Pros and Cons of Federal Grants for Faith-Based Organizations

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Since its beginning under George W. Bush, the federal government’s “faith-based initiative” has offered grants to qualified religious organizations to assist them with their charitable work. The program is administered by a range of federal agencies, including the Department of Justice (for work related to public safety) and the Department of Education. Like every government program, the grant process involves jumping through hoops and acceptance of certain restrictions on how the grant money is used. Whether a religious nonprofit should pursue a federal grant will depend on a range of considerations.

The advantages of federal grants for faith-based organizations

Federal faith-based initiative programs are not just about funding. They can also give an organization a number of other advantages and resources that may make them an appealing option. Here are a few examples:

  • Money. The clearest reason to apply for a federal grant is to expand the organization’s financial resources for fulfilling its mission. Federal grants operate as reimbursement programs, meaning the organization spends its own money on qualified activities and then applies for reimbursement under the grant.
  • Access to resources. Many grant programs provide grantees with a range of additional tools to help them better achieve their goals. These resources might include training materials, classes, and personalized advice from consultants.
  • Networking. Grantees can gain access to a network of other grantees, opening doors to greater cooperation and sharing among like-minded organizations that can assist one-another in fulfilling their goals.
  • Image. Some private donors may perceive a successful grant application as a sign that the organization is well-managed and taking advantage of every financial opportunity.

Potential disadvantages of federal grants

Although having more money to work with is a good thing, federal grants never come without strings attached. For some organizations the costs of compliance with federal rules may outweigh the financial benefits.

  • Compliance. Many grant programs require grantees to submit regular reports, keep specialized accounts, or take other administrative steps that add a significant burden for the organization’s staff.
  • Oversight. Government oversight of a religious organization’s activities can give rise to legitimate concerns about state interference in religious affairs. How much monitoring and auditing is done will depend on the program and the administering agency, as well as the attitude of the individual officials tasked with confirming compliance.
  • Consequences among donors. Every organization must determine for itself if its significant donors will respond positively to the organization seeking federal funds. Some donors may dislike state entanglement. Others may feel that their dollars may be best spent elsewhere if the organization is receiving help from the government.

An attorney can help with the grant application process

The Church Law Center of California provides legal counsel to religious and secular nonprofits. We are happy to help religious organizations weigh the merits of federal faith-based grant programs. Call us at (949) 892-1221 or reach out to us through our contact page.

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