The Seven Deadly Sins of Government Funding

COMMENTARY Civil Society

The Seven Deadly Sins of Government Funding

Mar 1st, 1997 25 min read

Former William E. Simon Fellow in Religion and a Free Society

Joseph is a former William E. Simon Fellow in Religion and a Free Society.

Welfare reform is once again forcing upon Americans an age-old debate: How should we, as a society, care for the neediest among us? Until about the 1960s, privately funded charities were the most vital and visible answer to that question -- putting the jobless to work, lifting single mothers out of poverty, keeping delinquent kids out of jail. But gradually, after waves of Great Society programs, government has come to dominate the care-giving industry. Today, federal and state agencies fund and regulate every conceivable social service. And, increasingly, they do so indirectly: Countless charities and other nonprofits are now heavily subsidized to deliver care; many of these "private" groups depend on public funds for well over half of their income. Even numerous religious agencies, typically the most wary of entanglement with the secular state, could hardly survive without government aid.

With the lure of lucrative grants and contracts, government is quietly orchestrating one of the most profound -- and overlooked -- shifts in public policy in a generation. Massive, direct public funding for private nonprofits is quickly becoming the most important strategy for attacking social problems in America.

But is it working? By increasing the pressure on the private sector to mobilize against poverty and other social ills, recent welfare reforms have raised two vital questions: First, have private charities become too dependent on government support? And second, what special risks accompany the taxpayer money that flows to religiously based charities?

Defenders of the "public-private partnership" argue that government contracts make it easier for private agencies to sustain and expand their outreach. That may be true, but more true of those agencies with good lobbyists and political connections. Moreover, the subsidies to these groups carry serious liabilities.

The following observations reveal the dangers -- the "seven deadly sins" -- of government's alliance with private social-service agencies. They are based on research in Massachusetts, mainly in the Boston area, which was chosen in part because of its heavily funded network of social services. Nearly all of the organizations cited depend on public money for at least 60 percent of their budgets.

What follows, then, are not the criticisms of disenfranchised outsiders, but the insights and concerns of the system's benefactors -- or, put more precisely, its dependents.

1. Government regulations force providers to waste resources. With government grants and contracts come government standards -- reams of regulations intended to ensure accountability and guarantee quality care. What they guarantee instead is mindboggling waste.

Jacquelin Triston, a Salvation Army captain in Framingham, oversaw a federal lunch program at an Army center that mandated every child be served an entire meal every day -- whether he wanted it or not. And if a child asked for a second helping of anything on the menu, he got an entire meal. "It was a crazy waste of food," Triston says. "It just ended up in the trash."

The Key Program offers counseling and other support services to 700 youths daily, most of them in trouble with the law, at 40 sites throughout New England. Ninety-nine percent of the program's $15 million budget comes from state and federal sources. To continue to receive government funds, however, all Key centers must be fully accessible to the handicapped under the federal Americans with Disabilities Act.

So exactly how many of its kids are physically handicapped? "Zip," says Bill Lyttle, a 20-year veteran of the agency. "Our programs are not designed to serve handicapped kids. We serve a lot of delinquent kids. There are not a lot of delinquent kids stealing cars in wheelchairs."

Local regulations may be as clumsy and wasteful as federal rules. Private schools are prime targets of overzealous regulators, says Dick Barbieri, the executive director of the New England Association of Independent Schools:

  • A small elementary school sets up a lunch table for students to make their own peanut-butter-and-jelly sandwiches. A food inspector insists that every piece of bread placed out for use must be individually wrapped. Under the new rules, Barbieri says, "a kid comes along, takes two slices of bread, makes a peanut-butter-and-jelly sandwich. Regulators call that a health hazard."
  • Another school builds a hockey rink, but a fire inspector rules it cannot open because it lacks exit signs that would remain lighted in case of a blackout. School officials point out that the rink has no walls -- just a roof supported every 20 feet by girders. The fire inspector is unpersuaded, and the school installs the exit signs.

"What government agencies don't understand," says Bill Chiaradonna, the director of programs at Catholic Charities in Boston, "is that the more they regulate us, the more we have to spend what little money we get on business people and secretaries."

2. Government regulations cripple common-sense caregiving. The impulse to standardize care, to minimize the risk of accidents or failure, feeds an ever-growing regulatory thicket -- one that entangles and paralyzes local decisionmaking.

Washington issues numerous guidelines, for example, for the distribution of Federal Emergency Management Agency (FEMA) money. The Salvation Army's Triston oversaw a Cape Cod chapter that received FEMA funds to help struggling families meet rent and utility payments. But the money was tightly regulated: help could be given to a family only once in a fiscal year, for example, and could never amount to more than a month's bill. Local caregivers found they couldn't apply the money in ways best able to meet the financial crises of individual families. And that, says Triston, "made it difficult at times to really assist people in an appropriate way."

It is a vice not confined to Washington regulators. Consider the Massachusetts Department of Mental Retardation (DMR), which oversees all residential facilities for the mentally and physically handicapped in the state. DMR regulations demand that facilities investigate and report every incident involving the possibility of injury to residents. But the guidelines do not allow for the normal scrapes and bruises that mentally and physically handicapped people are bound to suffer. Though the rules permit program staff to use professional judgment in reporting incidents, providers say the mood created by regulators turns every bruise into a possible government probe.

"We're constantly debating whether something needs to be reported," says Maggie Mahoney, director of residential services at the Boston-based Justice Resource Institute. The Institute, which oversees several centers for the disabled, is continually processing paperwork on potential violations, incident reports, or actual investigations -- sometimes eating up 75 percent of Mahoney's work week.

The organization's dependence on public funds -- nearly all of its budget is paid by the state -- makes it especially vulnerable to government oversight. "Regulations dictate everything we do," says Mahoney, who has since left the Institute. "They tell us how many staff we have to have depending on the level of disability, what things are locked, what medications are kept, how individual service plans are developed."

She's not kidding. A human-rights committee, authorized by the DMR to review caregiving policies, recently overruled a staff decision to lock a refrigerator. JRI staff locked the refrigerator at one of its facilities because a resident with an eating disorder was stealing everyone else's food. The committee wanted the refrigerator unlocked and a staff person assigned to monitor the woman.

But all of the center's eight residents need significant custodial care, and there are not enough staff to give her exclusive attention. The Institute proposed an alternative: secure the refrigerator only when all the residents are home. The committee balked, spent months debating the issue, and ruled that the refrigerator should remain unlocked. "It just couldn't get resolved," says JRI director Bob Richards.

Many providers who deal with state agencies doubt that public officials appreciate the effect of regulation on day-to-day operations. "Some peoples' jobs are to create regulations," says the Key Program's Bill Lyttle. "If they don't find deficiencies, somebody thinks they're not doing their job. So their job is to find problems. It's the wrong orientation." Complains Ed Gotgart, the president of the Massachusetts Association of Non-profit Schools and Colleges: "Compliance becomes the focal point and not the program."

3. Government squeezes providers into its caregiving mold. The bureaucratic state places tremendous pressure on providers to adopt its vision of "professional" care. Listen to the Rev. Phillip Earley, legal counsel at Catholic Charities, who has reviewed his agency's state contracts for more than a dozen years: He wishes that government "would just give us a little more freedom in designing the services" and laments what he calls "the cookie-cutter approach to treating people."

One tool in that approach is the state's licensing system, which determines whether groups qualify for grants and contracts.

Jim Major, the director of the Massachusetts Association of Approved Private Schools, recalls a lengthy battle waged by the state Department of Education against a Springfield school for deaf children. The school, under contract to provide special education, cut its costs by renting classrooms from local public schools. By bringing its children into public classrooms, the Springfield school also encouraged interaction between deaf and nondeaf kids, a cherished goal among state educators. But the Education Department threatened to revoke the school's license and shut it down, Major says. The reason: The public school classrooms lacked state approval as appropriate facilities for the deaf.

The Department's licensing regs also stipulate that any new special-ed program must have 20 students. Major says the number is unrealistically high for most communities. "The regulations create a box kind of mentality about how special education should be provided," he says. "There are a lot of other ways to meet the educational needs of kids . . . but people aren't allowed to do it that way if they tell the state."

Thanks to state monitoring, Massachusetts educators also must anguish over the distinction between a preschool and a day-care center. The state licenses 120 independent private schools -- elementary, secondary, and boarding schools -- serving about 35,000 students. Many have preschool facilities on site, but principals and teachers don't operate them as day-care centers. Instead, they use educational materials and curricula appropriate for preschool classrooms.

But the state Office for Children makes a raw numerical judgment: If the majority of a school's students are in preschool programs, then the preschool arm is considered a day-care center. It must conform to all state regulations governing child-care facilities, including training for supervisors and administrators, a high teacher-pupil ratio, and building and safety codes.

Many of the state's independent schools, however, use Montessori educational principles, which keep the number of teachers to a minimum to encourage children to work together. State staffing regs for day-care centers undercut the Montessori philosophy. Says Barbieri, "you thwart your educational aim in order to conform to the day-care center standards."

A license to heal. Government regulators also pursue conformity by insisting on credentialed staff. State contracts contain unbending requirements for certified caregivers. Though few providers challenge the need for professionalism, some say the system's inflexibility is utterly counterproductive.

"It's a disaster," says Joyce Strom, the executive director of the Massachusetts Society for the Prevention of Cruelty to Children (MSPCC). Her Boston agency, which offers early intervention programs for families at risk of abuse, historically has relied heavily on volunteers. But state demands for credentialed staff undercut the agency's ability to use them. "We are so turf-driven and so professionally driven that we let it create a rigidity that I'm not even sure does the best job."

In areas such as substance-abuse treatment, state-mandated approaches clearly are not doing the best job. Despite layers of licensing and credentialing rules, long-term recovery rates for those in government-approved treatment programs are notoriously low. State-funded services are designed to wean people off drugs for a few days or weeks at a time. But most don't touch the deeper factors that contribute to substance abuse, such as personal responsibility and accountability to others and to God

Meanwhile, private, noncredentialed, spiritually-based programs such as Alcoholics Anonymous remain one of the most successful efforts nationwide. "When somebody comes into recovery, he's spiritually bankrupt," says Karen Wakefield of STEP, a Boston treatment program based on the 12-step model. "But [state-approved] service provision deals with the physical or the mental. We've totally ignored the spiritual, and now we're paying the price."

4. Government focuses on delivering services, not results. Whenever a social-service agency accepts a government contract, it also accepts a built-in bias in the way its work will be measured and rewarded. Government excels at quantifying and paying for services delivered: the number of clients counseled, beds provided, days spent in drug detoxification. But government pays little attention to the ultimate effectiveness of those services. "Nobody gives a darn if the kid got better," says Joyce Strom of the MSPCC, a leading recipient of family-service contracts. "All the auditors look at in my budgets is to see if I bought as many pencils and spent as much on gas as I said I did."

Each year, for example, Massachusetts pumps millions of dollars into substance-abuse programs, with no idea whether they are curing or perpetuating addictions. Though the state's Bureau of Substance Abuse employs a staff of 40 to manage its contracts, no one evaluates the effectiveness of the providers. "I don't know if a person we treat shows up in another treatment program across the city," says Steven Moss, the vice president of substance-abuse-treatment services at Dimoch Community Health Center in Boston. "Nobody really funds us to track people down."

This fixation on providing and quantifying services -- whatever the ultimate outcome -- reflects an entitlement mentality. It is the notion that all needy people deserve limitless public assistance, regardless of their willingness to change destructive attitudes and behaviors.

Boston's Pine Street Inn, one of the largest shelters in New England, provides food and housing to nearly a thousand homeless men, women, and children each day. But the shelter's contracts with government do not include any targets for moving people out of homelessness and into permanent independence. For most of Pine Street's 25 years of operation, its philosophy of assistance has mirrored that of government contractors. "The vision [has been] keeping people alive and meeting incredibly basic needs," says Jan Griffin, the director of program planning.

The shelter expects very little of its residents. They are not required to work or take classes. Nor do officials insist that all able-bodied residents enter its employment and housing program; no more than 20 percent of male residents ever volunteer. Even the no-drinking rule is qualified: Pine Street residents can walk a few yards from the shelter to a "wet park" -- a place where they can drink alcohol unmolested all day long -- and return to the shelter in the evening, no questions asked.

Beth Kidd, the director of another residential center for the homeless and other needy persons, believes that's the wrong way to offer help. "People who are substance abusers, who have been out on the street for years -- they've learned how to survive," she says. "They know how to manipulate. And what they've learned from the system is, 'I can make the system take care of me.' " What they need, she says, is moral challenge, not milquetoast charity. Kidd's Boston agency, Place of Promise, won't take a dime of government contract money because she wants the freedom to challenge people to reform bad behaviors -- a freedom that her state-paid colleagues tell her they don't always have.

A 25-year veteran of neighborhood nursing, Kidd tells the story of a young woman who had worked as a prostitute, became addicted to drugs, and eventually died of AIDS. "When she came here, she'd been through every government agency, everything Boston had to offer," Kidd says. Nothing had turned her around. A public nurse sent the woman to Place of Promise because she didn't know what else to try. A couple of days before she died, the same public nurse came to see the woman. "She struggled herself up on her elbows -- she was so sick -- and grabbed the nurse by her collar and pulled her down so she could hear," says Kidd. "She said, 'You've got to hear what I'm telling you. I have found life here. I am so filled with joy because I have finally found forgiveness.

" 'All those times you tried to tell me that everything I was doing was OK, I knew it wasn't OK. It destroyed everybody I ever cared about, everybody I ever loved. And most of all, it destroyed me. And you kept saying it's all right.' "

5. Agencies that chase public dollars confuse their mission. Government grants and contracts can be a tantalizing diversion. Even private agencies with the best of intentions may assume tasks that have little to do with their original purpose and for which they may be ill-equipped. "Most everyone is fighting for every penny they can get to run whatever program they have," says the Salvation Army's Triston. "It's really a matter of, if you can't do it the way you want, then you'll take your program and you'll fit it into what government will give you money for."

Sometimes private agencies have little choice. Kristen McCormack, a former executive director of Federated Dorchester Neighborhood Houses, recalls a summer-camp contract with the state Department of Social Services to help abused and neglected children. Federated Dorchester, an association of settlement houses in Boston, ran its own camp program for local kids. But it was not equipped to handle children from the DSS caseload. Nevertheless, it struggled with the contract for years.

"Everything about it was a disaster," McCormack says. "It was insane, we lost tons of money on it, it wasn't consistent with our mission." DSS caseworkers referred children from all over the city, often without reliable transportation, to the Dorchester camps, yet the agency had no buses to pick them up. DSS required numerous pages of paperwork for each referral, yet the agency lacked the administrative manpower. Most importantly, the agency was being asked to provide a program to DSS children with intense behavioral and emotional problems. "They were abused and neglected kids, which we didn't have the capacity to deal with in our summer camps," says McCormack. "We did not have intensive counseling and therapy."

Eventually McCormack told a regional DSS officer that Federated Dorchester would discontinue the contract. "I said we can't provide this service and we're not meeting the needs of the kids," she recalls. The DSS officer reminded McCormack of the $2 million in day-care contracts her agency had with the state. "They actually said, 'If you want your day-care contract, you will take the summer-camp contract,'" she says. "They were very clear." The agency renewed the contract.

Watching the children. Up until the late 1970s, Massachusetts performed its own investigations and assessments of welfare families, through its child protective services department. As its welfare caseload ballooned, so did the state's need for protective-service work. But government lacked the staff to monitor families effectively. By the early 1980s, the DSS began enticing child-welfare groups to take on its investigative caseload.

"Rather than purchasing add-on or supportive services from private agencies," says Bill Chiaradonna, the director of programs at Boston's Catholic Archdiocese, "DSS was trying to get the agencies to do the same work that it was doing." Although it boasted a long history of work in adoption and foster care, Catholic Charities had no experience in protective services. Nevertheless, by the late 1980s the charity brought in more than $1 million a year in child-protection contracts.

"This made us almost identical to the DSS office," says Chiaradonna, "and that became a problem." The problem was that Catholic Charities acquired the same stigma in the community that attaches to a government protective-service agency: It took on a quasi-policing function, monitoring and reporting parents suspected of abusing or neglecting their children.

A similar identity crisis enveloped the Massachusetts Society for the Prevention of Cruelty to Children (MSPCC). Founded in 1878, the agency had long focused on preventive services to families at risk of neglect or abuse. But by the 1980s, after the DSS reorganized, most of the big state contracts available to private agencies funded family investigations and case management of DSS families.

For abuse-prevention groups such as MSPCC, this was the wrong emphasis. The agency wanted to make sure families were getting enough support from the start -- including prenatal care, parenting skills, home visitation, counseling, health and other support services. Like Catholic Charities, however, MSPCC went along with the contract flow, eventually depending on child-protection work to fund 70 percent of its budget. "The board [of directors] felt it did contaminate their mission, and that they had to do what the state said," says Strom, who joined the agency in 1991. "They wanted to get back to the prevention word in our name."

Ironically, they soon got some help from the state legislature, which passed a bill banning most nonprofits from doing child-protection work. Cases were transferred back to the state, and funding to private groups was cut off.

Private agencies went into a tailspin. The MSPCC reorganized and launched a massive fundraising campaign. Catholic Charities scrambled to salvage other programs. The agency laid off social workers and supervisors, relegated program directors to part-time hours and restructured its administration. "There was a whole infrastructure that was supported in part by the DSS contracts," Chiaradonna says. "We were still being true to our mission," he insists, "but in the end, we probably would have gotten out of protective services ourselves."

Heavy dependence on federal and state contracts means dancing to the government piper. Public funding, says Strom, "definitely undermines your capacity to . . . show leadership, to try new demonstrations, to find strategies that work that bureaucracies can't get away with."

The leaders of Bruce Wall Ministries, a church-based program for at-risk youth, place a holy premium on their financial independence from government. For 20 years, public funds have supplied less than 5 percent of the Boston agency's budget. "There's this feeling that the cat's already out of the bag," says Karen Wall. "But my feeling is you'd better hold onto the cat's tail. Better to stop now than to get in bed with the feds and not have a sense of where you're going."

6. Politics often drives caregiving decisions. Racial and ethnic politics, the biases of state agency commissioners, the shifting fiscal moods of the state legislature -- all these factors affect program decisions. Consider:

  • Project Place has a grant to work with Latino girls in a local school system. The girls are considered at high risk for pregnancy, drug use, and AIDS. But so are the whites, Asians, African Americans, and other students in the school district, which has asked Project Place to expand its outreach. "The grant doesn't allow us to do that," says executive director Suzanne Kenney. And so the program's government-funded counselor must literally turn away anyone but Latino girls.
  • The DSS decision to end nearly all of its protective-service contracts with private providers had nothing to do with quality control. When the DSS transferred the cases of roughly 3,000 families back to its own caseworkers, critics said the agency wasn't ready. It lacked the personnel to handle the larger caseload and had no transition plan for the extra families. Says Joyce Strom of MSPCC, "It was not thoughtful, it was not practical, it was not logical."

Why the shift? It was part of a deal between state legislators, who wanted to cut the budget of the Department of Social Services, and the social workers union, eager to protect its members' jobs. "There was a political deal cut with the union and the Senate Ways and Means [Committee] in the middle of the night," Strom says. "They said, 'You're cutting so much money, at least bring back the private money in protective services, and we won't fight you on these budget cuts.' "

The state vs. St. Ann's. Finally, consider a dispute that broke out in August 1995 between a state agency and a residential facility for children. The Department of Social Services instructed all residential-care centers for emotionally troubled children to get DSS kids out of the expensive facilities as quickly as possible. Most would be sent to less supervised foster-care settings. Transition plans for the children were to be scrapped. So instead of a gradual transition -- two or three months to get acquainted with a new foster family -- the children were given a matter of days, sometimes barely 24 hours.

The roughly 1,700 children in the system, however, are some of society's most vulnerable. Most have been abandoned, abused, hospitalized for emotional problems, and in and out of foster homes. For these kids, the word "family" means pain, abuse, and rejection.

In justifying the decision, Governor William Weld's administration tried to have it both ways. Citing a $5.5 million deficit facing the DSS, the governor called the move "well within the range of reasonableness." At the same time, a DSS spokesperson portrayed the decision as a deliberate shift in the agency's treatment philosophy. "We've got a whole new attitude," she told the Boston Globe. "The old way was to park kids in group care forever. We don't think that's best for the kids. We want to see how they do in less structured settings, so we can get them into permanent situations."

Patrick Villani, the director of St. Ann's Home in Methuen, was aghast. "This all starts not with a new philosophy," he says. "It starts with a $5.5 million deficit. And then havoc breaks out."

Villani fired off protest letters to the governor, the secretary of the Executive Office of Health and Human Services, and the DSS commissioner. A child psychologist predicted terrible results for the children, writing of one case that "it would be hard to design a transition out of residential treatment that would be less appropriate/more destructive for this child." Unmoved, DSS officials ordered children shipped out to foster care or other less expensive settings.

"You work for us." Villani met with administration officials, who wanted his criticism to end. Villani says the $4 million in DSS funding for St. Ann's hung silently -- but heavily -- in the air. The administration's tacit message: "You've got to realize you work for us." End of meeting.

But not end of story: St. Ann's filed suit against the state, charging administration officials with an attempt to silence criticism. The Office for Children eventually found that DSS had violated 27 regulations for its own licensing. A follow-up with some of the children confirmed earlier fears: Some had passed through several foster homes, others needed psychiatric hospitalization, one had allegedly assaulted a roommate, and another had set fire to his room.

"Is the state committed to treating these kids? I think the answer to that is no," Villani says. "What this all shows in the end is that the state cannot be expected to act in the best interests of kids in its custody because of the funding constraints placed upon them."

Villani fears that government intrusion of this sort may portend the future of social services -- an unhappy Brave New World of careless, cost-driven treatment philosophies. "They're in essence buying the professional to say that the child does not need the more expensive forms of treatment," Villani says. "Survival depends on producing the kind of optimistic statements about treatment -- especially inexpensive treatment -- that the state wants to hear." State accountants and politicians as therapists? That sounds more like a George Orwell novel than a philosophy of caregiving.

7. Government tends to secularize religious programs. Just like their secular counterparts, many religious providers would founder or shut down without government contract money. Two of the state's largest religious charities -- Catholic Charities and the Salvation Army -- depend on government contracts for more than 50 percent of their funding.

Paradoxically, the federal courts' obsession with the strict separation of church and state prohibits government support of religion. How, then, can government justify public assistance to these groups?

In a landmark 1988 case, Bowen v. Kendrick, the U.S. Supreme Court ruled that the state may fund social-service agencies with religious ties -- but only when those groups are not "pervasively sectarian." Though it never clearly defined that pregnant phrase, the Court insisted that agencies separate "religious" and "secular" activities to qualify for public funding. How does church-state law influence religious nonprofits that do business with government?

Defining membership. Consider employment policies. Federal civil-rights laws allow privately funded groups to discriminate in employment for religious reasons. But wherever public money goes, anti-discrimination laws generally follow. Massachusetts law is especially restrictive: Once state funds flow to a nonprofit, the Commonwealth prohibits discrimination based on religious or sexual orientation, no matter how sectarian the group or agency.

For religious organizations, however, the religious credentials of its employees can be crucial. "Employees and their religious commitments virtually define an agency," says Steven Monsma, a political scientist at Pepperdine University and the author of When Sacred and Secular Mix. "If a faith-based agency may not limit their hiring to persons of their own faith, the religious nature of that agency would be effectively destroyed."

Catholic Charities now supports most of its paid staff through contract money. Agency officials seem surprised that religious questions would even be discussed in the job application process. "When a person becomes an employee of Catholic Charities, I'm not so sure they're doing it because of any spiritual thing, or because of our mission," says Earley. "It's a job. They're a social worker and there's a position available." Sister Linda O'Rourke, the vice president for the Boston charity's day-care programs, describes the "interfaith" nature of the organization's staff. She estimates that more than half are not Catholic.

Hiring practices at the Salvation Army, a Protestant evangelical organization, also can be problematic. Though known as a social-service agency, the Army is legally constituted as a church. Each local Army center, which supports a congregation, must be led by a Salvationist minister. This position is funded privately, so no discrimination statutes apply. Any staff position paid for with public funds, however, is subject to all relevant state laws prohibiting discrimination.

Although Army members may be hired under a state contract, religion must not be a criterion for these jobs. So many positions are now filled by applicants with professional -- not necessarily religious -- credentials. A day-care center employs a Jewish director. A drug-treatment center with a staff of eight employs only one Salvationist, and includes an Islamic counselor who serves Muslims. "We have a drug clinic, and that needs a licensed clinician. We have a day-care center that needs a masters-level program in child development. Those criteria will always be first and foremost," says Jeff Green, a social-service coordinator for the Army's Massachusetts Bay Area centers.

On the issue of homosexuality, both charities must live with a certain amount of tension. Catholic and Salvationist teaching considers homosexuality morally deviant and officially bans homosexuals from roles of spiritual leadership. But state law prevents officials from quizzing job applicants about their sexual orientation. When it comes to hiring, church officials seem to follow President Clinton's notorious compromise with the military: don't ask, don't tell. However, unlike military policy, openly gay, state-paid employees could not be dismissed because of their homosexuality.

God in a box. A second threat awaits religious charities doing business with government: Can courts really insist that they expunge the spiritual components from their programs?

The original mission statement of Catholic Charities in Boston was "to insure the religious education of Catholic children placed in non-Catholic foster homes." The charity's prime concern was to safeguard the Catholic faith of some of its community's most vulnerable members -- parentless children. It was a decidedly sectarian mission.

The charity's most recent mission statement identifies its central task as "supporting the social, mental, and spiritual well-being of children, families, and individuals." Catholic Charities now offers a full range of health and social services to more than 100,000 people annually -- to people of all faiths or of no faith. Says Earley: "We don't check baptismal slips at the door."

As the agency's agenda has broadened, however, its self-conscious spiritual agenda has withered: Catholic Charities is legally incorporated as a not-for-profit, nonsectarian agency, and there now is little religious content to most of its state-funded programs. The charity's largest day-care program in Boston, for example, offers no religious instruction for its children. Youth intervention programs avoid discussion of religious topics. Education and parenting programs for pregnant teens, though decidedly pro-life, are short on references to distinctive Catholic religious teaching.

"Some clergy think we should be teaching Catholic theology," says O'Rourke. "But it's not the mission of a social outreach movement to teach and evangelize." Says Earley, "I'm not sure that the so-called explicitly spiritual issues come up."

The Army's quagmire. The Salvation Army -- with a church facility, a minister, and a congregation at most local chapters -- is in a stronger position than many other church-based providers to preserve a spiritual dimension to its social outreach. At one Army chapter, men from a state-funded shelter program attend a Bible-and-fellowship club; a day-care center for preschool-age children offers a Bible study for parents during the week; a drug-treatment program holds a mandatory chapel or meditation service every morning.

Moreover, the Army is legally constituted as a church -- "an evangelical part of the universal Christian church." Its mission statement is unabashedly sectarian: "to preach the gospel of Jesus Christ and to meet human needs in His name without discrimination." "It's an integrated ministry," says Steve Carroll, an officer of the group. "Our Christian mission and Christian focus is in no way separated from the social services and the work which we do. In the Salvation Army, you can't draw a line."

The dilemma is that this is precisely what federal and state law demands of religious charities. The Salvation Army is more aggressive than some other church-based agencies in providing its clients with "religious" activities -- church services, Bible clubs, prayer meetings. But the contract system prohibits the Army from directly incorporating these activities into state-funded programs. No public funds can be used for them, and no publicly funded staffer can perform them on program time. Says Green, "The leader of the day-care center or drug clinic would not be leading a Bible study." In this sense, the Salvation Army manages to keep religion close at hand as it helps the needy. But in order to avoid violations of the First Amendment, it pushes explicit expressions of faith to the periphery.

All of this adds up to an ambiguous, adversarial, even precarious relationship between the secular state and its religious providers. Says Pepperdine's Monsma, "When one looks at the legal and constitutional bases on which they receive those funds, the situation could not be more uncertain and dangerous."

From the vantage point of the faithful, the greatest threat is not the loss of contract money but the slow corruption of their religious institutions. If staff members -- and the faith they bring with them -- do not help define a religious organization, what does? The government's effort to distinguish between sacred and secular activities only compounds the problem. To avoid being deemed "pervasively sectarian," religious entities are careful to separate their government-funded acts of charity from explicit expressions of Christian faith and practice. Ironically, the religious groups most successful at managing such segregation may be in the most danger. Warns John Samaan, the director of the Boston Rescue Mission: "If you're a Christian organization that doesn't have Christian outreach, you're not a Christian organization anymore."

A deadly peril. No particular political bent is needed to recognize the ill effects of entangling social-service providers in government financing: Some of the agencies most beholden to the public-funding regime are its most potent critics. Dick Barbieri of the New England Association of Independent Schools, a long-time servant in that regime, describes the mindset of state regulators this way: "If it isn't regulated, it's a deadly peril. They don't think that anybody in society can take care of themselves unless there's a government agency overseeing them."

Twenty years ago, Peter Berger and Richard John Neuhaus raised similar concerns in their groundbreaking work To Empower People. The authors warned that a social-service strategy with government funding as its lifeblood would produce all sorts of mischief. Government, they wrote, could easily co-opt private agencies "in a too-eager embrace that would destroy the very distinctiveness of their function."

Veterans of this system confirm their anxiety. "Virtually every agency of any size at all does some business with the state," says Joseph Doolin, the secretary for social services at Catholic Charities in Boston. "And, increasingly, any business [with the state] becomes dominant business -- and, hence, the whole disappearance of a truly voluntary sector." Such is the verdict of one of the largest, most politically-honed providers in one of the nation's most progressive states. Let's hope it won't be lost on others determined to offer the most effective help to our nation's neediest.

Joseph Loconte is the William E. Simon Fellow in Religion and a Free Society at the Heritage Foundation and editor of the forthcoming book, The End of Illusions: America's Churches and Hitler's Gathering Storm.

First appeared in "Policy Review"