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Q&A on Legal Issues Involved in FBO-Government Partnerships

FBO - GOVERNMENT COLLABORATION RESOURCE  

Q&A on Legal Issues Involved in FBO-Government Partnerships

(Valerie Munson, Eckert Seamans Cherin & Mellott, LLC, 2004.)

The future of FBO-Government partnerships is an exciting one with the potential to work tremendous good.  Today, FBOs and the government stand together at a milestone on their historic road of social service partnerships.  They are moving forward onto a newly charted length of that road. For the first time in many years, the law explicitly permits government to fund social services provided by organizations that have a distinctly religious character. Moreover, the law acknowledges that such organizations need not surrender their religious identity in order to partner with the government. Nevertheless, the legal lines on this length of the road are still being painted–both in Congress and in the courts, and will continue to be painted for the foreseeable future.  Yet, as we move forward today the road does have parameters, traffic signals and warning lights.  FBOs and Government representatives will both do well to recognize them, keep their eyes open, and travel this road prudently.

This document lists general rules and answers frequently asked questions regarding collaboration between government and faith-based organizations. It tackles issues raised when FBOs receive direct grant or contract funding from government and those that come into play when FBOs receive indirect public funding (e.g., through vouchers). Practitioners and public administrators will also find the document's observations regarding employment issues faced by FBOs partnering with government particularly useful.

(Please note: Nothing contained herein should be construed as providing legal advice for a specific situation, or as creating an attorney-client relationship.)

Programs Receiving Public Funds Directly From the Government

General Rule #1:  Money must be used only for secular activities and not for specifically religious activities.

Impermissible Religious Activity or Content

Question 1. What are some examples of activities that may not be funded by the government?

A: The Constitution permits government to finance secular services provided by organizations that have a religious character. The Constitution prohibits, however, the government from directly funding social services with specifically religious content. The three categories of religious activity that are most clearly disqualified from funding are proselytizing, worship, and religious instruction. In addition to these obviously religious activities, the Constitution also prohibits direct government funding of services that involve religious content (for more information about this legal standard, see http://www.religionandsocialpolicy.org/docs/legal/reports/12-2-2003_state_of_the_law.pdf). Thus, it would be impermissible for the government to fund a sexual abstinence course that combines discussion of religious issues with discussion of health issues, or an addiction recovery program that teaches participants to center their lives on faith as an alternative to substance abuse.

Question 2. My FBO runs a government-funded home for homeless men. There is a highly regarded addiction recovery program nearby that is very faith-intensive. Is it acceptable for our staff to encourage men in our program to enter the faith-intensive addiction recovery program?

A: There is nothing wrong with such encouragement in and of itself. However, there are a lot of warning signs to be aware of in a situation like this. First, the government-funded staff should neither instruct someone in the principles of a faith- intensive addiction recovery program themselves nor should they coerce someone to participate in a faith-intensive program in any way. They should also keep in mind that “subtle coercive pressure” or “social pressure” may be viewed as equally coercive as more direct forms of coercion, especially if an individual is particularly susceptible to persuasion.

Question 3.  I’m the minister of a church that operates a government-funded back-to-work program. May I hold a service with an altar call during a lunch break in the program and encourage program participants to attend? I wouldn’t require anybody to come to the service. Responding to the altar call would be voluntary.

A: Again, in this situation, the warning signs must be considered and a judgment call made. A service, particularly one with an altar call, falls into the category of prohibited specific religious activity which can be a very faith-intensive transformative experience. If you held such a service during the program day, even if during the lunch break, it might be viewed as part of the program, even if you don’t intend it to be. This is particularly true if you encourage program participants to come. That encouragement might well be taken as a form of coercion. It would be best to reserve such activity for a time before or after the program day and to simply extend an invitation to program participants who may wish to attend.

Question 4.  What should I do if a program participant asks me about my religious beliefs or begins a conversation about a religious subject during program time?

A: A good strategy is to answer him or her briefly and then politely arrange to speak further after the program’s scheduled time, if you would like to continue the conversation.

Question 5. May I invite a program participant to a worship service at my church where the social service program is held?

A: Yes, by all means. Simply make sure that you are clear in stating that you are extending an invitation and that there is no requirement or expectation that the program participant attend the worship service.

Question 6. We are considering applying for a government grant for our FBO’s after school center. I usually work on reading skills by reading with the children from the Bible. Would that be permissible since I’m not really teaching about religion?

A: Because working on reading skills is a secular activity and can be achieved by the use of another book, specifically religious texts (such as the Bible or Koran) should not be used. These religious texts, of course, may be used in programs that are not financed by the government.

Question 7.  If our FBO gets a government grant for its weekday job training program and uses some of the government funds to buy computers for the program, is it permissible to use those computers on Sundays for our youth Bible study class?

A: Neither government funds, nor materials (or labor) purchased with government funds may be diverted and used for specifically religious activity like Bible study. Thus, using computers that are exclusively funded by government for such religious activity is strictly prohibited. Some faith-based organizations have made it a practice to use private funds to pay for a percentage of materials, such as computers, and then using those materials for religious activity for a similar percentage of their overall time in use (for example, using private funds to pay for 25% of the cost of computers, and then devoting 25% of the computer usage time to religious activity.) However, the safer course by far is to use government-financed equipment, supplies, or labor exclusively for secular activities, and to raise private funds to buy and maintain wholly separate materials or services for religious activities. For example, if the government financed the purchase of three computers and the religious organization could afford a fourth, privately-funded computer, it would be better to use that one for your Bible study class, rather than using all four computers for religious activity 25 percent of the time.

General Rule #2: No religious discrimination among participants

Question 1.  May an FBO which receives government funds for a class reserve some of its class “chairs” (program slots) for members of its own faith as long as the class is also open to people of other religions and people of no religion at all?

A: If you wish to reserve chairs for members of your own faith, the best solution would be to secure other funding for those chairs and make it clear in your records that those chairs are privately funded. Of course, the particular contract documents for your program would need to be reviewed carefully to make sure that such an arrangement is permitted in your particular circumstances.

Question 2. My staff members certainly don’t consider themselves people who discriminate.

Are there things that we should keep in mind about this “don’t discriminate against any participants” rule?

A: Simply be aware of the issue and don’t consciously or unconsciously give more attention or opportunities to participants of one religion over another or in any way treat participants any differently due to their religious affiliation or beliefs.

Government Monitoring for Impermissible Religious Content or Activity – What may Government do? What should Government do?

Question 1. Does the government have an obligation to assure that government funds are not being used to fund specifically religious activity?

A: The Government has an obligation to assure that public funds are not being spent on impermissible religious activity or content. It also has an obligation, under the First Amendment, not to become “excessively entangled” with religion. So, it is in everyone’s best interests, that simple and effective constitutional safeguards and monitoring systems be developed, implemented and maintained.

Question 2. What is the government supposed to do to see that government funds are not being used for religious activities? What may it do?

A: This is an area where we can expect to see more legal line painting over time.  Examples of monitoring mechanisms might include: (1) reviewing the program description in the grant application for descriptions of proselytizing activity, worship or religious instruction as well as religious themes, messages or content; (2) reviewing the materials used by the grantee  for religious themes, messages or content, (3) monitoring the program as implemented, by requiring periodic reports with certifications by the FBO contact that, during the reporting period, no program events, or activities, supported in whole or in part with government funds included proselytizing, worship or religious instruction, religious themes, messages or content, and no materials created, acquired, or supported with government funds contained religious themes, messages or content, (4) visiting the program periodically to ensure that it is being administered in a manner that does not violate the Constitution, and (5) documenting in writing any violations and their remedy.

Programs Receiving Public Funds Indirectly (Voucher or Other Means of Participant Program Selection)

Question 1. Why is there a difference between what religious activity is permitted depending on whether the FBO receives the government money directly from the government or indirectly through a voucher or other form of participant selection of the program? The money all comes from the same place.

A: The key factor under constitutional law is not where the money comes from but whether any religious activity itself can reasonably be said to be the activity of the government. For example, let’s say that I am a government employee and you come to my government-sponsored parenting skills program. Much to your surprise, I then teach you parenting skills using a particularly intense faith perspective. It might be reasonable for you to think that the government was endorsing that religious viewpoint – that the government was behind what I was teaching.

Now, let’s say I’m a government employee and I tell you that the government will pay for you to take a parenting skills class and there are two or three or four such classes to choose from. I then describe the classes to you and they all are similar in quality and scope of services. The only real difference is that I tell you that one of the classes is taught from a faith perspective. Now, if you tell me to sign you up for the one taught from a faith perspective, or you take the voucher I give you and go to that particular class – you’ve made an independent choice. In that case, it might be less reasonable for you to think the government was endorsing that provider’s religious viewpoint.

Question 2. What does it mean that in an indirect funding program, the participant must have had a “genuine, independent private choice” among religious and secular program options?

A: Whether there is genuine, independent private choice among religious and secular program options in a specific situation will depend on the particular facts of that case. All relevant factors likely will be considered. Here are some:
  • Have secular options been presented at all? Are they reasonably similar alternatives (e.g., similar in terms of distance, conditions, services offered, etc.)
  • Has the person making the choice been advised appropriately about the religious nature of the program? Has he or she given independent consent without any coercive influence?
  • Is there any kind of documentation on the options afforded the person and the advice given concerning the religious nature of the faith-intensive option(s)? Is there any documentation of the choice made? (In other words, is there some way to corroborate that these steps were really taken?)
  • Are there any facts suggesting that the individual presenting the choices to the person in need of services has an incentive for presenting the choices in a non-neutral manner?
  • Does the participant enjoy particular privileges if he chooses the faith-intensive FBO program or, alternatively, suffer any negative consequences if he does not choose that program?

Employment Issues

Question 1.  My FBO currently hires only people of our own faith. We are considering submitting a grant application for a government grant funded with federal funds. How do we figure out whether getting the grant would mean that we would have to change our hiring practices?

A:  That will depend on what kind of grant you are applying for, and you will need to find the answers to some particular questions yourselves, or find a very reliable source that has worked through the answers to those questions for FBOs in your area participating in the program you are interested in. It would be prudent to talk with a lawyer about this question to make sure that you have obtained and properly considered all of the necessary information.

There is some general information available about the employment provisions of particular federal laws in the White House Policy Statement:” Protecting the Civil Rights and Religious Liberty of Faith-Based Organizations: Why Religious Hiring Rights Must Be Preserved, http://www.religionandsocialpolicy.org/docs/general/6-24-2003_whofbci_religious_hiring_rights.pdf.

There is also information available through the faith-based and community initiative centers of the federal government agencies. You may contact the agency administering the program you are interested in. For a listing of the web addresses of these centers, see Web Resources for Research and Information Concerning Faith-Based initiatives and Legal Issues 

Generally, FBOs are exempt from the provision of federal law that forbids religious discrimination in hiring. But, Congress sometimes puts language in federal social service program laws that "overrides" that exemption and says that FBOs getting grants under that particular may not discrimination in their hiring practices. So, the first thing you have to do is find out whether Congress put such an explicit override statement in the law for the program you are interested in. If it did, then you may not limit your hiring to people of your own religion.

Even if federal law permits FBOs to prefer co-religionists in employment decisions, state and local law may prohibit such discrimination. Thus, the next thing you need to do is to find out (1) whether that law exempts FBOs from any provision prohibiting religious discrimination, and, if it does, (2) whether an FBO loses that exemption if it enters into a contract with the state.

You also need to find out whether the municipality where you are located has a nondiscrimination law and if so (1) whether that law exempts FBOs from any provision prohibiting religious discrimination, and, if it does (2) whether an FBO loses that exemption if it enters into a contract with the municipality.

You will find charts setting forth the relevant provisions of all state and a number of municipal nondiscrimination laws as of the fall of 2002 at http://religionandsocialpolicy.org/publications/publication.cfm?id=22. However, it is prudent to consult with a lawyer in your own area to evaluate the current status of the law that applies to your specific situation.

Question 2.  If my church has a government grant for a social service program, does that mean we have to be open to hiring people of any faith for all of the jobs in our church?

A:  No. First of all, there are some positions that come within what is known as the “ministerial exception.”As a matter of constitutional law, no discrimination laws apply to individuals in positions that fall within that exemption category. Regarding those positions, the church is free to consider a very broad array of factors in its hiring decisions.

As to what employees come within that category, it is clear that those who are ordained, preach and administer sacraments fall within that category. It is also clear that the category includes others who are not ordained but who are involved in religious teaching, ritual or governance. Whether or not a particular job comes within the ministerial exception depends upon the specific function of the individual’s position and how it relates to the spiritual and pastoral mission of the FBO.

The controversy concerning the faith-based initiative and the hiring practices of FBOs is focused on those employees being hired for social service programs receiving government funds. It is possible, however, that under some state or municipality laws, FBOs receiving government grants must refrain from religious discrimination with respect to all positions, except for the highest leadership roles. You should check with local officials and your own lawyer to answer this question.

Question 3.  If my synagogue receives a government grant for its life skills class, may our rabbi still teach the class?

A:  Yes. Clergy and others who participate in leadership roles in the religious activities of the synagogue may also hold leadership roles in the government-funded secular life skills class. Keep in mind, however, that it is especially important to maintain careful records of employee duties, time and compensation in the case of individuals who have dual roles involving both secular activities and religious activities. A person may not engage in impermissible religious activity in a government-funded program, nor may an individual be compensated with government funds for religious activities performed for the FBO outside of the social services program.

Question 4.  My FBO’s program is government-funded and we have learned that we are exempt from any religious discrimination provisions. Does that mean that we are free to hire only people of our own religion and to make adherence to our religious and moral tenets a condition of continued employment? We think this is very important to the success of our program because it has a big impact on our effectiveness.

A:  The language in the federal law on nondiscrimination in employment exempting FBOs from its religious discrimination provision has been interpreted by a number of federal courts to mean that FBOs may terminate an employee whose behavior or beliefs are not consistent with those of the employer. Also, some employment decisions, such as terminations, may be governed, at least in part, by the provisions of employment contracts or personnel manuals which may narrow or clarify the grounds for termination, including the religious grounds. Therefore, it is prudent to consult a lawyer to review carefully all relevant documents and the current law in your area when making non-routine employment decisions.

Question 5.  If an FBO is allowed to hire only co-religionists, does that mean its program can have more religious content than it could have if it were allowed to restrict hiring to co-religionists?

A:  No. The two issues are completely unrelated. The rules regarding government funding of specifically religious activity and religious content are the same whether an FBO is exempt from religious discrimination laws or not.

Legal Nuts & Bolts

Many of the legal and practical particulars about what can and cannot be done in an FBO-government partnership depend upon the contract, policies and procedures specific to that partnership. When questions about what can be done come up, written materials should be reviewed. It is also often a good idea for the FBO and government contacts to discuss the issue. FBO-government partnerships are like any other relationship. Clear communication between the parties prevents problems and helps things run smoothly.

Question 1. My mosque currently runs its soup kitchen out of the same building that houses our worship space. If we receive a government grant do we have to change the location?

A:  No. Under Charitable Choice legislation, the soup kitchen may stay in the same building as the mosque and you do not have to remove any religious images or symbols from the soup kitchen space. For other “Legal Highlights” on general Charitable Choice rules, see Toolkit for Government and FBO Collaboration.

Question 2.  Does my church have to set up a separate organization and obtain charitable nonprofit tax status for that new organization, if the congregation wants to apply for a government grant to partially fund its job training program? Should it do that even if it’s not required?

A:  Although some states do require this, federal law does not require FBOs to set up a separate 501 (c) (3) (charitable nonprofit organization) in order to apply for, and receive, government funds. However, you will be required to keep careful accounts and records pertaining to the job training program that show how the government funds were used and that there was no misuse of the funds. The financial accounts and other records for the job training program should be maintained completely separate from those relating to other activities of the church. Some organizations find that the best way to accomplish that is by setting up a completely distinct organization.

You might also decide that it is best to set up a separate management structure for the government-funded training program than the one you have for the church and, again, that the best and clearest way to do that is to set up a separate organization.

Another important reason you might decide to set up a separate organization is to serve as a legal “fire wall” between the job training program and the church, if for some reason a legal claim arises. The fact that the job training program was operated by a separate organization may go a long way toward protecting the church’s assets against any financial claims that somebody might make in a law suit arising out of the training program’s activities. In addition, if government-funded organizations in your state or locality are forbidden from engaging in religious discrimination in employment, setting up a separate organization will ensure that only the government-funded entity, and not the religious organization, will be subjected to that regulation.

It is prudent to seek legal counsel about whether or not to set up a separate organization for your social service program in your particular situation.

Question 3.  Where can I go to find answers to other legal and business questions I have about starting a faith-based social service program, setting up a corporation, handling financial matters and things like that?

A: The FASTEN web site (www.urbanministry.org) offers a variety of resources on these topics. You might especially want to peruse the articles and resources posted on the web in the “Effective Organizations” channel under the topics, “Getting Started” and “Management & Leadership.”