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Impact of Federal Funds on Faith-Based Organizations - FAQs:
Faith-based organizations who received funding are allowed to:
- Use facilities without removing religious art, icons, scriptures or other religious symbols
- Retain religious terms in organization's name
- Select board members on a religious basis
- Include religious references in their mission statements and other governing documents
- Retain their federal exemption under Title VII of the Civil Rights Act, which allows them to hire on a religious basis, except in cases where the federal program statute forbids it
- Retain their authority over internal governance
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Not only do faith-based organizations need to abide by the Equal Treatment and Charitable Choice regulations, but all organizations are required to provide the same assurances and restrictions on the use of HHS funds so that they are applied equally to secular and religious providers.
For information about the Equal Treatment and Charitable Choice regulations, visit http://www.hhs.gov/partnerships/about/regulations/
Financial Reporting Requirements.
To make sure that grant funds are used properly, organizations that receive Federal funds must file regular financial status reports. These forms should not take long to complete, but they are important. The basic financial report form is a one-page document called Standard Form 269. Many agencies have adapted this form to suit their own programs. You can find a copy of Standard Form 269 at http://www.whitehouse.gov/omb/grants/sf269.pdf.
Audit.
All agencies/organizations that receive Federal funds are subject to basic audit requirements, including community and faith-based groups. These audits are intended only to examine the Federally-funded parts of an organization's operations and are not designed to identify unrelated problems. The audits are necessary to make sure that Federal dollars have been spent properly on legitimate costs. It is therefore extremely important for grant recipients to keep accurate records of all transactions conducted with Federal funds.
Most organizations are not audited by the government itself, although the Federal government has the right to audit any program that receives public money at any time. For example, organizations that spend less than $300,000 a year in Federal funds are generally asked only to perform a "self-audit." For larger grants -- those over $300,000 a year -- an audit by a private, independent outside legal or accounting firm is required. More information on audits may be found on the Office of Management and Budget's website (www.whitehouse.gov/omb/circulars).
Yes. A faith-based or religious organization does not need to change its identity, including its name or chartering documents, to qualify for a Federal grant. Nor does it need it to remove religious art, icons, scripture, or other religious symbols from its property or its publications, although all of these must have been purchased with private funds.
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If you violate the requirements specified in your grant or otherwise improperly use the funds you receive, you may be subject to legal action. Among other things, you may:
- Lose your grant funds,
- Be required to repay the funds you received, and
- Pay any damages that might be awarded through court action.
If an organization uses its funds fraudulently, it could be subject to criminal prosecution.
If you have information regarding a grant fraud specific to HHS, please contact the HHS Fraud Hotline at 1-800-447-8477.
Learn More:
- Fraud Prevention & Detection (Office of the Inspector General)
- Frequently Asked Questions about Fraud, Waste, and Abuse
The United States Supreme Court has said that faith-based organizations may not use direct government support to support "inherently religious" activities. Basically, it means you can not use any part of a direct Federal grant to fund religious worship, instruction, or proselytization. Instead, organizations may use government money only to support the non-religious social services that they provide. Therefore, faith-based organizations that receive direct governmental funds should take steps to separate, in time or location, their inherently religious activities from the government-funded services that they offer.
Such organizations should also carefully account for their use of all government money. This does not mean your organization can't have religious activities. It simply means you can't use taxpayer dollars to fund them. Some faith-based organizations set up separate charitable organizations (so-called "501(c)(3) corporations") to keep programs that receive government money separate from those that engage in inherently religious activities.
This rule of thumb is different if your organization receives Federal money that comes in the form of "vouchers" or other so-called "indirect aid." In simple terms, an indirect aid program is one that gives funds or certificates to individuals in need, which can be used to obtain services from a number of qualified organizations. A good example of indirect aid is a child-care certificate that a parent can use for daycare at any participating child-care center. School vouchers are another example of indirect aid. The vast majority of programs affected by the Faith-Based and Community Initiative involve direct aid to organizations (that is, money that goes directly to the organizations themselves), not vouchers or indirect aid.
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