfunding. In fact, by 1930, 26 states had con-stitutional prohibitions on governmentfunding of religious activities.
11
From the New Deal of the 1930s to theGreat Society of the 1960s and beyond, thefederal government’s involvement in socialwelfare increased dramatically. Opportunitiesfor faith-based charities to receive govern-ment funding increased correspondingly,especially after the Johnson and Nixonadministrations began widespread fundingof community organizations in the 1960s.Still, government agencies struggled to recon-cile funding of faith-based programs withconcerns about church-state separation.Most grants came with conditions: a require-ment that the central religious body form aseparate nonprofit organization to administerthe program and prohibitions on the use offunds for the purchase or improvement of realestate that would also be used for sectarianpurposes; on the provision of services in build-ings that had religious symbols or fixtures; onthe use of funds for training or education fora religious vocation; and on the use of fundsin religious instruction, worship, prayer, orother inherently religious activities.
12
As lateas 1986, the Department of Housing andUrban Development proposed a total banon grants to churches and other religiousorganizations.
13
Some of the efforts of government to dis-tance itself from religion were almost comicin their extremism. According to one perhapsapocryphal story, reported by columnistGeorge Will, an official with HUD wrote tothe bishop in charge of the St. Vincent de PaulHousing Center in San Francisco asking himto rename the building the Mister Vincent dePaul Center.
14
In another case, a city agencynotified the local branch of the SalvationArmy that it would be awarded a contract tohelp the homeless, but only on the conditionthat the organization remove the word“Salvation” from its name. Could the organi-zation, perhaps, be known as some other kindof army, a government official wondered.
15
As the failures of government welfare pro-grams became increasingly apparent, peoplebegan to contrast those failures with the suc-cess of private charities in general, and faith-basedcharities in particular.
16
As a result,theredeveloped a growing movement to expand
3
As the failures ofgovernmentwelfare programsbecame increas-ingly apparent,people began tocontrast thosefailures with thesuccess of privatecharities in gener-al, and faith-based charities inparticular.
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