    Faith-Based and Community Initiative: Improvements in Monitoring
    Grantees and Measuring Performance Could Enhance Accountability
    (19-JUN-06, GAO-06-616).

    The Administration's efforts to improve the federal government's
    provision of social services through its Faith-Based and
    Community Initiative have sparked considerable interest. GAO was
    asked to examine (1) the activities of the initiative-related
    centers in five federal agencies; (2) the grant award procedures
    for selected grants; (3) the extent to which selected federal and
    state agencies are providing information on and ensuring
    compliance with safeguards designed to protect faith-based
    organizations (FBO), beneficiaries, and the government; and (4)
    how the progress of the initiative is being measured. We
    interviewed government officials administering 10 grant programs
    and officials from 26 FBOs.
    -------------------------Indexing Terms-------------------------
    REPORTNUM:   GAO-06-616
        ACCNO:   A55726
      TITLE:     Faith-Based and Community Initiative: Improvements in
    Monitoring Grantees and Measuring Performance Could Enhance
    Accountability
         DATE:   06/19/2006
      SUBJECT:   Federal aid programs
    	     Federal grants
    	     Grant administration
    	     Grant award procedures
    	     Grant monitoring
    	     Intergovernmental relations
    	     Internal controls
    	     Locally administered programs
    	     Noncompliance
    	     Risk management
    	     Safeguards
    	     State-administered programs
    	     Faith-Based and Community Initiative

    ******************************************************************
    ** This file contains an ASCII representation of the text of a  **
    ** GAO Product.                                                 **
    **                                                              **
    ** No attempt has been made to display graphic images, although **
    ** figure captions are reproduced.  Tables are included, but    **
    ** may not resemble those in the printed version.               **
    **                                                              **
    ** Please see the PDF (Portable Document Format) file, when     **
    ** available, for a complete electronic file of the printed     **
    ** document's contents.                                         **
    **                                                              **
    ******************************************************************
    GAO-06-616

         * Executive Orders Establish Centers and Responsibilities
         * Equal Treatment Regulations Set Forth Safeguards Applicable
         * Agencies Monitor Grantees Through Various Means, Including D
         * Centers Have Acted to Remove Barriers to Faith-Based and Com
         * Five Federal Centers Cumulatively Spent $24 Million since Fi
         * Faith-Based Organizations Compete for Funds on the Same Basi
         * New Programs Established since Initiative to Provide Trainin
         * Most of the Federal Programs We Reviewed Provided Grantees w
         * State and County Agencies Provide Grantees Information on Al
         * Some FBOs We Visited Did Not Appear to Understand the Requir
         * Program Offices Are Not Required to Monitor FBO Grantees Dif
         * OMB and WHOFBCI Grade Agencies' Progress in Implementing the
         * Efforts to Measure Agencies' Progress toward Achieving Initi
         * Federally Administered Grant Programs
         * State and locally Administered Grant Programs
         * Education
         * Compliance
         * Order by Mail or Phone

    Report to Congressional Requesters

    United States Government Accountability Office

    GAO

    June 2006

    FAITH-BASED AND COMMUNITY INITIATIVE

    Improvements in Monitoring Grantees and Measuring Performance Could
    Enhance Accountability

    GAO-06-616

    Contents

    Letter 1

    Results in Brief 5
    Background 10
    Centers Employ Different Activities and Resources to Implement the
    Initiative 16
    Agencies Use Same Grant Award Procedures for Faith-Based as Other
    Organizations, and Some New Grant Programs Established to Encourage More
    Faith-Based and Community Organization Participation 22
    Government Agencies Generally Provide Grantees with Information on
    Safeguards, but Most Do Not Have Procedures in Their Monitoring Guidelines
    for Assessing Compliance 29
    OMB and WHOFBCI Assess Agencies' Progress in Implementing Initiative, but
    Data Limitations and a Lack of Information May Hinder Ability to Measure
    Progress toward Achieving Initiative's Long-Term Goals 40
    Conclusions 51
    Recommendations for Executive Action 53
    Agency Comments 54
    Appendix I Centers' Estimated Expenditures by Category, Fiscal Year 2005
    61
    Appendix II Selected Characteristics of Faith-Based Organizations GAO
    Visited 62
    Appendix III Best Practices for the Initiative's Standards for Success 65
    Best Practices for Outreach and Technical Assistance 65
    Best Practices for Implementation of Equal Treatment Regulations 66
    Appendix IV Comments from the Department of Justice 68
    GAO Comments 72
    Appendix V Comments from the Department of Education 75
    Appendix VI Comments from the Department of Health and Human Services 77
    Appendix VII Comments from the Department of Housing and Urban Development
    79
    Appendix VIII Comments from the Department of Labor 81
    Appendix IX GAO Contacts and Staff Acknowledgments 83

    Tables

    Table 1: Executive Orders Related to the Faith-Based and Community
    Initiative 11
    Table 2: Equal Treatment Safeguards and the Key Parties They Are Designed
    to Protect 13
    Table 3: Selected Federal Programs Providing Funding to Various
    Organizations, Including Faith-Based Organizations 24
    Table 4: New Grant Programs Intended to Encourage Faith-Based and
    Community Organization Participation in Federally Funded Social Efforts 26
    Table 5: Extent to Which Safeguards Are Included in Program Grant
    Documents 31
    Table 6: OMB's Green and Yellow Standards for Success for Executive
    Agencies with Centers for the Faith-Based and Community Initiative 41
    Table 7: Most Required Outcome Evaluations Not Completed, and Some Design
    Plans May Not Support an Evaluation of Program Outcomes 48

    Figure

    Figure 1: Estimated Expenditures of Centers for Faith-Based and Community
    Initiatives, Fiscal Years 2002 through 2005 20

    Abbreviations

    FBCI Faith-Based and Community Initiatives

    FBO faith-based organization HHS Department of Health and Human Services

    HUD Department of Housing and Urban Development OMB Office of Management
    and Budget

    PMA President's Management Agenda WHOFBCI White House Office of
    Faith-Based and Community Initiatives

    This is a work of the U.S. government and is not subject to copyright
    protection in the United States. It may be reproduced and distributed in
    its entirety without further permission from GAO. However, because this
    work may contain copyrighted images or other material, permission from the
    copyright holder may be necessary if you wish to reproduce this material
    separately.

    United States Government Accountability Office

    Washington, DC 20548

    June 19, 2006

    The Honorable George Miller Ranking Minority Member Committee on Education
    and the Workforce House of Representatives

    The Honorable Pete Stark Ranking Minority Member Subcommittee on Health
    Committee on Ways and Means House of Representatives

    Each year the federal government provides billions of dollars to
    organizations that provide social services to needy families and
    individuals. In large part, these funds are provided through competitive
    grants and contracts either directly to organizations or through formula
    grants passed through state agencies to local organizations. Organizations
    providing these services have traditionally included both secular and
    faith-based organizations (FBO), which include churches and religiously
    affiliated entities. In the past, as a condition of receiving public
    funds, FBOs were required to secularize their services and premises so
    that their social service activities were distinctly separate from their
    religious activities.1 More recently, courts have become less concerned
    with the religious nature of the organization, and in 1996 Congress
    enacted "charitable choice" provisions which authorized religious
    organizations2 to compete on the same basis as other organizations for
    federal funding under certain programs without having to alter their
    religious character.3

    1This was based on a number of Supreme Court opinions, which interpreted
    the First Amendment and addressed the eligibility of religious
    organizations to receive federal funds. See Committee for Public Education
    v. Nyquist, 413 U.S. 756 (1973).

    2The federal legislation applies to charitable, religious, or private
    organizations but does not specifically define the term "religious
    organization."

    3For a discussion on implementation of charitable choice regulations see
    GAO, Charitable Choice: Federal Guidance on Statutory Provisions Could
    Improve Consistency of Implementation, GAO-02-887 (Washington, D.C.: Sept.
    10, 2002).

    In 2001, the President created the White House Office of Faith-Based and
    Community Initiatives (WHOFBCI) to establish policies, priorities, and
    objectives to further expand the work of faith-based and community
    organizations. In that same year, the President, by executive order,
    created centers for the Faith-Based and Community Initiatives (FBCI) in
    five federal agencies that administer a broad range of social service
    programs.4 Then, through a series of executive orders, the President
    incorporated charitable choice principles in social service programs
    administered by federal agencies, created initiative-related centers in
    six additional federal agencies,5 and established fundamental principles
    for FBOs receiving federal funds. Modeled after the charitable choice
    legislation, these principles included safeguards designed to protect the
    interests of FBOs, beneficiaries receiving social services, and government
    agencies providing federal funds. For example, FBOs are allowed to retain
    religious icons and symbols in the facilities where they provide services
    and generally are not prohibited by federal law from making employment
    decisions based on religious grounds, even after receiving federal funds.
    However, they are not permitted to provide "inherently religious"
    activities such as prayer or worship with direct federal funds or
    discriminate against beneficiaries on the basis of religion.

    The Administration's efforts to expand opportunities for these
    organizations and to strengthen their capacity to provide social services
    through its initiative has sparked considerable interest both among
    various parties involved in providing social services and among
    researchers, religious leaders, and other groups. Some have lauded efforts
    to encourage more FBOs to seek federal funds, maintaining that these
    organizations are more in tune with the needs of their communities than
    other organizations and can better serve individuals that may need a range
    of social services. Others have expressed concerns about the potential for
    federal funds to be used for religious purposes and the extent to which
    organizations are monitored to ensure the appropriate use of federal
    funds. Government agencies primarily monitor grantees by reviewing grantee
    documents, conducting site visits, and conducting single audits. The
    Single Audit Act requires state and local governments and nonprofit
    organizations that expend $500,000 or more in federal awards in a fiscal
    year to have a single audit, which is an audit of the federal grantee's
    financial statements and compliance with laws and regulations governing
    federal awards. While government agencies are responsible for ensuring
    that grantees comply with grant requirements, little is known about how
    these agencies are working with FBOs to ensure that these organizations
    understand and comply with the safeguards.

    4These agencies are the Departments of Health and Human Services, Housing
    and Urban Development, Education, Labor, and Justice.

    5The six additional centers are the Department of Agriculture, the Agency
    for International Development, the Department of Commerce, the Department
    of Veterans Affairs, and the Small Business Administration, and most
    recently, the Department of Homeland Security.

    In addition, a sound performance and reporting system for the initiative
    is important in light of claims by some interested parties that the
    initiative has increased participation by faith-based and community
    organizations in providing federally funded social services. It is also
    important as Congress is likely to continue to discuss efforts to
    formalize-by establishing in statute-the WHOFBCI and the work activities
    within the federal centers for the faith-based and community initiative.
    An informed debate about these issues is helped by the availability of
    credible performance information focusing on the outcomes achieved with
    budgetary resources and other tools.6

    To shed light on how centers and federal agencies are carrying out the
    initiative and how the government is assessing the initiative's
    performance, you asked us to explore the work of the centers and agencies
    in implementing the initiative, including the extent to which government
    entities are providing guidance to, and oversight of, faith-based
    grantees.

    Specifically, you asked:

               1. How do the activities and resources of the initiative-related
               centers in five federal agencies compare?
               2. What are the grant award procedures for selected project and
               formula grants, and are they the same for all grant applicants,
               including FBOs?
               3. To what extent are selected federal and state agencies
               providing information on and ensuring compliance with the
               safeguards designed to protect the interests of FBOs,
               beneficiaries, and the government?
               4. How is the federal government measuring the progress of the
               initiative?

    6For more information on reexamining federal programs and performance
    budgeting, see GAO, 21st Century Challenges: Performance Budgeting Could
    Help Promote Necessary Reexamination, GAO-05-709T (Washington, D.C.: June
    14, 2005).

    To understand how the centers administer the initiative, we interviewed
    center officials in the five agencies that were the first to establish
    centers for the Faith-Based and Community Initiative. These are the
    Departments of Education (Education), Health and Human Services (HHS),
    Housing and Urban Development (HUD), Justice, and Labor. We analyzed data
    on their expenditures and work activities and, to assess the reliability
    of the data for expenditures, we conducted semistructured interviews with
    agency officials about data quality control procedures and reviewed
    relevant documentation. We determined the data were sufficiently reliable
    for the purposes of this report. Our review focused on 10 programs,
    including at least 1 program from each of these five agencies. To obtain
    information on how these agencies award and monitor grants to FBOs, we
    interviewed program officials administering six federal project grants
    (competitive project grants awarded by a federal agency directly to a
    local organization), and one competitive procurement program. We chose
    programs that awarded grants to numerous FBOs and that provided a range of
    social services, including mentoring of children, housing for the
    homeless, and business development grants to refugees.7 We also met with
    federal program officials responsible for overseeing three formula grant
    programs (program grants that are passed through state agencies to local
    organizations) that attract or are likely to attract significant FBO
    participation.8 For the 10 programs included in our review, we also
    analyzed pertinent documents provided to grantees and prospective
    grantees, such as grant applications, contracts, and award letters. Our
    findings pertain to the 10 programs included in our review and are not
    generalizable to all programs administered by these five agencies. To
    understand how the federal government measures the progress of the
    initiative, we spoke with officials from the Office of Management and
    Budget (OMB) and analyzed pertinent documents.

    7The six competitive project grant programs are Mentoring Programs
    (Education); Community-Based Abstinence Education Program; Mentoring
    Children of Prisoners; Microenterprise Development Program (HHS);
    Continuum of Care (HUD); and Small Grassroots Faith-Based and Community
    Organizations Connecting with the One-Stop Delivery System (Labor). The
    competitive procurement program is Justice's Community Corrections
    Contracting.

    8The formula grants included in our review are HHS's Abstinence Education
    Program and its Substance Abuse Prevention and Treatment Block Grant, and
    HUD's Emergency Shelter Grant Program.

    To obtain more specific information on how the three formula grants are
    awarded by the states to local organizations and how their grantees are
    monitored for compliance with the safeguards, we visited four
    states-California, Georgia, Ohio, and Texas-and interviewed numerous state
    officials. We also interviewed county officials in California and Ohio and
    several federal regional and field office program staff. We chose these
    states because they each received significant funding from federal direct
    programs in 2003 or 2004 and because FBOs in these states received funds
    from at least 3 or more of our selected programs. In addition, we
    considered geographic dispersion and diversity in terms of whether the
    state established an initiative-related center.9

    We also conducted semistructured interviews with 26 selected FBOs in these
    four states to determine their understanding of program regulations and
    the extent to which they have been monitored for compliance with the key
    safeguards related to the initiative. We selected FBOs that had received
    federal project and formula grants in 2003 or 2004 from the 10 programs
    included in our review. Finally, we interviewed independent auditors in
    three states who had completed single audits for a few of our selected
    FBOs. Because we used a nonprobability sample of FBOs, our findings are
    not generalizable to all FBOs receiving federal funds from the programs
    included in our review. Our work was conducted from March 2005 through
    June 2006 according to generally accepted government auditing standards.

                                    Results in Brief

    The five centers for faith-based and community initiatives that we
    reviewed employ a range of activities and resources to implement the
    initiative, in part based on what activities center officials determined
    was necessary to fulfill their responsibilities for the initiative and
    differences in center staffing levels and administrative costs. One of the
    centers' first tasks was to identify and eliminate barriers to the
    participation of faith-based and community organizations in federally
    funded services. The centers' ongoing efforts include collecting data on
    FBOs' participation in federal grant programs, developing pilot programs,
    and providing outreach and technical assistance to faith-based and
    community organizations. The centers adopted different approaches to
    technical assistance training activities based on what they needed to do
    to support the initiative. In general, HUD's and Education's centers help
    organizations learn how to apply for funds, while Labor's center helps
    grantees learn how to manage grants. Justice's and HHS's centers
    coordinate with program offices that provide training to these
    organizations. The next phase of the centers' work will focus on
    encouraging partnerships between faith-based and community organizations
    and state and local governments. Since fiscal year 2002, the five centers
    estimated that they had cumulatively expended more than $24 million on
    administrative activities, but these estimates generally did not include
    additional funding that agency program offices provided to assist in the
    initiative's implementation, such as administrative costs associated with
    program offices' efforts to assist faith-based and community
    organizations. In fiscal year 2005, four of the centers spent the largest
    proportion of their funding on staff salaries and benefits-ranging from 35
    percent to 87 percent-followed by other expenditures for such
    administrative costs as rent, contracts, and travel. Factors such as the
    number of staff and differences in administrative costs such as rent and
    travel account for, in part, the differences in resources across centers.

    9Texas and Ohio have established state faith-based offices, while
    California and Georgia have not.

    Federal and state officials told us they do not treat FBOs any differently
    than other organizations during the grant award process in the 10 federal
    programs we examined. Some new programs have been established since the
    beginning of the initiative to provide training and technical assistance
    to faith-based and community organizations and increase faith-based and
    community organization participation in delivering federally funded
    services. In the programs we reviewed, agencies used standard criteria and
    independent reviewers to evaluate applications for funding, and reviewers
    do not necessarily know whether an applicant is faith-based because
    organizations are generally not required to identify themselves as FBOs.
    Funding decisions were generally based on applicants' scores that were
    awarded for various criteria, such as the quality of the project plan.
    While the process to award funds is the same for faith-based as for other
    organizations, between fiscal years 2002 and 2005, federal agencies have
    awarded over $500 million through new competitive grant programs that are
    intended to encourage greater participation of faith-based and community
    organizations in providing these social services. Some of these programs,
    such as Labor's Prisoner Reentry Initiative, limit eligibility to these
    organizations, while others, such as HHS's Compassion Capital Fund
    Demonstration Program, fund intermediary organizations that provide
    capacity-building assistance to faith-based and community organizations.

    The government agencies administering the programs that we reviewed
    provided grantees with some information on the safeguards designed to
    protect FBOs, their clients, and the government, but few agencies included
    in their monitoring guidelines checks for grantee compliance with the
    safeguards related to nonallowable activities and nondiscrimination
    against beneficiaries. Specifically, 7 of the 10 federal programs that we
    reviewed provided a statement to grantees regarding the prohibition on the
    use of direct federal funds for inherently religious activities. Officials
    at Justice told us that they believe FBOs in the Community Corrections
    Contracting program are exempt from the prohibition on providing
    inherently religious activities because of an exception specified in the
    agency's regulations. However, we believe that the scope of this exception
    is left unclear and thus could create uncertainty for FBO program staff
    about allowable religious activities using federal funds. Regarding the
    safeguards on nondiscrimination against beneficiaries and permissible
    hiring by FBOs, only 4 provided a statement on nondiscrimination and only
    3 provided information on permissible hiring by FBOs based on religion.
    While officials in all 26 FBOs that we visited told us that they
    understood that federal funds could not be used for inherently religious
    activities, 4 of the 13 FBOs that offered voluntary religious
    activities-such as prayer or worship-did not appear to understand the
    requirement to separate these activities in time or location from their
    program services funded with federal funds. For example, one FBO official
    told us that she discusses religious issues while providing federally
    funded services if requested by a participant and no other participants
    object, and a few told us that they pray with beneficiaries during program
    time if requested by the beneficiary. Government agencies are not required
    to monitor FBO grantees differently than secular organizations. Only 2 of
    the 7 federal agencies providing project and procurement grants, and 5 of
    the 13 state agencies administering formula grants included references in
    their monitoring guidelines on grantee compliance with these safeguards.
    Agencies' single audit reviews, which can be used as an effective tool to
    monitor organizations, only apply to those organizations expending
    $500,000 or more in federal funding in a given year, and generally do not
    include specific checks for these safeguards.

    OMB and WHOFBCI assess agencies' progress in implementing the short-term
    goals of the initiative, but data limitations-such as the difficulty in
    identifying an FBO-and a lack of publicly available information hinder the
    federal government's efforts to measure agencies' progress in achieving
    the initiative's two long-term goals. OMB and WHOFBCI assess agencies'
    implementation of the initiative and grade agencies' efforts to carry out
    activities in accordance with the Standards for Success that outline the
    centers' responsibilities, such as collecting accurate data on the
    participation of faith-based and community organizations and conducting
    outcome evaluations of all pilot programs. OMB and WHOFBCI award a green
    grade to agencies that meet all of the initiative's standards for success.
    In the first quarter of fiscal year 2006, three of the five centers we
    reviewed received green status. OMB established two long-term goals for
    the initiative-greater participation by faith-based and community
    organizations and improved participant outcomes-but data limitations may
    hinder efforts to assess the initiative's progress in achieving these
    goals. Importantly, there are no criteria for what constitutes a
    faith-based organization that all agencies must use to identify FBOs, and
    FBOs are not required to self-identify, leaving individual agencies and
    states to determine which organizations are faith-based. Determining what
    elements constitute an FBO is challenging. Although no method can ensure
    that all data collected are accurate, having consistently applied criteria
    or requiring self-identification would provide greater assurance that
    agencies are collecting accurate data than the current method. Moreover,
    while the WHOFBCI has published data on trends of FBO participation in
    providing federally funded social services, it has not reported on the
    participation of community-based organizations-the other group of
    organizations specified in the long-term goal. Consequently, it is unclear
    whether the reported data by the WHOFBCI provides policymakers with a
    sound basis to assess the progress of agencies in meeting the initiative's
    long-term goal of greater participation of faith-based and community
    organizations. Progress in achieving the initiative's long-term goal of
    improved participant outcomes is not yet known because most agencies have
    not completed the OMB-required outcome-based evaluations of their pilot
    programs. Of the 15 pilot programs under way, 1 outcome-based evaluation
    has been completed, 6 evaluations are under way, and 6 are planned.
    Outcome-based evaluations are not planned for 2 of the pilot programs.
    Outcome-based evaluations may involve several years of data collection
    before the analysis can take place and several of these pilot programs
    were initiated only a few years ago. OMB also faces other challenges in
    measuring and reporting on how agencies are progressing toward
    accomplishing the initiative's two long-term goals.

    To improve grantee understanding and federal agency oversight of the equal
    treatment regulations for programs in which faith-based organizations are
    eligible for federal funding, we recommend that the Director of OMB ensure
    that all agencies with initiative-related centers include information on
    the equal treatment safeguards in their grant documents and direct
    agencies to include a reference to these safeguards in their monitoring
    tools. To ensure that contractors for Justice's correctional programs
    understand the exception to the prohibition on using federal funds for
    inherently religious activities, we recommend that the Attorney General
    clarify the exception in Justice's equal treatment regulations and include
    a clear explanation of the exception and its scope in the contracts for
    its correctional programs. To improve accountability of the Faith-Based
    and Community Initiative, we recommend that the Director of OMB work with
    agencies to improve how federal agencies identify which organizations are
    faith-based and develop a plan for measuring and reporting on agency
    progress in achieving the long-term goals of the initiative.

    We received comments from Education, HHS, HUD, Justice, Labor and OMB on a
    draft of this report. OMB officials stated that they generally agreed with
    the report's recommendations, although they had comments pertaining to
    several of the recommendations. With regard to our recommendation that
    program-specific single audit supplements include a reference to the equal
    treatment safeguards, OMB stated that for some programs that already have
    extensive audit requirements, expanding the program-specific audit
    requirements could pose additional burdens to the independent auditors
    conducting those reviews. In response, we modified the recommendation to
    indicate that it might not be appropriate to include a reference to the
    equal treatment safeguards in some program-specific audit supplements. OMB
    officials raised issues with our recommendation pertaining to getting
    better data, saying that while they agreed that obtaining better data
    would be helpful, there are obstacles to obtaining better data and that
    they are uncertain about the extent to which the data could be further
    improved. While we acknowledge the challenges in obtaining data, various
    agency centers or program offices are currently applying criteria-whether
    explicitly or implicitly-that determine whether they categorize an
    organization as an FBO, and we believe that greater consistency in their
    use of criteria could improve the data. With regard to our recommendation
    that OMB develop a plan to measure and report out on long-term goals, OMB
    said it was reasonable for OMB to report out on the results of agencies'
    outcome evaluations of pilot programs but that the White House was already
    reporting data on participation of faith-based organizations. OMB
    proceeded to acknowledge that there is a lack of clarity about how the two
    long-term goals of the initiative are linked with OMB's Standards for
    Success and that it may be appropriate to clarify their connection as part
    of a reassessment of the long-term goals. In response, we broadened the
    wording of our recommendation to note that it may be appropriate to
    clarify the connection of the long-term goals to the Standards for
    Success. In its comments, Justice generally agreed with the two
    recommendations we made to the Attorney General. Justice, Education, HHS,
    HUD, and Labor raised various issues with the report, which we discuss and
    respond to in the agency comments section of the report and appendix IV on
    Justice's comments. Education, HHS, HUD, Labor and OMB also provided
    technical comments, which we incorporated where appropriate.

                                       Background

    Citing the crucial role faith-based and community organizations play in
    areas such as curbing crime and overcoming addiction, in 2001 the
    President introduced the WHOFBCI with the goal of expanding opportunities
    for these organizations and to strengthen their capacity to provide social
    services. The President issued executive orders that created the WHOFBCI,
    initiative-related centers in several federal agencies, and rules to
    ensure that organizations are treated equally in government programs.

    Executive Orders Establish Centers and Responsibilities

    Beginning in January 2001, the President issued several executive orders
    to implement the Faith-Based and Community Initiative (see table 1). These
    executive orders established a WHOFBCI and centers for faith-based and
    community initiatives in a number of federal agencies as well as
    principles for ensuring equal treatment of faith-based and community
    organizations in federal government programs.

    Table 1: Executive Orders Related to the Faith-Based and Community
    Initiative

    Executive order Purpose                     Description
    Executive Order Created the White House     The White House Office of
    13199 January   Office of Faith-Based and   Faith-Based and Community
    29, 2001        Community Initiatives       Initiatives is given lead
                                                   responsibility to establish
                                                   policies, priorities, and
                                                   objectives for efforts to
                                                   expand opportunities for
                                                   faith-based and community
                                                   organizations to provide
                                                   social and community services
    Executive Order Created Centers for         To coordinate agency efforts
    13198 January   Faith-Based and Community   to eliminate obstacles to the
    29, 2001        Initiatives in five         participation of faith-based
                       agencies: Education, HHS,   and community organizations in
                       HUD, Justice, and Labor     providing federally funded
                                                   social services
    Executive Order Created centers for         To coordinate agency efforts
    13280 December  Faith-Based and Community   to eliminate obstacles to the
    12, 2002        Initiatives in two          participation of faith-based
                       additional agencies:        and community organizations in
                       Department of Agriculture   providing federally funded
                       and Agency for              social and community services
                       International Development
    Executive Order To provide, among other     Set out criteria on
    13279 December  things, guidance to federal fundamental principles and
    12, 2002        agencies in formulating     policymaking that designated
                       policies regarding          federal agencies can use in
                       faith-based and community   establishing safeguards
                       organizations and to ensure applicable to FBOs providing
                       equal protection under the  services under federal
                       laws for these              programs
                       organizations
    Executive Order Created centers for         To coordinate agency efforts
    13342 June 1,   Faith-Based and Community   to eliminate obstacles to the
    2004            Initiatives in three        participation of faith-based
                       additional agencies:        and community organizations in
                       Departments of Commerce and providing federally funded
                       Veterans Affairs and the    social and community services
                       Small Business
                       Administration
    Executive Order Created Center for          To coordinate agency efforts
    13397 March 7,  Faith-Based and Community   to eliminate obstacles to the
    2006            Initiatives in the          participation of faith-based
                       Department of Homeland      and community organizations in
                       Security                    providing federally funded
                                                   social and community services

    Source: GAO analysis of White House Office of Faith-Based and Community
    Initiatives Information.

    These executive orders identify the key responsibilities for each center:

               o  an agencywide audit of barriers to participation of faith-based
               and community organizations in delivery of social services;
               o  removal of barriers to these organizations' participation in
               providing federally funded social and community services;
               o  a comprehensive effort to incorporate faith-based and community
               organizations in department programs and initiatives;
               o  development of pilot and demonstration programs to increase
               these organizations' participation in federal, state, and local
               initiatives; and
               o  development and coordination of outreach efforts to disseminate
               information more effectively to these organizations.

    The executive orders also direct the centers to coordinate their
    activities with the WHOFBCI. Centers do not award any federal funds to
    faith-based and community organizations. However, they coordinate with
    agency program offices that are responsible for awarding federal funds and
    monitoring grantees. For example they review program funding guidance to
    ensure that the program does not contain barriers to these organizations'
    participation and interact with agency program offices to develop and
    coordinate department efforts to disseminate information more effectively
    to faith-based and community organizations with respect to programming
    changes, contracting opportunities, and other department initiatives.

    Equal Treatment Regulations Set Forth Safeguards Applicable to Direct and
    Formula Federal Grants

    As noted in table 1, Executive Order 13279 of December 12, 2002, directed
    designated federal agencies to establish safeguards for the participation
    of faith-based organizations in a broad set of federal social service
    programs, including mentoring, housing, and job training programs.
    Congress had previously enacted charitable choice provisions as part of
    the Temporary Assistance for Needy Families (TANF) program, Community
    Services Block Grant program, and the Substance Abuse Prevention and
    Treatment Block Grant several years earlier.10

    To implement this executive order, federal agencies with centers for the
    faith-based and community initiative subsequently issued "equal treatment"
    rules. These rules apply to project grants awarded by the federal
    government to faith-based and community organizations, formula and block
    grants awarded to states where funds are passed down to these
    organizations, and other financial agreements.11 These rules state that
    FBOs are eligible to participate in federal programs on the same basis as
    other private organizations, and include safeguards to protect the
    interests of FBOs, beneficiaries of social services, and government
    agencies providing funds (see table 2). For example, FBOs are not
    permitted to use direct federal funds for inherently religious activities
    such as prayer, religious instruction, worship, or proselytization. If an
    FBO conducts such activities, the activities must be separated by time or
    location from federally funded services or programs and must be voluntary
    for the beneficiary. However, they are allowed to retain religious art,
    icons, or symbols in the facilities where they provide services. In
    addition, for the programs in our review, FBOs generally are not
    prohibited under federal law from making employment decisions based on
    religious grounds, even after receiving federal funds.

    10Charitable choice provisions were enacted for TANF as part of the
    Personal Responsibility and Work Opportunity Reconciliation Act of 1996,
    in the 1998 reauthorization of the Community Services Block Grant program,
    and in the amendments to the Public Health Service Act in 2000 affecting
    the Substance Abuse Prevention and Treatment Block Grant Program.

    11The equal treatment rules also cover agency contracts and cooperative
    agreements.

    Table 2: Equal Treatment Safeguards and the Key Parties They Are Designed
    to Protect

                                                    Government
    Safeguards                                    entities  FBOs Beneficiaries
    FBOs are eligible to compete for funding on
    the same basis as other nonprofit                        X
    organizations.
    FBOs may not use direct government fundsa to
    support inherently religious activities such
    as prayer, worship, religious instruction,
    or proselytization. Any inherently religious     X                 X
    activities must be offered separately in
    time or location from services directly
    funded with government assistance and must
    be voluntary for participants.
    FBOs retain control over their internal
    governance and do not have to remove                     X
    religious art, icons, and symbols.
    FBOs cannot discriminate on the basis of
    religion or religious belief in providing                          X
    services to clients.
    FBOs generally retain the ability to make
    employment decisions on religious grounds,               X
    even after receiving federal funds.b

    Source: GAO analysis.

    aThis safeguard does not apply to federal funds provided indirectly to
    religious organizations. For example, it does not apply to funds that a
    provider receives as a result of an independent choice of a beneficiary,
    such as programs that provide vouchers to beneficiaries who then redeem
    the vouchers for services at a provider of their choice. Providers may
    offer voluntary religious activities without separation of time or
    location from the social service if beneficiaries are given a genuine
    choice between faith-based and secular service providers as part of
    indirect funding, such as a voucher program.

    bThere are exceptions to this protection as some programs, such as
    Workforce Investment Act programs and Head Start, currently contain
    statutory language that prohibits faith-based organizations receiving
    funds from making employment decisions on religious grounds. In addition,
    FBOs may be subject to state or local laws prohibiting discrimination in
    employment based on religion.

    Charitable choice provisions enacted by Congress for the TANF and
    Substance Abuse Prevention and Treatment programs contain an additional
    safeguard that entitles clients who object to the religious character of a
    provider to receive services from an alternative provider to which the
    client has no religious objection. However, this safeguard is not part of
    the equal treatment rules agencies issued in response to the President's
    2002 executive order and does not apply to other federal programs.

    During the federal rule-making process for the equal treatment
    regulations, some interested parties expressed a need for greater clarity
    and safeguards in the proposed rules. For example, commenters stated that
    it was unclear which activities would be considered "inherently
    religious." Agencies declined to clarify which activities would be
    considered inherently religious apart from the general examples provided
    in the agencies' respective rules, noting the difficulty in establishing a
    list of such activities and that the Supreme Court has not comprehensively
    defined these activities.12 Of the agencies we reviewed, most cited the
    Supreme Court decision of Mitchell v. Helms as support for the view that
    aid provided to religious institutions does not necessarily advance the
    institutions' religious purposes and emphasized the secular nature of the
    federally funded services.13 The regulations state that if a grantee
    engages in religious activities such as prayer, such activities must be
    voluntary for the beneficiary and the grantee must offer them separately
    in time or location from the programs funded with direct federal financial
    assistance.14

    Some commenters on agencies' equal treatment regulations also urged
    agencies to adopt additional assurances to prevent funds from being
    diverted for improper religious purposes.15 However, in their final rules,
    agencies stated they found no basis for requiring additional assurances or
    greater oversight and monitoring of FBOs, as all participants must comply
    with all rules applicable to federal grants, including the equal treatment
    rules. In addition, they stated that agencies' current monitoring and
    oversight practices for all grantees would be sufficient to ensure that
    federal funds are used for eligible activities.

    12See,Participating in Justice Department Programs by Religious
    Organizations; Providing for Equal Treatment for All Justice Department
    Program Participants, (Department of Justice Final Rule) 69 Fed. Reg. 2832
    (2004).

    13530 U.S. 793 (2000) (plurality opinion).

    14See, for example, the Department of Justice regulation at 28 C.F.R.
    S:38.2(b)(1).

    15In her concurring opinion in Mitchell v. Helms, Justice O'Connor found
    private schools' receipt of funding from the federal program at issue in
    that case (providing funds to state educational agencies to be used for
    instructional and educational materials) to be constitutionally acceptable
    in part because of the adequacy of the safeguards employed by the federal,
    state, and local governments to prevent diversion of federal program funds
    to religious purposes. These safeguards included signed assurances by the
    schools receiving the program funds, monitoring visits by the state and
    local educational agencies, and appropriate labeling of materials and
    equipment purchased with program funds.

    Agencies Monitor Grantees Through Various Means, Including Desk Audits, Site
    Visits, and the Single Audit

    Federal agencies monitor their grantees for programmatic and financial
    compliance. OMB provides general guidance, through Circular A-110, on the
    administration by federal agencies of grants to and agreements with
    nonprofit organizations.16 OMB guidance also notes that the awarding
    agency may make site visits part of its monitoring procedures, but it does
    not require site visits or prescribe how many grantees should be visited
    or how often.

    Nonfederal entities (i.e., state, or local government, or a nonprofit
    organization) that expend $500,000 or more annually in federal awards are
    required to have a single audit conducted for that year. The Single Audit
    Act, as amended, replaced multiple audits of separate grant awards with
    one organizationwide audit.17 Federal awarding agencies are responsible
    for such tasks as issuing a management decision on audit findings within 6
    months after receiving the audit report and ensuring that the recipient
    takes appropriate and timely corrective action.18 OMB Circular A-133
    requires the auditor to report on compliance, and include an opinion by
    the auditor as to whether the entity complied with laws, regulations, and
    grant agreements. In addition, federal agencies provide specific audit
    guidelines for selected programs that direct the auditor to check for
    program-specific compliance requirements. For example, program-specific
    compliance requirements include a section on allowable and unallowable
    activities that detail what a grantee can and cannot do with federal funds
    in a particular program. For those programs that do not have
    program-specific guidelines, an auditor is to use the more general single
    audit guidance provided by OMB.

    16OMB Circular A-110 requires that the performance reports shall generally
    contain brief information, such as (1) a comparison of actual
    accomplishments with the goals and objectives established; (2) if
    appropriate, reasons why goals were not met; and (3) other pertinent
    information, such as an explanation of cost overruns. It also provides
    guidance on the type of information that should be included in the
    grantee's financial report.

    17OMB Circular A-133 provides single audit requirements. It sets forth
    standards for obtaining consistency and uniformity among federal agencies
    for the audit of states, local governments, and non-profit organizations
    expending federal awards.

    18See OMB Circular A-133 for other federal agency requirements that
    pertain to single audits.

     Centers Employ Different Activities and Resources to Implement the Initiative

    The five centers for faith-based and community initiatives that we
    reviewed employ a range of activities and resources to implement the
    initiative, in part based on what activities center officials believed was
    necessary to fulfill their responsibilities for the initiative and
    differences in staffing levels and administrative costs. Initially, the
    centers' activities focused on identifying and eliminating barriers to the
    participation of faith-based and community organizations in federally
    funded services. The centers' ongoing efforts include collecting data on
    FBOs' participation in agency programs, implementing pilot programs, and
    providing outreach and technical assistance to these organizations. The
    centers adopted different approaches to technical assistance training
    activities. The centers' future work will focus on encouraging
    partnerships between faith-based and community organizations and state and
    local governments, according to center officials. The centers estimated
    that they have cumulatively spent more than $24 million on administrative
    activities, although their resource levels and administrative costs varied
    depending on the number of staff members and rent and travel costs.

    Centers Have Acted to Remove Barriers to Faith-Based and Community
    Organizations, Collect Data, and Tailor their Outreach and Assistance Efforts to
    Meet the Agencies' Needs

    Initially, the centers set out to identify and eliminate barriers to the
    participation of faith-based and community organizations in federally
    funded services. These barriers included regulations, rules, and outreach
    activities that either discriminated against or discouraged the
    participation of these organizations in federal programs. To identify
    barriers, the centers reviewed selected programs and gathered information
    on program eligibility and program regulations, among other things. Each
    center submitted a report to the White House with its findings, and in
    August 2001 the White House published the results of the centers'
    efforts.19 Specifically, the report found that the centers identified
    barriers such as programs that excluded FBOs from applying for federal
    funds, confusion on the part of agency officials and FBOs about the
    ability of FBOs to consider religion in employment decisions, complex
    grant applications and agreements, and limited accessibility of federal
    grant information. Each center then issued equal treatment rules in
    2004.20 These rules were intended to help ensure that faith-based and
    community organizations could compete on the same basis as other
    organizations for federal funds while retaining their independence and
    protecting the rights of beneficiaries of social services. The adopted
    rules were largely identical across each agency.

    19The White House. Unlevel Playing Field: Barriers to Participation by
    Faith-Based and Community Organizations in Federal Social Service Programs
    (Washington, D.C., 2001).

    20HUD issued equal treatment rules for eight programs administered by the
    HUD Office of Community Planning and Development in 2003; in 2004 HUD
    issued equal treatment rules applicable to all HUD programs.

    Since 2003 the centers have collected data on, and WHOFBCI has reported
    on, funds awarded to FBOs in direct grant programs that allow faith-based
    and community organization participation.21 The White House published the
    results for all five agencies for fiscal years 2003 through 2005,
    characterizing the information as a snapshot of federal grants awarded to
    FBOs. For the fiscal year 2005 data collection effort, the centers also
    obtained these data from state and local governments administering formula
    grants. The centers we reviewed each tracked funding to FBOs for one
    formula grant program within their agencies. The White House notes that
    because the majority of federal social service dollars are awarded through
    formula grants, such a review is critical for understanding the extent of
    FBO participation. Center officials noted that they do not have a standard
    definition to identify FBOs, leaving each center, some working with
    program offices, with the responsibility of identifying FBOs using a
    combination of methods. For example, a nonprofit organization that applies
    for federal funds may self-identify as a faith-based organization or a
    community-based organization as part of a voluntary survey that is
    included in grant application packages.22 In cases where an organization
    elects not to complete this survey, center officials told us that program
    and center staff applied a number of other methods to identify
    organizations, including the review of information from grant
    applications, information provided by program staff familiar with the
    organization, Internet research, or name recognition.

    Each center has also assisted in developing pilot programs within its
    agency to strengthen the partnership between faith-based and community
    organizations and federal agencies. In general, these programs provide
    services related to the policy focus of each agency. For example, Labor
    has pilot programs to build partnerships between faith-based and community
    organizations and the workforce system. Similarly, Education implemented a
    program to educate these organizations on how to become providers of
    supplemental educational services. Most of Labor's and HHS's pilot
    programs, as well as one of HUD's two pilot programs, represent new grant
    programs that either award funds directly to faith-based and community
    organizations or to intermediary organizations that help these
    organizations expand their services. In contrast, HUD's second pilot
    program and most of the pilot programs at Education and Justice do not
    provide funds directly to faith-based and community organizations or
    intermediaries. Education and HUD's programs provide information and
    technical assistance to these organizations to help them access federal
    funds or provide services, while Justice's pilot programs promote the
    participation of faith-based and community organizations in areas such as
    juvenile offender mentoring and fraud prevention.

    21Center officials told us that they are now collecting data on
    community-based organizations. HUD and Justice officials stated that in
    2005 they submitted data on community-based organizations to the WHOFBCI,
    and Labor officials told us that they reported this data to WHOFBCI
    several years ago.

    22OMB No.1890-0014, "Survey on Ensuring Equal Opportunity for Applicants."

    In addition, the centers provide outreach and technical assistance
    activities to enhance the opportunities of faith-based and community
    organizations to compete for federal funding. To inform these
    organizations about the resources available to them, the centers engage in
    similar outreach activities such as posting grant and funding
    opportunities on center Web sites and disseminating information to these
    organizations via e-mail. However, the centers adopted different
    approaches to their technical assistance training activities. In general,
    HUD's and Education's centers help organizations learn how to apply for
    funds, while Labor's center helps grantees learn how to manage grants.
    Justice's and HHS's centers coordinate with program offices that provide
    these services. Center officials said their approaches to technical
    assistance were based on what they determined would best meet needs within
    their agency and fulfill their responsibilities to enhance opportunities
    for faith-based and community organizations. For example, HUD's
    center-citing the need to educate faith-based and community organizations
    on how to access resources to meet needs in their communities-has
    conducted a series of free grant-writing seminars for faith-based and
    community organizations since 2004. HUD has also designated staff in each
    of its regional and field offices to serve as faith-based and community
    liaisons and to provide outreach to these organizations. Education's
    center sponsors technical assistance workshops for faith-based and
    community organizations that provide information on the agency's grant
    opportunities as well as information on how organizations can become
    approved providers of supplemental educational services.

    Labor's center reported that the large size of Labor's grant programs was
    an obstacle that prevented small grassroots organizations, including those
    that are faith-based, from participating in its programs. As a result,
    Labor's center officials said they tailored their outreach and technical
    assistance efforts to focus on providing assistance to smaller
    organizations to build their capacity to manage grants and to encourage
    partnerships between small grassroots organizations and the workforce
    system. For example, the Labor center sponsors technical assistance
    training for small faith-based and community organization grantees on how
    to manage grants and measure program effectiveness, among other things. In
    contrast to the centers at HUD, Education, and Labor, the Justice and HHS
    centers coordinate efforts with program offices that provide these
    services. Among these services are grant-writing seminars provided through
    the Substance Abuse and Mental Health Services Administration (SAMHSA) in
    HHS and the Office of Juvenile Justice and Delinquency Prevention in
    Justice. Center officials at the Justice and HHS centers told us that they
    adopted this approach to take advantage of efficiencies from working with
    program offices that provided these services prior to the creation of the
    centers.

    According to center officials, the next phase of the centers' work will
    focus on encouraging the establishment of state and local government
    partnerships with faith-based and community organizations, as the majority
    of federal social service funds are distributed through formula grant
    programs administered at the state and local levels. OMB has directed each
    center to help implement an action plan to enhance the opportunities of
    faith-based and community organizations competing for federal funds
    provided through state and local governments, and to provide guidance to
    state and local officials on the equal treatment rules. The President has
    also encouraged states to create offices or liaisons to provide
    information and resources for faith-based and community organizations
    interested in partnering with state and local governments to provide
    social services. Thirty-two states have now established state offices or
    liaisons for faith-based and community organizations, according to the
    White House.

    Five Federal Centers Cumulatively Spent $24 Million since Fiscal Year 2002, but
    Their Funding Sources, Staffing Levels, and Administrative Costs Varied

    The five centers that we reviewed estimated that they cumulatively spent
    more than $24 million on administrative activities related to the
    initiative since fiscal year 2002, although the level of resources and
    their application varied across the five centers. As shown in figure 1,
    centers in HHS, HUD and Labor spent between $1 million and $2.3 million
    annually, while centers in Education and Justice spent less than $1
    million annually. HHS, HUD and Labor's centers also had more staff in
    fiscal year 2005 than Education and Justice. In fiscal year 2005, HHS,
    HUD, and Labor had between 7 and 9 staff members, while Education and
    Justice had 5.5 and 3 respectively.23 In Labor, Education, and Justice's
    centers, the majority of the center staff members were appointed rather
    than career staff.

    Figure 1: Estimated Expenditures of Centers for Faith-Based and Community
    Initiatives, Fiscal Years 2002 through 2005

    Note: Figures adjusted for inflation. Education's fiscal year 2002 amount
    covers the period from May 19, 2002, to September 30, 2002.

    In fiscal year 2005, salaries and benefits of center staff members
    constituted the largest proportion of the funds spent in four of the
    centers,24 ranging from 35 percent to 87 percent of their total
    expenditures.25 The centers' remaining expenditures went toward such
    administrative costs as rent, contractual services, travel, printing, and
    supplies. The centers' estimated expenditures, however, do not include
    other federal initiative-related expenditures, such as the administrative
    costs associated with program offices' efforts to assist faith-based and
    community organizations.26 For example, Justice's Office of Juvenile
    Justice and Delinquency Prevention has allocated $1.87 million since
    fiscal year 2003 to fund federal grant application training for
    community-based, faith-based, and other nonprofit organizations.

    23Labor's center had 7 staff members for the first three quarters of
    fiscal year 2005; it currently has 6 staff members, according to a Labor
    center official.

    24Justice could not provide a detailed breakdown of its center's
    expenditures.

    Funding for the centers comes from a variety of sources. Education's
    center receives its funding through the Office of the Secretary of
    Education and HUD's center receives its funding through HUD's salaries and
    expenses account, while Justice's and HHS's centers are funded through
    internal agencies such as the Office of Justice Programs in Justice and
    the Administration for Children and Families in HHS. Labor's center
    receives funds from both its agency's departmental management account and
    from program offices. In addition, although not required to, HHS has
    included information on funding for its center as part of its
    congressional budget requests for several years, while HUD and Labor have
    included similar information in past budget requests. These agencies have
    in turn received guidance from Congress in the past on the amount of
    resources to allocate to their centers. In contrast, Education and Justice
    have provided limited or no information on their centers' funding to
    Congress as part of their budget requests. In turn, these agencies have
    not received guidance from Congress on the amount of resources to allocate
    to their centers.

    Differences in staffing levels and administrative costs account for, in
    part, the differences in centers' total expenditures. Staff compensation
    represented the largest category of center spending, and the centers with
    the largest number of staff spent the most on activities to implement the
    initiative.27 Different administrative costs also accounted for some of
    the variation in the center resources. For example, in fiscal year 2005,
    HHS spent more on rent, communications, and utilities than HUD's center,
    while centers in Education and Labor did not report any expenses for these
    services.28 Centers in HUD and Education spent more in travel expenses for
    fiscal year 2005 than the other centers we reviewed. These higher travel
    expenses were likely associated with the training and technical assistance
    workshops that these centers conducted across the country for faith-based
    and community organizations.

    25See appendix I for a breakdown of estimated expenditures by the centers
    for fiscal year 2005.

    26Labor's estimates did include funds expended for center activities done
    on behalf of internal agencies.

    27Officials in the five centers we reviewed could not explain how initial
    staff and resource allocations were made, as many of them did not work in
    the centers when they were established in 2001.

    Agencies Use Same Grant Award Procedures for Faith-Based as Other Organizations,
    and Some New Grant Programs Established to Encourage More Faith-Based and
                          Community Organization Participation

    Federal and state officials administering the 10 programs we examined told
    us that they do not treat FBOs any differently than other organizations
    during the grant award process. They use standard criteria to assess all
    applications for grant funds, and grant reviewers do not necessarily know
    if applicants are FBOs because an organization is not generally required
    to identify itself as an FBO when applying for funds. While the grant
    award process was similar for all organizations in the competitive
    programs we reviewed, since the beginning of the initiative, agencies have
    awarded over $500 million through new competitive grant programs to
    provide training and technical assistance to faith-based and community
    organizations and to increase the participation of these organizations in
    providing federally funded social services. In its fiscal year 2007 budget
    request, the Administration requested increased funding for some of these
    programs.

    28HHS spent $310,000 on rent, communications, and utilities in fiscal year
    2005; HUD spent $10,400 in fiscal year 2005 for the same services.

    Faith-Based Organizations Compete for Funds on the Same Basis as Other
    Organizations

    In the funding programs we examined, federal regulations require federal
    and state agencies to use the same processes to evaluate grant
    applications from FBOs as they do applications from other organizations.29
    When rating each application, reviewers for these programs used standard
    criteria and assigned numerical scores or other ratings to assess how well
    an application addressed the criteria.30 Funding decisions are primarily
    determined by these rating scores, although other factors, such as
    geographical dispersion, may be taken into account. For example, selection
    criteria used to evaluate applications in one program included factors
    such as the quality of the project design, quality of project personnel,
    and quality of the project evaluation, with points assigned to each
    criterion. None of the programs we reviewed awarded points specifically
    for faith-based organizations. One of the programs in our review,
    Education's Mentoring Program, awarded five points to "novice"
    organizations applying for mentoring funds in 2002. Novice organizations
    were defined as ones that had never received a grant from the program
    before and had not received a discretionary grant from any federal program
    for 5 years.31 (See table 3 for a listing of the programs covered in our
    review.)

    29For a discussion of Education's Office of Innovation and Improvement's
    grant award process, see GAO, Discretionary Grants: Further Tightening of
    Education's Procedures for Making Awards Could Improve Transparency and
    Accountability, GAO-06-268 (Washington, D.C., Feb. 21, 2006). This review
    sampled all the grants in Education's Office of Innovation and Improvement
    and found that Education generally adhered to its policies regarding
    competitions.

    30One of the programs we reviewed was a contracting program in which
    federal officials review applications/bids-for the purposes of our
    discussion we treat it the same as the other programs. The competitive
    process used by Justice's Bureau of Prisons to award community corrections
    contracts involves a selection board whose members rate proposals
    submitted by bidders on specific factors; bidders whose proposals receive
    the highest scores are awarded contracts. The equal treatment safeguards
    apply to contracts as well as direct competitive and formula grant
    programs.

    31In Education's 2004 Mentoring Program grant notice, the department
    announced that five points would be awarded to a consortium of eligible
    applicants that included local educational agencies, community-based
    organizations, or one private school that qualified as a nonprofit
    community-based organization.

    Table 3: Selected Federal Programs Providing Funding to Various
    Organizations, Including Faith-Based Organizations

    Program                 Agency    Type of funding Purpose of program
    Mentoring Programs      Education Project grants  To promote mentoring
    (Safe and Drug-Free                               programs for children of
    Schools and Communities                           greatest need
    National Programs)
    Community-Based         HHS       Project grants  To provide funding to
    Abstinence Education                              public and private
    Program a                                         institutions for
                                                         community-based
                                                         abstinence education
                                                         project grants
    Mentoring Children of   HHS       Project grants  To award grants to
    Prisoners Program                                 organizations, including
                                                         community and
                                                         faith-based entities, to
                                                         provide children of
                                                         incarcerated parents
                                                         with mentors
    Microenterprise         HHS       Project grants  To assist refugees in
    Development Program                               starting or expanding
    (Refugee and Entrant                              very small businesses
    Assistance
    Discretionary Grants)
    Abstinence Education    HHS       Formula grant   To enable states to
    Program                           program         provide abstinence
                                                         education and mentoring,
                                                         counseling, and adult
                                                         supervision to promote
                                                         abstinence from sexual
                                                         activity
    Substance Abuse         HHS       Formula grant   To provide financial
    Prevention and                    program         assistance to states and
    Treatment Block Grant                             territories to support
                                                         projects for the
                                                         development and
                                                         implementation of
                                                         programs directed at the
                                                         prevention and treatment
                                                         of alcohol and drug
                                                         abuse
    Continuum of Care (set  HUD       Project grants  To address the problems
    of three programs:                                of homelessness in a
    Supportive Housing                                comprehensive manner
    Program, Shelter Plus
    Care, and Single Room
    Occupancy)
    Emergency Shelter       HUD       Formula grant   To improve the quality
    Grants Program                    program         of emergency shelters
                                                         and transitional housing
                                                         for the homeless, to
                                                         make additional shelters
                                                         available, and to
                                                         provide services to the
                                                         homeless
    Community Corrections   Justice   Competitive     To provide assistance to
    Contracting                       procurement     inmates who are near
                                         program         release and provide a
                                                         structured, supervised
                                                         environment and
                                                         counseling, job
                                                         placement, and other
                                                         services
    Small Grassroots        Labor     Project grants  To expand the access of
    Faith-Based and                                   faith-based and
    Community-Based                                   community-based
    Organizations                                     organizations' clients
    Connecting with the                               and customers to the
    One-Stop Delivery                                 services offered by
    System (Small                                     local one-stop centers
    Grassroots Program)

    Source: GAO analysis based on agency information.

    aIn 2005, the Community-Based Education Program was moved from HHS's
    Health Resources and Services Administration to HHS's Administration for
    Children and Families.

    Because applicants in most programs we examined are not required to
    identify themselves as FBOs, the grant reviewers do not necessarily know
    whether an applicant is an FBO.32 A voluntary survey that may be submitted
    with the standard federal grant application asks the applicant, among
    other things, to self-identify whether it is a faith-based/religious
    organization or whether it is a nonreligious community-based organization.
    However, federal officials told us that this survey, if submitted by the
    applicant, is removed from the application, and is unavailable to the
    reviewers. Nonetheless, an organization's identity might be reflected in
    its name, or the organization might disclose its identity in its
    application, for example, when describing the history or mission of the
    organization.

    New Programs Established since Initiative to Provide Training and Technical
    Assistance to Faith-Based and Community Organizations and Increase Faith-Based
    and Community Organization Participation

    In four of the agencies we reviewed, new programs have been created to
    provide training and technical assistance to faith-based and community
    organizations and to increase the participation of these organizations in
    providing federally funded social services. Some of these programs are the
    pilot programs established by the centers and program offices in response
    to the initiative. Between fiscal years 2002 and 2005, over $500 million
    in competitive grants has been awarded through these programs.33 Some of
    these programs, such as Labor's Prisoner Reentry Initiative, limit
    eligibility to faith-based and community organizations, while others, such
    as HHS's Compassion Capital Fund Demonstration Program, fund intermediary
    organizations that provide capacity-building assistance to faith-based and
    community organizations. (See table 4 for a list and description of these
    programs.)

    32The applications for the Continuum of Care programs ask a yes/no
    question on whether the applicant is a religious or a religiously
    affiliated organization.

    33Funds awarded in fiscal year 2006 were not included because several
    agencies had not made grant awards for fiscal year 2006 at the time of our
    review.

    Table 4: New Grant Programs Intended to Encourage Faith-Based and
    Community Organization Participation in Federally Funded Social Efforts

                                                Total funds
                                                    awarded
                                         Start      through
                                       date of  fiscal year Grantee/subgrantee
    Program             Agency         program         2005 eligibility        Grant purpose
    Access to Recoverya Health and        2004 $198,000,000 States, District   To provide client
                        Human Services                      of Columbia,       choice among
                                                            territories, and   substance abuse
                                                            tribal             treatment and
                                                            organizations      support service
                                                                               providers, expand
                                                                               access to an
                                                                               array of
                                                                               treatment and
                                                                               recovery support
                                                                               options, and
                                                                               increase
                                                                               substance abuse
                                                                               treatment
                                                                               capacity.
    Compassion Capital  Health and        2002 $125,594,965 Nongovernmental    To help smaller
    Fund (CCF)          Human Services                      organizations;     organizations
    Demonstration                                           Indian tribal      manage their
    Grantsa                                                 governmental       programs
                                                            organizations;     effectively,
                                                            nonprofit          access funding,
                                                            agencies,          train staff,
                                                            including          expand programs
                                                            faith-based        in their
                                                            organizations,     communities, and
                                                            public agencies,   replicate
                                                            state and local    promising
                                                            governments,       programs.
                                                            colleges and       Intermediary
                                                            universities, and  organizations
                                                            for-profit         receiving CCF
                                                            entities           grants also
                                                                               provide subawards
                                                                               to a diverse
                                                                               range of
                                                                               faith-based and
                                                                               community
                                                                               organizations.
    Mentoring Children  Health and        2003 $100,047,432 States,            To support the
    of Prisonersa       Human Services                      localities,        establishment or
                                                            private,           expansion and
                                                            nonprofit,         operation of
                                                            community and      programs to
                                                            faith-based        provide mentoring
                                                            entities, and      services for
                                                            coordinated        children of
                                                            networks of such   incarcerated
                                                            entities           parents.
    Compassion Capital  Health and        2003  $22,587,556 Nonprofit,         To increase the
    Fund Targeted       Human Services                      faith-based, and   capacity of
    Capacity-Building                                       community          faith-based and
    Programa                                                organizations      community
                                                                               organizations
                                                                               with a proven
                                                                               track record of
                                                                               serving the needs
                                                                               of at-risk or
                                                                               low-income
                                                                               individuals and
                                                                               families.
    Ready4Worka         Labor/Justice     2003  $21,700,000 Public/Private     To assist
                                                            Ventures           faith-based and
                                                            (non-profit        community
                                                            organization)      programs that
                                                            provides subgrants provide mentoring
                                                            to lead agencies   and other
                                                            at 18 sites        transition
                                                                               services for men
                                                                               and women
                                                                               returning from
                                                                               prison.
    Prisoner Reentry    Labor/Justice/    2005  $19,840,000 Faith-based and    To reduce
    Initiativea         HUDb                                community          recidivism and
                                                            organizations      re-incarceration
                                                                               by helping
                                                                               inmates find work
                                                                               when they return
                                                                               to their
                                                                               communities.
    Grants for States   Labor             2002  $11,874,147 States             To increase the
    for FBO/                                                                   number of
    Community-Based                                                            faith-based and
    Organization                                                               community-based
    Partnerships                                                               organizations
                                                                               serving as
                                                                               committed and
                                                                               active partners
                                                                               in the One-Stop
                                                                               delivery system.
    Grants for          Labor             2004  $10,706,389 Workforce          To encourage the
    Workforce                                               Investment Boards  formation of
    Investment Boards                                                          long-term
    for FBO/                                                                   partnerships with
    Community-Based                                                            faith-based and
    Organization                                                               community
    Partnershipsa                                                              organizations
                                                                               that meet
                                                                               community needs
                                                                               related to
                                                                               hard-to-serve
                                                                               populations.
    Grants for          Labor             2002   $9,661,191 Nonprofit,         To increase the
    Intermediaries for                                      community, or      number of
    FBO/Community-Based                                     faith-based        faith-based and
    Organization                                            organizations with community-based
    Partnerships                                            connections to     organizations
                                                            faith-based and    serving as
                                                            community          committed and
                                                            grassroots         active partners
                                                            organizations      in the One-Stop
                                                                               delivery system.
    Helping Outreach    Justice           2002   $3,675,000 Faith-based and    To foster the
    Programs Expand                                         community          development of
    (HOPE)                                                  organizations      grassroots crime
                                                                               victim service
                                                                               providers to
                                                                               expand both
                                                                               public visibility
                                                                               and outreach to
                                                                               victims, thereby
                                                                               increasing the
                                                                               number of
                                                                               available service
                                                                               providers.
    Faith and           Justice           2003   $3,500,000 One grant awarded  To establish a
    Community-Based                                         to Florida         multifaceted
    Juvenile                                                Department of      faith-based
    Delinquency                                             Juvenile Justice   initiative to
    Treatment                                                                  provide positive,
    Initiativea                                                                caring adult
                                                                               relationships,
                                                                               and greater
                                                                               supervision and
                                                                               moral leadership
                                                                               as youthful
                                                                               offenders
                                                                               transition back
                                                                               into their
                                                                               communities.
    Small Grassroots    Labor             2002   $3,408,981 Local nonprofit    To provide
    Faith-Based and                                         social service     workforce
    Community-Based                                         organizations with services to
    Organizations                                           $350,000 or less   specific
    Connecting with the                                     in annual revenues populations or
    One-Stop Delivery                                       or fewer than six  provide
    System (Small                                           employees          particular
    Grassroots Program)                                                        services not
    a                                                                          currently
                                                                               provided through
                                                                               the One-Stop
                                                                               delivery system;
                                                                               expand the access
                                                                               of faith-based
                                                                               and
                                                                               community-based
                                                                               organizations'
                                                                               clients and
                                                                               customers to the
                                                                               services offered
                                                                               by the local
                                                                               One-Stops; and
                                                                               establish methods
                                                                               and mechanisms to
                                                                               ensure
                                                                               sustainability of
                                                                               these
                                                                               partnerships.
    Helping Outreach    Justice           2005   $3,000,000 Faith-based and    To increase the
    Programs to Expand                                      other community    development and
    II (HOPE II)                                            organizations that capacity of
                                                            will provide       faith-based or
                                                            subgrants to       community-based
                                                            grassroots,        organizations to
                                                            faith-based, and   respond to
                                                            community          underserved
                                                            organizations to   victims in
                                                            serve crime        high-crime urban
                                                            victims while also areas.
                                                            building their
                                                            capacity.
    Rural Domestic      Justice           2005   $1,024,965 Community          To increase the
    Violence and Child                                      organizations      level of services
    Victimization                                           (nonprofit,        available to
    Enforcement Grant                                       private entities)  rural victims of
    Program Special                                         of rural states    domestic violence
    Initiative:                                             and faith-based    by increasing the
    Faith-based and                                         organizations of   number of
    Community                                               rural states       first-time,
    Organization Pilot                                      (nonprofit,        grassroots
    Programa                                                private entities). faith-and/or
                                                            Private entities   community-based
                                                            of nonrural states organizations
                                                            that are members   receiving Office
                                                            of or central      of Violence
                                                            offices of         Against Women
                                                            national           funding and
                                                            organizations may  technical
                                                            consider applying  assistance in
                                                            through an         rural America.
                                                            affiliated
                                                            organization
                                                            located within a
                                                            rural state.c
    Enhancement of      HUD               2005     $524,578 Public housing     To determine if
    Public Housing HOPE                                     authorities with   providing
    VI Communities                                          HOPE VI            mentoring
    through Mentoring                                       Revitalization     services to
    Demonstration                                           grants will        residents already
    Programa                                                partner with       participating in
                                                            grassroots,        self-sufficiency
                                                            faith-based and    programs
                                                            other              increases their
                                                            community-based    likelihood of
                                                            organizations.     achieving
                                                                               self-sufficiency.
    Clergy Against      Justice           2002     $273,614 One grant awarded  To partner with
    Senior Exploitation                                     to Denver,         faith communities
    (CASE)a                                                 Colorado, district in addressing the
                                                            attorney's office  issue of elder
                                                                               fraud in Denver
                                                                               County.

    Source: GAO analysis based on information on the White House Office of
    Faith-based and Community Initiatives Website and agency documents.

    Note: This table does not include programs that provide only technical
    assistance and not grant funds to faith-based and community organizations,
    such as Education's Supplemental Educational Services and HUD's Grant
    Writing Training program.

    aDenotes a pilot program identified as such by Centers for Faith-Based and
    Community Initiatives staff.

    bAs of April 2006, Justice and HUD had not disbursed any funding under the
    initiative.

    cGrantees act as intermediaries and offer subgrants and technical
    assistance to small, faith-based or community organizations with less than
    10 full-time employees, an annual domestic violence budget less than
    $100,000, and an overall annual operating budget less than $350,000.

    The President proposes $323 million in funds in his 2007 budget
    submission-a 36 percent increase from what was enacted in fiscal year
    2006-for five programs in order to foster faith-based and community
    organization participation.34 The President's budget proposes an increase
    in funding for the Compassion Capital Fund from $64 million to $100
    million and the Prisoner Re-entry Initiative funding from $26 million to
    $60 million. In an effort to encourage more participation by faith-based
    and community organizations in combating the spread of HIV and AIDS, the
    President proposed new funding for an outreach program to the
    African-American community.

    34Compassion Capital Fund, Access to Recovery, Mentoring Children of
    Prisoners, Prisoner Reentry Initiative, and the President's HIV/AIDs
    Initative.

     Government Agencies Generally Provide Grantees with Information on Safeguards,
      but Most Do Not Have Procedures in Their Monitoring Guidelines for Assessing
                                       Compliance

    Most of the 10 federal program offices that we reviewed included an
    explicit statement in their grant documents explaining that FBOs cannot
    use direct federal funds for inherently religious activities 35 However,
    less than half of program offices provided a similar statement explaining
    that organizations may not discriminate against beneficiaries based on
    religion or explaining the permissible hiring practices for FBOs. Most of
    the grant documents related to these two safeguards provided only a
    reference to federal or program regulations, and a few program offices
    provided no information on the nondiscrimination and hiring safeguards. In
    general, state and county offices in the four states we visited provided
    information on the safeguards to their formula grant awardees, although in
    several cases they provided incorrect information on whether FBOs may make
    hiring decisions on the basis of religion. While officials in all 26 of
    the FBOs that we visited told us that they understood that federal funds
    could not be used for inherently religious activities, officials at
    several organizations appeared to have misunderstood the safeguard that
    religious activities may only be conducted at a separate time or in a
    separate location from federally funded services. Few government agencies
    administering the programs we reviewed monitor organizations to ensure
    compliance with these safeguards, and the single audit, which is used to
    monitor organizations receiving a certain level of federal funding,
    generally does not include checks for these safeguards.

    35We reviewed a program's latest grant announcement and grant application
    for references to the safeguards on inherently religious activities,
    nondiscrimination of program beneficiaries, and FBOs' permissible hiring
    practices. We also requested from agency officials any additional guidance
    that they provided to applicants or grantees related to the use of grant
    dollars.

    Most of the Federal Programs We Reviewed Provided Grantees with a Statement on
    Nonallowable Activities, but Fewer Provided Information on Other Safeguards

    Seven of the 10 programs that we reviewed provided grantees with an
    explicit statement in one or more of their grant documents that federal
    funds for that program could not be expended for "inherently religious
    activities." Most statements noted that organizations receiving direct
    federal funds cannot engage in inherently religious activities, such as
    worship, religious instruction, or proselytization as part of program
    services directly funded with federal funds. For example, Labor sent state
    workforce agencies a guidance letter in July 2005 reiterating its equal
    treatment rules and directing the agencies to develop policies and
    procedures to implement the safeguards. HUD also issued a memorandum to
    state agencies reiterating its equal treatment rules pertaining to
    Emergency Shelter program grantees. Table 5 summarizes the extent to which
    information on each of the safeguards was included in programs' grant
    documents.

    Table 5: Extent to Which Safeguards Are Included in Program Grant
    Documents

                               Prohibition on
                               inherently religious
                               activities unless                      Provision
                               separate in time or  Prohibition on    explaining
    Safeguards stated In    location from        discrimination    permissible
    federal documents to    federally funded     against clients   hiring by
    granteea                programs or services based on religion FBOs
    Agency/program
    Federal Project and Contract Grants
    Education/Mentoring              0M                 0M             0M
    Programs
    HHS/Community- Based
    Abstinence Education             fS                 0M             0M
    Programb
    HHS/Mentoring Children           fS                 0M             0M
    Of Prisoners
    HHS/Microenterprise              fS                 OS             OS
    Development Program
    HUD/Continuum of Care            fS                 fS             fS
    Programc
    Justice/Community                d                  0M             0M
    Corrections Contracting
    Labor/Small Grassroots           fS                 fS             fS
    Program
    Formula Grants
    HHS/Abstinence                   fS                 fS             OS
    Education Program
    HHS/Substance Abuse
    Prevention and                   0M                 0M             0M
    Treatment Block Grant
    Program
    HUD/Emergency Shelter            fS                 fS             fS
    Grants

    Key: document fS = provides statement in one or more of the following
    documents: grant application, announcement, or guidance documents 0M =
    cites regulations OS = makes no reference to these safeguards

    Source: GAO analysis based on review of agency documents.

    aDocuments include grant announcements, applications, award letters, and
    any additional guidance sent to grantees.

    bSafeguards were stated more clearly in HHS's Health Resources and
    Services Administration's 2003 and 2004 applications, which included an
    advisory memo and a questions and answers section. Advisory and question
    section was not included in HHS's Administration for Children and
    Families' 2006 application package. However, the program's application and
    grant award letter include a reference to the prohibition on inherently
    religious activities.

    cHUD's notice to agency and field office directors providing guidance to
    Continuum of Care grantees covered by HUD's 2003 equal treatment
    regulations expired September 2005.

    dJustice officials told us that this safeguard does not apply to Community
    Correction Contracting programs and therefore the agency did not include
    it in the program's contract documents. See discussion below.

    We found no reference to the prohibition on inherently religious
    activities in Justice's Community Corrections Contracting program.36
    Justice officials advised us that, under their equal treatment
    regulations, they believe that FBOs providing services in Community
    Corrections Centers (also referred to as halfway houses that allow inmates
    to leave the centers for religious services) are exempt from the
    prohibition related to inherently religious activities and therefore the
    agency does not include any reference to the prohibition in the contract
    documents for this program. The regulations provide that the restrictions
    on inherently religious activities do not apply where funds are provided
    to chaplains or organizations assisting chaplains in certain settings such
    as community correction centers.37 According to these officials, given the
    duty to accommodate inmates' rights to religious exercise, all FBOs
    providing services are essentially viewed as "assisting chaplains" and
    fall within the exception. Accordingly, Justice officials believe it is
    appropriate not to include any reference to the restriction on inherently
    religious activities in the contract documents for community correction
    centers.

    We believe that the failure by Justice to include any reference to this
    restriction could create uncertainty for FBOs. For example, the omission
    could be read as allowing all providers of social services in these
    settings to engage in worship, religious instruction, or proselytization,
    regardless of whether the services assist chaplains or whether the
    religious activities are voluntary on the part of the participant. In
    other words, the scope of the exception for assisting chaplains is left
    uncertain and FBO program staff may not understand whether, to what
    extent, or under what circumstances, they may engage in religious
    activities using federal funds.

    As table 5 shows, 4 of the 10 programs that we reviewed included an
    explicit statement in grant documents that grantees must not discriminate
    against beneficiaries on the basis of their religion. In contrast, most of
    the other programs refer applicants and grantees to either their agency's
    equal treatment regulations or program regulations that contain this
    safeguard. For example, HHS's Community-Based Abstinence Education program
    refers the applicant to the agency's equal treatment regulations,and
    SAMHSA's Substance Abuse Prevention and Treatment Block Grant Program
    refers states to its charitable choice regulations. The Mentoring Children
    of Prisoners Program added a reference to HHS's equal treatment regulation
    in its June 2006 announcement. However, we found that in some instances,
    the cited regulations contained out-of-date information on this safeguard.
    For example, HHS's Mentoring Children of Prisoners and Microenterprise
    Development Programs' Standard Terms and Conditions (attached to the grant
    award) cited a Web address for 2003 regulations that did not contain the
    equal treatment safeguards.

    36Community Corrections Contracting includes both Community Corrections
    Centers and Comprehensive Sanctions Centers. Bureau of Prison officials
    told us that while the Comprehensive Sanctions Centers have a more
    structured system for granting inmates access to the community, the
    process of contracting for and monitoring of these two programs is the
    same. Our interviews with FBOs included one that operated a Community
    Corrections Center and another that operated a Comprehensive Sanctions
    Center.

    37See 28 C.F.R. 38.1(b)(2).

    Programs provided the least information on whether FBOs are permitted to
    make hiring decisions based on religion. Of the 10 federal program offices
    that we reviewed, only 3 provided information in grant documents about
    religious organizations' hiring of employees that share their religious
    beliefs. Five other programs referred applicants or grantees to the equal
    treatment regulations, and 2 provided no reference to FBO hiring in their
    grant documents. In addition, Justice's contract for its Community
    Correction Centers contains a reference to a clause that cites an
    executive order that does not apply to FBO contractors and thus provides
    incorrect information on FBO hiring.38 The one program in our
    review-Labor's Small Grassroots Program-that is governed by statutory
    language prohibiting FBOs from making employment decisions on religious
    grounds, includes information in its program grant documents explaining
    the prohibition.39

    The 7 competitive project and procurement grant programs differed with
    respect to whether they provided any training for new grantees on the
    safeguards. Five program offices provided training to grantees that
    included a discussion of the safeguards, while two did not. Officials from
    2 of the formula grant programs in our review explained how some state
    officials received training on the safeguards. An HHS official with the
    Abstinence Education formula grant program told us that state officials
    attended the February 2006 conference offered to new grantees for the
    Community-Based Abstinence program and were given the opportunity to
    attend breakout sessions that focus on compliance with the equal treatment
    safeguards. SAMHSA officials told us that they hold sessions during the
    semiannual conference that directly discuss charitable choice regulations.
    Applicants and grantees interested in learning about the safeguards could
    also obtain access information on an agency's Center for Faith-Based and
    Community Initiatives Web sites.

    38Executive Order 13279 amends section 202 of Executive Order 11246 so
    that the prohibition on religious hiring does not pertain to a government
    contractor or subcontractor that is, among other entities, a religious
    corporation.

    39Labor's Small Grassroots Program is governed by statutory language
    prohibiting FBOs from making employment decisions on religious grounds for
    positions that administer or are connected with the program or activities
    that receive Workforce Investment Act assistance.

    State and County Agencies Provide Grantees Information on Allowable Activities
    and Nondiscrimination of Clients, but Several Provided Grantees with Incorrect
    Information on FBO Hiring

    For the three formula grant programs we reviewed, the grant program
    documents that state and county agencies provide to applicants and
    grantees contain information on allowable activities and nondiscrimination
    of beneficiaries and, in general, provide more explicit information on
    these two safeguards than the federal agencies. In addition, like federal
    program offices, state and county program offices in the four states we
    visited provided little information on FBO hiring, or in several cases,
    provided incorrect information. For example, we found that state and
    county offices in two states that administer the Substance Abuse
    Prevention and Treatment Block Grant and Abstinence Education program
    provided documents to grantees that included incorrect information on
    whether FBOs could hire based on religion. In one case, county officials
    acknowledged that they provided documents that contradicted one another on
    FBO hiring. They explained that one provision of their state contract says
    that organizations cannot discriminate in hiring, while another provision
    cites charitable choice hiring rules.

    Some FBOs We Visited Did Not Appear to Understand the Requirement for Separation
    in Time or Location for Religious Activities and the Safeguard Pertaining to
    Hiring by Religious Organizations

    Four of the 13 FBOs that we visited that provided voluntary religious
    activities for beneficiaries did not appear to adhere to the requirement
    to separate in time or location religious activities from program services
    funded with direct federal funds. In addition, 13 of the 26 did not
    understand the safeguard that pertained to permissible hiring on the basis
    of religion. On the basis of our discussions with FBO officials, we did
    not find any indications that FBOs did not serve a beneficiary based on a
    beneficiary's religious beliefs.

    While officials in all 26 FBOs that we visited told us that they
    understood the prohibition on providing inherently religious activities
    with direct federal funds, 4 described engaging in activities that appear
    not to be permissible with federal funds under the equal treatment rules.
    For example, officials from 2 of these FBOs told us that that they would
    pray with beneficiaries at the beneficiary's request. While voluntary
    prayer is permissible as long as it is offered separately in time or
    location from program activities conducted with direct federal funds,
    these officials indicated that they conducted prayer at the same time and
    location  as their federally funded services.40 In addition, an official
    from another FBO said that he began each program session, which provided
    services to children, with a nonsectarian prayer that at times included a
    brief reading from the Bible. Finally, one FBO program manager told us
    that she discussed religious issues during the same time and at the same
    location as federally funded services if requested by a participant and no
    other participants objected.

    One program office has taken action to better define the separate in time
    or location requirement. Included as part of the settlement of a lawsuit
    that arose from the agency's funding of a faith-based sexual abstinence
    education program was a set of "Safeguards Required" drafted by HHS's
    Community-Based Abstinence Education Program office for the grantee. This
    document was intended to provide guidance to the grantee for operation of
    the program in compliance with existing law and regulations, and included
    a detailed explanation of ways in which the grantee's activities might be
    separated in time or location. As of March 2006, HHS was considering
    providing similar information to all grantees to more clearly delineate
    how an organization could separate its religious activities from those
    provided with federal funds, according to the abstinence education program
    director.

    Some FBOs are also confused about the safeguard related to hiring by
    religious organizations. Only half of the 26 FBOs that we visited
    correctly understood whether they could take religion into account when
    hiring staff. In general, FBOs that were prohibited by program legislation
    or state law from considering religion when making employment decisions
    understood the hiring safeguard. For example, 8 of the 9 FBOs that we
    visited in Ohio understood that the state had a statute that prohibits
    discrimination in employment based on religion.41 In addition, Labor's
    Small Grassroots Program is governed by statutory language that prohibits
    organizations from hiring based on religion. Program officials with 3 FBOs
    that had received funding from this program told us that they do not hire
    based on religion, and 2 of the 3 noted that the hiring safeguard was
    discussed during Labor's grantee training. Most of the 13 FBOs that did
    not correctly understand the hiring safeguard were unaware that they could
    consider religion when making employment decisions.

    40The preambles to most agencies' published equal treatment regulations
    note that while the Supreme Court has not comprehensively defined
    inherently religious activities, the Court considers prayer and worship to
    be inherently religious. See, for example, the Department of Justice's
    final rule at 69 Fed. Reg. 2832, 2834.

    41See Ohio Rev. Code Ann. sec. 4112.02 (2006). The Ohio statute does not
    specifically include an exemption for religious organizations.

    Program Offices Are Not Required to Monitor FBO Grantees Differently than Other
    Grantees, and Few Program Offices in our Review Include References in their
    Monitoring Guidelines on Compliance With Safeguards

    Federal and state program offices are not required under federal
    requirements to monitor FBO grantees any differently than secular
    organizations, and in our review, few program offices use monitoring tools
    that include checks for compliance with these safeguards. Federal agencies
    monitor grantees for compliance with program regulations primarily through
    such monitoring activities as desk audits, site visits, and single audit
    compliance reviews. However, many faith-based and community organizations
    may not be covered by the single audit because they do not expend $500,000
    or more in federal funds in a given year. Further, for those FBOs that do
    meet this financial threshold, single audit guidelines do not generally
    instruct auditors to check for compliance with the equal treatment
    safeguards.

      Program Offices Monitor Grantees Primarily through Desk Audits and Site Visits

    Federal program offices monitor grantees by reviewing financial reports
    (standard reports that collect data on grantee disbursements) and
    performance reports that grantees submit. Program officials told us that
    they review these reports to identify any financial or programmatic issues
    that may require them to do additional follow-up with the grantees.
    Performance reports focus on programmatic issues and collect information
    on the number of beneficiaries served and program outputs. None of the
    reports that we reviewed contained any questions related to compliance
    with the safeguards.

    Program offices also monitor grantees for compliance with program rules
    through site visits. Many federal officials told us that they use a
    risk-based approach when determining which sites to visit. Several program
    officials told us that they do not single out FBOs for site visits and do
    not consider them at higher risk for noncompliance than other
    organizations. Grantees often selected for visits include ones that
    receive high dollar grants, novice grantees, grantees that have had prior
    problems, and grantees with high staff turnover. Program officials
    typically use written monitoring guidelines or site visit protocols when
    conducting site visits.

    We found that only 2 of the 7 federal direct programs had monitoring
    guidelines that contained any reference to the equal treatment safeguards,
    and one program-established in 2002-had not yet developed a monitoring
    tool. HHS's Community-Based Abstinence Education Program recently
    developed a monitoring tool that includes a question on whether the
    project is being implemented "in a manner consistent with all other
    Federal requirements (e.g., faith-based issues, civil rights, etc.)" and
    whether the grantee is "aware of the regulations regarding the use of
    federal funding for inherently religious activities." Similarly, Labor's
    monitoring handbook contains a general reference to avoiding client
    discrimination, but does not include a discussion of compliance with the
    safeguards. An HHS Mentoring Children of Prisoners program official told
    us that the program office had not yet developed a monitoring tool for its
    mentoring program.

    The number of site visits conducted by program offices varied widely.
    Officials noted that the number of grantees in a given program affects how
    frequently their staff can conduct site visits. A Labor official in a
    field office told us that Labor officials try to visit all Small
    Grassroots Program grantees at least once during the span of the grant.
    HUD officials noted that visiting 10 percent of all grantees annually
    amounted to about 600 visits in 2004, and an Education official noted that
    visiting 5 percent of grantees had become increasingly difficult as the
    number of grantees grew each year. Since its move to HHS's Administration
    for Children and Families from the agency's Health Resources and Services
    Administration in 2005, the Community-based Abstinence Education program
    has conducted two site visits. The program's director said he hopes his
    office will complete around 20 in 2006, but that he would like to visit
    all grantees at least once during their 3-year grant period.42

    State and county agencies are responsible for monitoring grantees of
    federal formula grants. Similar to federal agencies, state and county
    officials in the four states we visited conduct desk audits of grantees
    and conduct site visits to a limited number of organizations. Many use
    risk assessment to determine which grantees to visit while others attempt
    to visit all grantees within a certain time frame. Only 5 of the 13 state
    or county program offices we visited included a reference to the
    prohibition on using direct federal funds for inherently religious
    activities or services. Georgia's monitoring tool for its Emergency
    Shelter Grants program states that housing and services are to be provided
    in a "manner that is free from religious influence," and its abstinence
    education performance and outcome scorecard has a space for organizations
    to indicate that their "curriculum does not teach or promote religion."
    Similarly, Texas' abstinence education on-site evaluation report includes
    as one of its review criteria a check to ensure that direct federal funds
    are not used for sectarian worship, instruction, or proselytization. In
    addition, the monitoring manual for Sacramento County, California,
    includes a check to ensure that grantees include in their program policies
    and procedures information on the requirement that FBOs certify that they
    will comply with all the requirements of SAMHSA's charitable choice
    provisions and implementing regulations.

    42According to Health Resources and Services Administration officials,
    their office did not conduct any site visits during the 4 years they
    administered the program.

      Single Audits Are Also Used to Monitor Grantees, but Guidelines Do Not
      Consistently Reference Safeguards

    Program offices also use the single audit to monitor recipients that
    expend $500,000 or more in federal funds in a fiscal year. OMB provides
    specific audit guidelines for some programs. While three programs we
    reviewed-the Substance Abuse Prevention and Treatment Block Grant Program,
    Emergency Shelter Grants, and the Continuum of Care Supportive Housing
    Program-have program-specific guidance, they varied on whether and how
    they included information on the equal treatment regulations.43 For
    example, single audit guidance for the Substance Abuse Prevention and
    Treatment Block Grant Program provided the auditor with audit steps
    related to the equal treatment provision prohibiting organizations from
    expending direct federal funds on inherently religious activities, while
    Emergency Shelter Grant guidance refers the auditor to the program
    regulations that discuss what faith-based organizations can and cannot do
    with direct federal funds. In contrast, the single audit guidance on HUD's
    Supportive Housing Program contains no reference to the prohibition on
    using direct federal funds for inherently religious activities.

    The other 7 programs we reviewed do not have OMB program-specific audit
    guidelines. OMB's single audit guidelines used for programs that do not
    have program-specific guidelines also contain no reference to the
    prohibition on using direct federal funds for inherently religious
    activities. Instead, OMB's general guidelines direct auditors to refer to
    grant documents or laws and regulations to determine which activities are
    allowed or unallowed with federal funds. We interviewed three independent
    auditors, who told us that unless these safeguards were referenced in the
    single audit guidelines or included in grant documents-which typically
    outline the key provisions of the grant-an auditor would not likely test
    for compliance with these provisions. Two auditors we interviewed noted
    that they did not check for the safeguards because the safeguards were not
    referenced in the single audit guidelines for HUD's Continuum of Care and,
    at that time, SAMHSA's Substance Abuse Prevention and Treatment Block
    Grant Program, the two programs administered by the FBOs they audited. The
    other auditor, who had recently audited an FBO that had received an
    Abstinence Education grant, told us that he had developed his own audit
    plan by reviewing the grant application package. He explained that because
    he readily found a reference in the application to the prohibition on
    providing inherently religious activities, he was able to discuss with the
    program manager how this issue was conveyed to program staff and reviewed
    written feedback from the students to ascertain whether any religious
    discussions had occurred while staff were providing federally funded
    services.44

    43We also reviewed all the programs cited in the White House Faith-Based
    and Community Initiatives Report Grants to Faith-Based Organizations FY
    2004 to ascertain how many of these programs had program-specific
    single-audit compliance guidelines. Out of the 81 programs that are
    administered by the five agencies in our review, we found that 12 had
    program-specific guidelines.

    44The auditor did not find any indication that the FBO had violated the
    prohibition on inherently religious activities.

     OMB and WHOFBCI Assess Agencies' Progress in Implementing Initiative, but Data
      Limitations and a Lack of Information May Hinder Ability to Measure Progress
                     toward Achieving Initiative's Long-Term Goals

    OMB and the White House Office of Faith-Based and Community Initiatives
    (WHOFBCI) assess agencies' progress in implementing the initiative and
    highlight this progress through a number of published vehicles.45 However,
    the federal government's efforts to assess the initiative's progress in
    achieving its long-term goal of greater participation may be hindered by
    the accuracy of data collected on the number of FBOs receiving federal
    grants because the government has not established consistently applied
    criteria for what constitutes a faith-based organization and has not
    required organizations to self-identify as such. Moreover, little
    information is available to assess agencies' progress toward the long-term
    goal of improving participant outcomes because outcome-based evaluations
    for most pilot programs have not yet been completed. In addition, OMB
    faces other challenges in measuring and reporting on agencies' progress in
    meeting the two long-term goals of the initiative.

    OMB and WHOFBCI Grade Agencies' Progress in Implementing the Initiative by
    Assessing Their Progress on Several Activities

    Through the President's Management Agenda (PMA) issued in 2001, OMB
    identified expected short-term, intermediate, and long-term results or
    goals for the initiative.46 OMB and WHOFBCI assess and track agencies'
    implementation of the initiative by using the Executive Branch Management
    Scorecard, a traffic-light system showing agencies' grades on their
    efforts to carry out activities in accordance with the initiative's
    Standards for Success. Developed in 2003, the initiative's Standards for
    Success describe expectations on the progress agencies are making in
    implementing certain responsibilities for the initiative, such as
    collecting accurate data on the participation of faith-based and community
    organizations and conducting outcome-based evaluations of pilot programs.
    Center officials at the agencies that we reviewed told us that they are
    focusing their efforts on implementing the standards for success and
    achieving the short-term goals of the initiative. Specifically, they are
    working on "leveling the playing field" for faith-based and community
    organizations to compete for federal funds. Table 6 specifies OMB's green
    and yellow standards for success for the initiative, and appendix III
    lists the best practices that are referenced in the Standards for Success.

    45In May 2006, OMB published on its Web site the Standards for Success
    used to gauge the progress agencies are making in implementing the
    initiative.

    46Through the PMA, OMB has emphasized improving government performance
    through five governmentwide goals and a number of agency-specific
    initiatives, one of which is the Faith-Based and Community Initiative.

    Table 6: OMB's Green and Yellow Standards for Success for Executive
    Agencies with Centers for the Faith-Based and Community Initiative

                              GREEN Standards for Success

    Agency:

          1. Has implemented a comprehensive outreach and technical assistance
          strategy for enhancing opportunities of faith-based and community
          organizations (FBCO) to compete for federal funding, including working
          with state and local officials to expand access to Federal funding
          awarded through them. This strategy employs 12 of 15 best practices;
          2. Regularly monitors compliance with the equal treatment regulations
          at the State and local levels, promptly addresses violations once they
          are detected, and has a process in place to ensure that compliance
          information is used to inform future funding. Compliance monitoring
          activities include 10 of 13 best practices;a
          3. Collects accurate and timely data on participation of FBCO and other
          applicants, including government entities, in selected Federal
          non-formula grant programs and has taken steps to expand data
          collection efforts to formula grant programs and make them a routine
          part of program administration. Programs are working to make this
          information accessible to the public;
          4. Implements pilot programs to strengthen the partnership between FBCO
          and the Federal government to deliver services and inform
          implementation of the Initiative, and expands the use of pilots to test
          new strategies when appropriate; AND
          5. Undertakes outcome-based evaluations of its pilot programs where
          FBCO participate, provides quarterly progress reports and interim
          results to the WHOFBCI throughout the life of the program, and builds
          an evaluation component into new pilots. Incorporated FBCO component
          into broader program evaluations when appropriate.
                              YELLOW Standards for Success

          1. Has developed a comprehensive outreach and technical assistance
          strategy for enhancing opportunities of faith-based and community
          organizations (FBCO) to compete for federal funding, including working
          with state and local officials to expand access to Federal funding
          awarded through them, and has begun to implement the plan. This
          strategy employs 8 of 15 best practices;
          2. Has taken steps to ensure barrier free access for FBCO to the
          Federal competitive grants process. These steps include 7 of 15 best
          practices;
          3. Has established procedures to collect data on participation of FBCO
          in selected Federal programs;
          4. Has implemented pilot programs to strengthen the partnership between
          FBCO and the Federal government to deliver services; AND

    5. Has undertaken outcome-based evaluations of its first set of pilot
    programs and has provided progress reports to WHOFBCI.

    Source: OMB.

    a For compliance monitoring activities, only 3 of the best practices
    pertain to monitoring whereas the other 10 best practices involve
    activities to inform faith-based and community organizations, state and
    local officials, and others about the regulations.

    OMB and WHOFBCI grade agencies both on current status and on progress in
    implementation. OMB and WHOFBCI award an agency with a green status if it
    meets all of the yellow and green standards for success, yellow if it has
    achieved the yellow but not all of the green standards for success, and
    red if the agency fails to meet any one of the yellow standards. OMB and
    WHOFBCI assess each agency's progress on a quarterly basis, and according
    to OMB officials, they use this performance information to identify
    problems and to develop corrective actions.

    Of the five agencies that we reviewed, three agencies have a green status
    (Education, Justice, and HUD), and two have a yellow status (Labor and
    HHS) for current status during the first 2006 rating quarter. These
    agencies received a green status for progress in implementation for the
    rating quarter except HUD, which was downgraded to a yellow status from
    the previous rating quarter. OMB and agencies publish these summary scores
    in a number of places, such as in OMB and agency budget and performance
    documents as well as on their respective Web sites. According to OMB and
    some center officials, OMB negotiates with the agencies on a quarterly
    basis to set milestones that agencies must meet to maintain their green
    status.

    The OMB Web site contains the Standards for Success for achieving the
    PMA's five governmentwide goals,47 as well as the standards for the
    initiative. It lists the agencies that have performed best in meeting the
    individual standards for success (i.e., getting to green) for the goals.

    Efforts to Measure Agencies' Progress toward Achieving Initiative's Long-term
    Goals Is Hindered by Data Limitations and Lack of Information

    Although OMB's scorecard highlights agency progress in implementing the
    initiative, there are difficulties in assessing progress towards the two
    long-term goals for the initiative specified in the PMA. Efforts to assess
    the progress in achieving the initiative's long-term goal of increasing
    participation of faith-based and community organizations is hindered in
    part by difficulties agencies encounter in attempting to determine whether
    or not an organization is faith-based. Further, assessing achievement
    toward the other long-term goal of improving participant outcomes is
    hindered because agencies have not completed most of the OMB-required
    outcome-based evaluations of their pilot programs. In addition to the
    issues already noted, OMB and the WHOFBCI face other challenges in
    measuring and reporting on agencies' progress in meeting the broad
    long-term goals of "greater participation of faith-based and community
    organizations" and "improved participant outcomes."

    47The five governmentwide goals under the PMA are (1) strategic management
    of human capital, (2) competitive sourcing, (3) improved financial
    performance, (4) expanded electronic government, and (5) budget and
    performance integration.

      Data Issues Affect Efforts to Measure Progress of Agencies in Meeting
      Long-Term Goals

    As set forth in the PMA, one of the long-term goals of the initiative is
    for federal agencies to facilitate greater participation of faith-based
    and community organizations in providing federally funded social services.
    Although the Administration has not defined a "faith-based and community
    organization" or a "faith-based organization," it directs the centers for
    faith-based and community initiatives to collect data on federal grants
    awarded to FBOs and community-based organizations. The WHOFBCI has
    published data on FBOs for all five agencies for fiscal years 2003-2005.
    In March 2006, the WHOFBCI reported that in fiscal year 2005 the federal
    government awarded, through seven federal agencies, more than $2.1 billion
    in competitive social service grants to FBOs-an increase of 7 percent over
    the previous year. The WHOFBCI also reported that between fiscal years
    2003 and 2005, grants to FBOs increased by 38 percent and funding
    increased by 21 percent.

    The WHOFBCI's report states that federal agencies make good-faith efforts
    to collect accurate data on grants awarded to FBOs, and we also found that
    agencies are making significant efforts to collect this data. However,
    they face constraints in collecting accurate data. Specifically, the
    government has not established criteria for what constitutes a faith-based
    organization that all federal agencies must use, and federal agencies do
    not require organizations to self-identify as faith-based. Although no
    method can ensure that all data collected are accurate, having
    consistently applied criteria or requiring self-identification would
    provide greater assurance that agencies are collecting accurate data than
    the current method.48 In addition, the WHOFBCI has not reported on grants
    awarded to community-based organizations. Consequently, it is unclear
    whether the reported data provide policymakers with a sound basis to
    assess the progress of agencies in meeting the initiative's long-term goal
    of increasing participation of faith-based and community organizations.

    As we've previously reported, a long-standing challenge for the federal
    government has been producing credible data on outcomes achieved through
    federal programs. Policymakers need credible data to make resource
    allocation decisions on what programs to fund. Concerns about the accuracy
    of the data collected on FBOs have previously been raised by others. For
    example, during a June 2005 House hearing on the centers for faith-based
    and community initiatives, two former officials from the WHOFBCI and a
    former HHS center director questioned the accuracy of the data.49 In
    short, they questioned the methods used to collect data on which
    organizations are faith-based and the credibility of the reported data.

    48Accuracy includes both validity and reliability. Validity means that we
    are measuring what we think we are measuring. Reliability is the
    likelihood that a measurement procedure will obtain the same results if
    repeated. Thus, reliable data would largely be free from random error
    components. Without a single clear definition, there is the risk that
    individuals are using different definitions inconsistently to identify
    different organizations. Therefore, the FBO data may not be valid or
    reliable.

    In 2001, the Administration noted that a lack of a standard definition for
    what constitutes a faith-based organization was an obstacle to federal
    agencies in determining how much federal funding FBOs receive.50 Without
    using consistently applied criteria across federal agencies or requiring
    organizations to self-identify, each center is responsible for determining
    which grantees in selected programs are faith-based. One vehicle the
    centers use for identifying FBOs is a voluntary survey that is sent to all
    grant applicants and which asks, among other questions, whether the
    applicant is a "faith-based/religious" organization. However, the extent
    to which applicants return the survey varies across the centers, and
    several center officials reported that the response rate for this survey
    has been low.

    In cases in which applicants do not complete the voluntary survey,
    agencies rely on other methods of identification, such as administrative
    reports, Web sites, and phone inquiries by center and program staff.
    Moreover, a variety of agency staff collects this data without
    consistently applied criteria. Some agencies rely on center officials to
    collect this data, while others rely on either program staff or
    contractors. For example, one center official said that because there is
    no established definition of an FBO, officials are careful not to direct
    the program office staff on what characteristics to look for when
    identifying these organizations. Such methods involve considerable work on
    the part of program and center officials and, in some cases, discretion in
    determining which organizations are faith-based. Another document that
    collects information on organizations' characteristics is OMB's mandatory
    application for federal financial assistance that all applicants must
    complete. Although the application instructs applicants to identify
    themselves from a list of organizational categories, no category for
    faith-based organization is included.51

    49For a discussion of congressional oversight of the Faith-Based and
    Community Initiative and data issues, see H.R. 1054 Authorizing
    Presidential Vision: Making Permanent the Efforts of the Faith-Based and
    Community Initiative, hearing before the House Committee on Government
    Reform, Subcommittee on Criminal Justice, Drug Policy, and Human
    Resources, 109th Cong. (June 21, 2005).

    50White House (2001). Unlevel Playing Field: Barriers to Participation by
    Faith-Based and Community Organizations in Federal Social Service
    Programs. Washington, D.C.

    Some center officials told us that they believed that many FBOs may be
    reluctant to identify themselves as such on the voluntary survey because
    of concerns that being labeled faith-based might work against them in the
    grant process. However, it is unclear the extent to which FBOs are
    reluctant to self-identify. Some FBOs may not be concerned as indicated by
    the fact that they have religious organizational names and their mission
    statements include religious references. In addition, according to HUD
    officials, since 1997 HUD has asked organizations applying for Continuum
    of Care programs to self-identify whether or not they are "a religious
    organization, or a religiously-affiliated or motivated organization." HUD
    officials reported a high response rate from its applicants on this
    question and noted that for this program, they rely on these data rather
    than the voluntary survey to identify grantees that are FBOs. Finally,
    most of the 26 FBOs we visited said they filled out the voluntary survey,
    and almost all said they would not be hesitant to self-identify as
    faith-based if asked.

    Developing criteria for what constitutes an FBO is a challenging task.
    Some organizations have a historical religious connection but only provide
    secular social services, while other organizations are churches where
    faith permeates the nonfederal services provided. The problem of
    determining, without consistently applied criteria across federal agencies
    whether an organization is faith-based or not is illustrated by one center
    official telling us that his agency considers all of the local Young Men's
    Christian Association (YMCA) and the Young Women's Christian Association
    (YWCA) entities to be FBOs on the basis of the religious affiliation
    contained in their organizational names and mission statements of the
    national organizations. Meanwhile, an official at another agency said that
    his agency looked beyond the national organization to see if the local
    entities consider themselves to be faith-based.

    An official at one local YWCA in Texas told us that the organization does
    not consider itself to be an FBO. Similarly, several California
    organizations listed by the WHOFBCI as FBOs told us that despite their
    religious-sounding names, they did not consider themselves to be FBOs.
    This issue will also be a concern as centers seek to collect additional
    data on FBOs receiving state-administered formula grant programs. Several
    state officials said that they believed that having a standard definition
    for FBOs would help them if they are asked to collect data on which of
    their grantees are FBOs.

    51One of the types of applicant categories available for applicants to
    check is "not for profit organization." However the application does not
    contain any further breakdown of this category.

    Other attempts have been made to develop criteria for what constitutes an
    FBO for collecting data on federal funding to FBOs. A February 2006 study
    by the Roundtable on Religion and Social Welfare Policy sought to assess
    the extent of federal support of faith-based social service providers by
    examining the direct recipients of discretionary grant awards made by the
    federal agencies that have initiative-related centers. Drawing on past
    research on key characteristics of the faith character of organizations,
    the study developed five characteristics by which to define an
    organization as an FBO. These characteristics include whether the
    organization used overt religious words or symbols in its name and whether
    religious or spiritual references were contained in the organization's
    mission or value statement.52

      Outcome Evaluations of Many Pilot Programs Have Not Begun

    Progress in achieving the initiative's second long-term goal of improved
    participant outcomes cannot yet be determined because agencies have not
    completed most of the outcome-based evaluations for their ongoing pilot
    programs. OMB's Standards for Success for the initiative requires agencies
    to undertake outcome-based evaluations of their pilot programs and build
    an evaluation component into new pilots. Outcome-based evaluations may
    involve several years of data collection before the analysis can take
    place, and several of these pilot programs were initiated only a few years
    ago.

    Generally, pilot programs help agencies demonstrate actual benefits that
    may be achieved using a particular approach. While outcome evaluations are
    an important component of program management in that they assess whether a
    participant is achieving an intended outcome-such as obtaining employment
    or completing high school-they cannot measure whether the outcome is a
    direct result of program participation. Other influences, such as the
    state of the local economy, may affect an individual's ability to find a
    job as much as or more than participation in an employment and training
    program. Many researchers consider impact evaluations-a form of outcome
    evaluation-to be the best method for determining the effectiveness of a
    program; that is, whether the program itself rather than other factors
    leads to participant outcomes. However, impact evaluations can be
    time-consuming and expensive and may not be appropriate in all
    circumstances.53

    52See Montiel, Lisa M., and David J. Wright Getting a Piece of the Pie:
    Federal Grants to Faith-Based Social Service Organizations, The Roundtable
    on Religion and Social Welfare Policy, February 2006, Washington, D.C.

    As shown in table 7, an outcome evaluation was completed or evaluations
    were under way for 7 of the 15 pilot programs for faith-based and
    community organizations. Justice completed an outcome-based evaluation for
    the Clergy Against Senior Exploitation pilot program in Denver. The
    evaluation suggests that the participants who completed the survey believe
    that they were more knowledgeable about types of fraud and fraud
    prevention and were better prepared to report fraud after completing the
    program than prior to the program. While such results are promising, the
    evaluation design does not allow for complete confidence that the pilot
    achieved its intended outcome of helping participants avoid becoming
    victims of fraud. For one of the six evaluations underway, we could not
    determine from the design plan provided to us on the Faith and
    Community-Based Juvenile Delinquency Treatment Initiative whether the
    evaluation would be outcome-based. While officials at Justice provided us
    with a list of research questions related to the process and outcome
    evaluation under way, no specific information about the research design
    was provided.

    53For further information about the different types of program
    evaluations, including process, outcome, and impact evaluations, see GAO,
    Performance Measurement and Evaluation: Definitions and Relationships,
    GAO-05-739SP (Washington, D.C.: May 2005).

    Table 7: Most Required Outcome Evaluations Not Completed, and Some Design
    Plans May Not Support an Evaluation of Program Outcomes

                                                           Intend to
                                      Outcome               conduct   No outcome
                 Pilot and date      evaluation Evaluation  outcome   evaluation
    Agency    established         completed   underway  evaluation  planned
    Justice   Life                               X
                 Connections-2002
                 Faith and
                 Community-Based
                 Juvenile                           X
                 Delinquency
                 Treatment
                 Initiative-2003
                 CASE-2003               X
                 Rural Domestic
                 Violence and Child
                 Victimization
                 Enforcement Grant
                 Program: Special                   X
                 Initiative
                 Faith-Based and
                 Community
                 Organizations Pilot
                 Program-2005
    Labor     Small Grassroots                              X
                 Program-2002
                 Ready4Work-2003                    X
                 Grants for
                 Workforce                                                 X
                 Investment
                 Boards-2004
                 Prisoner Reentry                   X
                 Initiative-2005
    Education Supplemental
                 Educational                        X
                 Services-2004
    HHS       Compassion Capital
                 Fund Demonstration                            X
                 Program-2002
                 Compassion Capital
                 Fund Targeted                                 X
                 Capacity-Building
                 Program-2003
                 Mentoring Children                            Xa
                 of Prisoners-2003
                 Access to                                     X
                 Recovery-2004
    HUD       Unlocking Doors                                          X
                 Initiative-2005
                 Mentoring Pilot                               X
                 Project-2005
    Total                             1          6          6          2

    Source: Education, HHS, HUD, Justice, and Labor program documents and
    interviews with agency officials.

    aCenter officials at HHS said they intend to conduct an impact evaluation
    of the Mentoring Children of Prisoners program that includes outcome data
    and analysis.

    Of the six pilot programs in which center officials said they intend to
    conduct outcome-based evaluations, HHS and HUD provided to us a total of
    five design plans. Three of the five design plans appear to support
    outcome-based evaluations.54 However, for two of the five design plans, we
    could not determine whether the evaluations would be outcome-based because
    the plans lacked clarity and specificity about how the agency would
    conduct these evaluations. Specifically, for HHS's Access to Recovery and
    Mentoring Children of Prisoners pilot programs, the written materials did
    not describe the methodology or research plans for the evaluations. With
    regard to the sixth pilot program, Labor did not provide us with any
    written materials with which to assess whether the evaluation for the
    Small Grassroots Program would be outcome-based or not. For the two pilot
    programs in which agencies do not plan to conduct an outcome-based
    evaluation, HUD completed a non-outcome-based evaluation, and Labor
    officials told us they have no plans to conduct an evaluation for the
    Grants for Workforce Investment Boards pilot program.

    Our previous work has shown that it is important for agencies to
    collaborate with OMB to increase the likelihood that evaluations will meet
    OMB's needs. As agencies move forward with their design plans for
    evaluating pilot programs, it will be important for agencies to discuss
    the expectations for the scope and purpose of evaluation designs with OMB
    so that these evaluations will meet the intended need. Evaluations
    designed for internal audiences, such as agency officials, and others
    designed for external audiences, often have a different focus. Evaluations
    that agencies initiate typically aim to identify how to improve the
    allocation of program resources. Studies requested by program-authorizing
    or oversight bodies, such as OMB, are more likely to address external
    accountability-to judge whether the program is properly designed or is
    solving an important problem.

    Although determining whether or not FBOs are more effective than secular
    organizations in helping program participants is not an explicit goal of
    the initiative, this issue has been part of the discussion since the
    initiative's inception. In the five agencies we reviewed, we identified
    only one program evaluation, by Education, that will seek to compare the
    effectiveness of FBOs with that of secular organizations.55 Judging from
    our literature review of independent, nongovernmental studies, very few
    studies attempt to make this comparison. We identified four studies
    comparing the effectiveness of faith-based organizations with that of
    secular organizations and determined that three of these studies lack
    methodological rigor. The fourth study did not find a statistically
    significant difference in the ratings made by people with low income of
    the effectiveness of faith-based organizations compared with nonsectarian
    organizations. However, the results of this study are not generalizable
    because the study's sample of respondents is for only two counties in
    Pennsylvania.56

    54The three pilot programs in which design plans appear to support outcome
    evaluations are HHS' Compassion Capital Fund Demonstration Program, the
    Compassion Capital Fund Targeted Capacity-Building Program, and HUD's
    Mentoring Pilot Project.

    55Education stated that it plans to compare the performance of faith-based
    and community organizations to non-faith-based and community organizations
    in certain department-funded programs by asking questions such as if the
    quality of programs funded by the department increased from 2001 to 2004
    as a result of the participation of faith-based and community
    organizations in the grant application process.

      OMB Faces Challenges in Measuring and Reporting on Progress in Meeting
      Long-Term Goals of Initiative

    Agencies are tasked by OMB to achieve the two long-term goals of the
    initiative:

               o  greater participation by faith-based and community groups
               because of regulatory and statutory reform, streamlined
               contracting procedures, and improved coordination and outreach
               activities to disseminate information more effectively at the
               grassroots level to faith-based and community organizations; and
               o  improved participant outcomes by placing a greater emphasis on
               accountability and by making federal assistance better tailored to
               local needs through the use of faith-based and community groups.

    Some center officials stated that achieving green status on OMB's
    scorecard did not necessarily mean that an agency had accomplished these
    long-term goals, but rather indicated the extent to which agencies had
    implemented OMB's Standards for Success.

    OMB has not fully assessed or reported on agencies' progress toward
    achieving the two long-term goals of the initiative and is likely to
    encounter challenges in doing so. For example, with regard to the first
    goal of greater participation by faith-based and community groups, we have
    already noted that although the WHOFBCI has reported annually on the
    numbers and amounts of federal competitive grants awarded to FBOs, there
    may be issues of accuracy with these data. Moreover, this data reporting
    effort has focused on FBOs, not on community-based organizations-the other
    group of organizations specified in the long-term goal. In addition, OMB
    also faces the challenge of translating the general goal of greater
    participation into measurement standards that do not create perverse
    incentives or unreasonable expectations for agencies. The general goal of
    greater participation could be measured in various ways, such as through
    the number or percentage of these groups among federal grant applicants,
    the number or percentage of grants awarded to these groups, or the amount
    or percentage of grant funds awarded to these groups.

    56See, Wuthnow, Robert, "The Effectiveness and Trustworthiness of
    Faith-based and Other Service Organizations: A Study of Recipients'
    Perceptions," Journal of Scientific Study of Religion. 43:1, (2004).

    With regard to the second long-term goal of improving participant
    outcomes, OMB is also likely to face challenges in assessing agencies'
    progress. For example, OMB has tasked agencies with performing
    outcome-based evaluations of the pilot programs in their faith-based and
    community initiative, but as we have noted, most of these evaluations have
    not been completed. In addition, it is unclear whether the outcome-based
    evaluations of pilot programs that eventually will be completed will
    provide sufficient information for assessing progress towards the second
    long-term goal-in part, because the goal of improved participant outcomes
    could be measured in different ways. Finally, it is unclear whether
    assessing agencies' progress toward this long-term goal would also take
    account of participant outcomes in some of the other nonpilot programs in
    which faith-based or community organizations receive grants, and if so,
    whether sufficient data would be available for these programs. These
    varied challenges do not undercut the importance of moving from a focus on
    processes to long-term results in assessing agencies' performance in
    implementing the faith-based and community initiative. GAO has previously
    reported that results-oriented agencies continuously strive to improve
    their strategic planning efforts and do not view strategic planning as a
    static or occasional event.57

                                      Conclusions

    The Administration's efforts to expand opportunities for faith-based and
    community organizations to provide federally funded social services have
    garnered support from many parties while at the same time prompting
    concerns from others about whether federal funds should be used to support
    the activities of FBOs and whether adequate measures are in place to
    ensure that these organizations are not using federal funds to support
    religious activities. Most of the programs that we reviewed provided some
    guidance to applicants and grantees on the requirement that federal funds
    for their programs not be used for religious activities, although some
    federal and state offices did a better job than others in clearly
    presenting information on this requirement to their grantees. We found
    instances where FBOs did not appear to understand the nuances associated
    with the equal treatment rule that prohibits FBOs from engaging in
    inherently religious activities while providing services supported with
    direct federal funds. We also found that Justice's exemption to the
    restrictions on inherently religious activities for certain programs,
    including the correctional program we reviewed, lacks needed specificity
    and does not provide FBOs with clear guidance on what religious activities
    they can and cannot engage in with federal funds in correctional settings.

    57See GAO, Agencies Strategic Plans under GPRA: Key Questions to
    Facilitate Congressional Review, GAO/GGD-10.1.16 (Washington, D.C.: May
    1997).

    We also found that many program offices only provided citations to federal
    or program regulations in their grant documents for the rules related to
    nondiscrimination against beneficiaries and permissible hiring by FBOs and
    that several provided outdated information. In many of the programs we
    reviewed, government agencies are not systematically monitoring for
    compliance with the equal treatment safeguards. While government agencies
    are not required by federal regulation to specifically monitor grantees
    for compliance with these safeguards, without some written
    guidelines-including those used in single audits-that require a discussion
    and check of these safeguards during monitoring, the government has little
    assurance that the safeguards are protecting beneficiaries, government
    agencies, and FBOs as intended. Furthermore, one of OMB's Standards for
    Success that agencies must meet to receive a green grade is to monitor
    grantees for compliance with the equal treatment safeguards.

    In addition to monitoring, program accountability can be facilitated
    through sound performance management and reporting, including reliable
    performance data. Collecting credible data on FBOs receiving federal funds
    is a difficult and time-consuming task, and the centers and program
    offices have made good-faith efforts to develop estimates for FBOs
    receiving federal grants. Nonetheless, without standard criteria across
    all agencies of what constitutes a faith-based organization or a
    requirement that FBOs self-identify, the data that the agencies collect
    may limit the ability of policymakers to assess the extent to which the
    initiative is progressing toward achieving its long-term goal of greater
    faith-based and community participation. While some have voiced concerns
    about requiring FBOs to self-identify, it is important to note that the
    surveys with this information are included in grant applications but are
    not considered when independent grant reviewers evaluate grant
    applications. In addition, FBOs may not be concerned about identifying
    themselves as faith-based as indicated by the fact that they have
    religious organizational names and their mission statements include
    religious references that are often seen by grant reviewers.

    Since 2001, agencies and OMB have emphasized progress toward the
    initiative's short term goals. Now that many agencies have achieved green
    status for their work on eliminating barriers and undertaking outreach and
    technical assistance to local organizations, it will be important for OMB
    to ensure that the initiative's strategic, long-term goals clearly
    articulate what OMB intends to measure so that it can assess whether
    agencies are achieving these goals and demonstrate whether agencies are
    using taxpayer dollars effectively. As with other strategic planning
    efforts, updating and revising long-term goals every several years is
    considered an effective performance management practice. Clarifying and
    fine-tuning strategic goals can help center officials manage their efforts
    toward achieving appropriate and realistic long-term goals.

                          Recommendations for Executive Action

    To improve grantee understanding and federal agency oversight of the equal
    treatment regulations for programs in which faith-based organizations are
    eligible for federal funding, we recommend that the Director of OMB:

               1. ensure that all agencies with initiative-related centers
               include information on the equal treatment safeguards in program
               grant documents for which faith-based organizations are eligible,
               and
               2. direct federal agencies and, where appropriate, state agencies,
               to include a reference to the equal treatment safeguards in their
               monitoring tools the agencies use to oversee federally funded
               grantees, and
               3. ensure that program-specific single audit supplements, where
               appropriate, include a reference to these safeguards.

    To ensure that contractors for Justice's correctional programs understand
    the exception to the prohibition on using federal funds for inherently
    religious activities, we recommend that the Attorney General:

               1. clarify the scope of the exception for chaplains and
               organizations assisting chaplains to the general prohibition
               against using federal funds for religious activities, and
               2. include a clear explanation of the exception and its scope in
               the contracts for Justice's correctional programs.

    To improve accountability of the Faith-Based and Community Initiative, we
    also recommend that the Director of OMB:

               1. Work with the Secretaries of Education, HHS, HUD, and Labor,
               and Justice's Attorney General, to develop a consistently applied
               method that will provide more accurate data on which organizations
               receiving federal funds are faith-based. This effort could
               consider options such as developing consistently applied criteria
               of what constitutes a faith-based organization, making the
               voluntary OMB survey of grant applicants mandatory, or modifying
               OMB's mandatory grant application form to include a category for
               faith-based organizations.
               2. Develop a plan for measuring and reporting on progress in
               achieving the long-term goals of the faith-based and community
               initiative. This effort may involve reassessing the two current
               long-term goals to determine whether they should be revised and
               clarifying their connection to the Standards for Success.

                                    Agency Comments

    We received comments from Education, HHS, HUD, Justice, Labor, and OMB on
    a draft of this report. Comments from Education, HHS, HUD, Justice, and
    Labor are contained in appendixes IV through VIII. Education, HHS, HUD,
    Labor and OMB also provided technical comments, which we incorporated
    where appropriate.

    On May 31, 2006, we met with OMB officials to obtain their comments on our
    draft report. OMB officials stated that they generally agreed with the
    report's recommendations to OMB. They agreed that our recommendations that
    OMB take action to help ensure that agencies include information on the
    equal treatment safeguards in program grant documents and in program
    monitoring tools were reasonable. OMB officials noted that these efforts
    would build upon agencies' existing efforts to ensure that grantees are
    aware of these important safeguards.

    In regard to our recommendation that OMB ensure that agencies include a
    reference to the equal treatment safeguards in program grant documents,
    Education and HHS stated that they already provide sufficient information
    in their grant documents on these safeguards. Our report documents in
    table 5 which programs in our review include references to specific
    safeguards in their grant documents. While a few programs provide
    information on all three safeguards we examined, most do not. Education's
    Mentoring program that we reviewed provided only citations to the equal
    treatment regulations and did not, for example, explicitly state in its
    grant documents that grantees cannot provide inherently religious
    activities with direct federal funds. One of HHS's programs included in
    our review did not provide any information on 2 of the 3 safeguards we
    examined. We believe that including information on the safeguards in one
    or more key grant documents will provide greater assurance that grantees
    are aware of and understand the safeguards designed to protect the
    interests of FBOs, beneficiaries, and the government.

    Education, HHS, HUD, and Labor took issue with our recommendation that
    agencies be required to include a reference to the equal treatment
    safeguards in their monitoring tools. They stated that such a requirement
    would involve singling out faith-based organizations for greater oversight
    and monitoring than other program participants on the basis of presumed or
    confirmed religious affiliation. However, we are not recommending that
    that they monitor FBOs more frequently or any differently than they
    monitor other organizations. The equal treatment regulations are
    potentially applicable to all grantees providing federally funded
    services. While these regulations may have more relevance to FBOs and
    their activities, we do not believe that having agencies ensure compliance
    with all applicable regulations, including the equal treatment
    regulations, results in any improper unequal treatment of FBOs. In our
    view, creating a level playing field for FBOs does not mean that agencies
    should be relieved of their oversight responsibilities relating to the
    equal treatment regulations. In addition, as noted in our report, several
    of the 10 program offices in our review included such a reference to equal
    treatment regulations in their monitoring guidelines, and officials from 2
    other program offices told us that they intend to include information on
    these regulations as they revise their monitoring guidelines. For example,
    Labor officials stated in their comments that they have drafted detailed
    revisions to their monitoring tools that will enhance their efforts to
    ensure compliance with all facets of the equal treatment regulations.

    HHS officials provided an additional comment on their efforts to ensure
    that their program staff understand the equal treatment regulations. They
    stated that HHS provides training to HHS program staff and state and local
    officials who administer federal program funds. We agree that such
    training can provide an important means for ensuring appropriate
    monitoring, but we believe that including information on these safeguards
    in program monitoring tools, as several programs covered in our review
    currently do, is a prudent approach to ensuring that program staff will
    consider these safeguards when monitoring grantees.

    OMB officials noted that grant-monitoring efforts could be strengthened
    governmentwide and that our recommendation that OMB ensure that
    program-specific single audit supplements include a reference to these
    safeguards would need to be considered in the context of grant-monitoring
    requirements overall. They stated that for some programs that already have
    extensive audit requirements, expanding the program-specific audit
    requirements could pose additional burdens to the independent auditors
    conducting those reviews and might not be implemented uniformly. OMB also
    questioned the potential usefulness of this recommendation since smaller
    programs do not have a program-specific supplement and many faith-based
    and community organizations receiving federal grants do not expend
    $500,000 or more in federal funds and therefore would not be subject to a
    single audit.

    We agree that a governmentwide review of grant monitoring requirements
    would be valuable and we acknowledge that adding a reference to
    program-specific single audit supplements would add another audit step for
    independent auditors and that agencies need to balance the additional
    requirement with the added assurance it would give providers. While we
    modified the recommendation to indicate that it might not be suitable to
    include a reference to the equal treatment safeguards in some
    program-specific supplements, we continue to believe that including these
    references wherever appropriate based on facts, circumstances, and risk,
    would help assure interested parties that grantees are using federal funds
    appropriately. It is noteworthy that two of the three programs in our
    review that had a 2006 program-specific audit required auditors to check
    that funds were not expended for inherently religious activities. We agree
    with OMB that many programs do not have program-specific supplements and
    that many faith-based and community organizations may not be subject to
    the single audit because of the $500,000 threshold. However, including a
    reference to the safeguards in these supplements would provide an
    additional check for compliance with these safeguards when independent
    auditors conduct a single audit of larger organizations. Moreover, our
    recommendation that agencies include information on the safeguards in
    their program grant documents takes on increased importance for those
    organizations not subject to a single audit. As noted in our report, one
    of the independent auditors we spoke with said that he developed his own
    audit plan by reviewing the grant application package.

    Regarding our recommendation that OMB work with agencies to develop more
    accurate data on FBO grantees, officials at OMB said that they agree that
    having better data on the types of organizations applying for and
    receiving federal grants would help agency and Administration efforts to
    gauge the success of the initiative. They said that federal agencies have
    been improving the quality of the data they collect, and which the White
    House reports annually, on FBOs receiving federal grants. However, OMB
    officials said that there are obstacles to obtaining better data and that
    they are uncertain about the extent to which the data could be further
    improved. They noted that agencies are concerned about the practical and
    legal difficulties inherent in developing a uniform definition for what
    constitutes an FBO. OMB officials stated that OMB and agencies have
    discussed making the voluntary survey mandatory, but that this step has
    not been taken because of agency concerns that some FBOs would not be
    comfortable self-identifying and that mandatory self-identification might
    discourage participation. HHS also questioned our recommendation to
    improve the data that the centers collect on federal grants awarded to
    FBOs. HHS stated that our recommendation suggests the need to establish a
    uniform definition of an FBO, which HHS stated would be problematic and
    provide questionable benefit.

    We acknowledge in our report that developing criteria on what constitutes
    an FBO is a challenging task, and our recommendation does not dictate that
    agencies establish a uniform definition. However, in cases where an
    organization chooses not to self-identify, the various agency centers or
    program offices are currently applying criteria-whether explicitly or
    implicitly-that determine whether they categorize an organization as an
    FBO. We believe that greater consistency in their use of such criteria
    could help improve the accuracy of data on funds received by FBO grantees.
    In addition, the extent to which FBOs are reluctant to self-identify is
    unclear. HUD includes in its Continuum of Care grant application a request
    for programs to self-identify, and HUD officials reported a high response
    rate from its applicants on this question. In addition, some FBOs have
    religious names and their mission statements include religious references.
    Without evidence that FBOs are reluctant to self-identify, we believe that
    agencies should explore the possibility of making the voluntary survey
    mandatory or modifying the mandatory application form to include a
    category for FBOs. We believe that if one of the stated long-term goals of
    the initiative continues to be greater participation of faith-based and
    community organizations in providing federally funded social services,
    then it is critical to systematically explore options for obtaining more
    accurate data on participation.

    With regard to our recommendation to OMB to develop a plan for measuring
    and reporting on progress in achieving the two long-term goals of the
    faith-based and community initiative, OMB officials had a different
    response for each long-term goal. For the long-term goal of improving
    participant outcomes, OMB officials agreed that it is reasonable for OMB
    to publish the results of the outcome-based evaluations that agencies are
    required to conduct on their pilot programs. However, OMB officials said
    they did not see a need for OMB to develop a plan for measuring and
    reporting on progress with respect to the other long-term goal of greater
    participation of faith-based and community organizations. They noted that
    the White House is already reporting on the numbers of FBOs receiving
    federal grants and the amounts of these grants in selected programs and
    trends in these areas. However, OMB officials acknowledged that there is a
    lack of clarity about how the two long-term goals of the initiative are
    linked with OMB's Standards for Success and that it thus may be
    appropriate to clarify their connection as part of a reassessment of the
    long-term goals. We agree with OMB that the long-term goals might need to
    be better aligned with the interim goal of expanding opportunities for
    faith-based and community organizations to compete on an equal basis for
    federal funding and we modified our recommendation to reflect this point.
    We also agree with HHS's comment that it would be inappropriate to
    establish arbitrary participation goals.

    Our draft report had included a recommendation that OMB make publicly
    available the Standards for Success for the FBCI. OMB posted these
    standards on its Web site in late May and we accordingly deleted this
    recommendation in our final report.

    Justice agreed with our recommendation that the Attorney General clarify
    the scope of the exception contained in Justice's equal treatment
    regulations for chaplains and organizations assisting chaplains. With
    regard to our other recommendation to the Attorney General, Justice stated
    that the Department's Federal Bureau of Prisons is open to discussing
    possible changes to its contract language to further clarify the scope of
    the exception to community corrections centers. See appendix IV for our
    annotated responses to each of the comments Justice made in its letter.

    In several instances, agencies commented that our report omitted important
    information. For example, HUD stated that we do not define what safeguards
    are designed to protect FBOs, beneficiaries, and the government. However,
    this information is outlined in table 2 and the safeguards are discussed
    in detail on pages 29-36. HUD also took issue with our characterization of
    the initiative's goals. HUD stated that we do not acknowledge the
    Administration's stated goals for the initiative of removing barriers,
    leveling the playing field, and providing technical assistance. However,
    we discuss these goals in table 1 and on page 40. Labor also stated in its
    comments that the object of the initiative is to level the playing field.
    While our report notes that this is a stated goal of the initiative, our
    report also cites the stated long-term PMA goals of the initiative of
    greater participation of faith-based and community organizations and
    improved participant outcomes. Labor also commented that our report
    overlooks the data that Labor collects from grantees on outcome measures,
    such as employment and earnings. Our report discusses the long-term goal
    of improved participant outcomes and provides information on the status of
    the outcome evaluations for the 15 pilot programs for faith-based and
    community organizations. The scope of our work did not include reporting
    the data being collected for individual outcome measures in the various
    programs. Finally, Education stated in its comments that we did not find
    any indication of unallowable activity. This is true except with regard to
    the prohibition pertaining to inherently religious activities. We found
    that a few of the FBOs included in our review described engaging in
    activities that appear not to be permissible with respect to this
    prohibition, as noted on pages 34-35.

    As agreed with your offices, unless you publicly announce its contents
    earlier, we plan no further distribution of this report until 30 days from
    its date. At that time, we will send copies of this report to the
    Secretaries of HHS, HUD, Education, and Labor; the Attorney General; the
    Director of OMB; appropriate congressional committees; and other
    interested parties. We will also make copies available to others upon
    request. In addition, the report will be available at no charge on GAO's
    Web site at http://www.gao.gov .

    Please contact me at (202) 512-7215 if you or your staff have any question
    about this report. Other major contributors to this report are listed in
    Appendix IX.

    Cynthia M. Fagnoni Managing Director, Education, Workforce, and Income
    Security Issues

    Aby Categor Appendix I: Centers' Estimated Expenditures by Category,
    Fiscal Year 2005

    Note: Justice was not able to provide a breakdown of its center's
    expenditures.

    Appendix II: Selected Characteristics of Faith-Based Organizations GAO
    Visited

                                Provide                              Annual     Annual
                                voluntary Received Believes FBCI    overall    program Percentage
                                religious federal  changed           budget     budget of federal
                                services  funding  opportunities   (dollars   (dollars   funds in
    Religious   Federal funding for       prior to for their             in         in    program
    affiliation program(s)      clients   FBCI     organization  thousands) thousands)     budget
    Christian   Community-Based No        No       No                 1,500        104         83
                Abstinence
                Education, HHS;
                Abstinence
                Education
                Program, HHS
    Christian   Community-Based No        Yes      No                   632        378        100
                Abstinence
                Education, HHS
    Christian   Community-Based No        Yes      Yes                1,500        680        100
                Abstinence
                Education, HHS
    Jewish      Microenterprise No        Yes      Yes                4,615        300        100
                Development
                Program, HHS
    InterFaith  Grants for      Yes       No       Yes                   50         50         50
                Small
                Faith-Based and
                Community
                Nonprofit
                Orgs., Labor
    Christian   Grants for      Yes       No       No                   225        150         17
                Small
                Faith-Based and
                Community
                Nonprofit
                Orgs., Labor
    Christian   Grants for      Yes       No       Yes                  250        250         10
                Small
                Faith-Based and
                Community
                Nonprofit
                Orgs., Labor
    Baptist     Mentoring       No        No       Yes                  550        270         75
                Children of
                Prisoners, HHS
    Lutheran    Continuum of    No        Yes      No                41,000      5,550         20
                Care, HUD;
                Emergency
                Shelter Grants
                Program, HUD
    Pentecostal Continuum of    Yes       Yes      No                 3,200        525         40
                Care, HUD
    Interfaith  Microenterprise No        Yes      Uncertain            950        325         60
                Development
                Program, HHS
    Evangelical Community       Yes       Yes      No                 3,000        825        100
                Corrections
                Contractor with
                Bureau of
                Prisons,
                Justice
    Christian   Abstinence      No        No       Yes                  313        313        100
                Education
                Program, HHS
    Christian   Abstinence      No        Yes      No                   100        100       92.5
                Education
                Program, HHS
    Catholic    Continuum of    No        Yes      No                36,000      1,300  Less than
                Care                                                                           50
    Protestant  Emergency       Yes       Yes      No                 1,500        244         26
                Shelter Grants
                Program, HUD
    Christian   Emergency       No        Yes      No                   300        300         25
                Shelter Grants
                Program, HUD
    Christian   Continuum of    Yes       Yes      No                 1,900        310         25
                Care, HUD
    Christian   Substance Abuse Yes       Yes      No                22,000      4,000         55
                Prevention and
                Treatment
                Grants, HHS
    Christian   Continuum of    Yes       Yes      No                 9,000      1,000         50
                Care, HUD;
                Emergency
                Shelter Grants
                Program, HUD
    Christian   Substance Abuse Yes       Yes      No                 1,400        873         80
                Prevention and
                Treatment
                Grants, HUD
    Protestant  Community-Based Yes       Yes      Yes                1,281        439         83
                Abstinence
                Education, HHS;
                Abstinence
                Education
                Program, HHS
    Protestant  Department of   Yes       No       Yes                  300        103         99
                Education
                Mentoring
                Programs
    Catholic    Community       Yes       Yes      Yes                1,500      1,500       100%
                Corrections
                Contractor with
                Bureau of
                Prisons,
                Justice
    Christian   Continuum of    No        Yes      No                 1,354        260        38%
                Care, HUD;
                Emergency
                Shelter Grants
                Program, HUD
    Christian   Department of   No        No       No                   250        106     80-85%
                Education
                Mentoring
                Programs

    Source: GAO analysis of information obtained from interviews with
    officials from the 26 FBOs.

    Appendix III: Best Practices for
    the Initiative's Standards for Success

                  Best Practices for Outreach and Technical Assistance

    Federally Administered Grant Programs

               1. reviews agency programs to identify those of particular
               interest to faith-based and community organizations,
               2. implements a strategic outreach and technical assistance plan
               (through White House regional conferences and workshops),
               3. creates a database of faith-based and community organizations
               and maintains grant solicitation mailing lists,
               4. produces informational materials in consultation with the White
               House Office of Faith-Based and Community Initiatives (WHOFBCI)
               5. organizes technical assistance workshops,
               6. provides Web-based outreach and technical assistance,
               7. participates in interagency conferences on the Faith-Based and
               community Initiative,
               8. incorporates Faith-Based and Community Initiative outreach
               goals into agencywide events.

    State and locally Administered Grant Programs

               9. implements an action plan in consultation with WHOFBCI to
               enhance opportunities of faith-based and community organizations
               to compete for federal funds at the state and local levels
               (through White House regional conferences and workshops),
               10. Creates a database of faith-based and community organizations
               interested in state and locally administered grant programs,
               11. provides targeted Web-based outreach and technical assistance,
               12. distributes written outreach materials approved by WHOFBCI,
               13. coordinates with state and local agencies through regional
               offices on outreach activities,
               14. adopts successful outreach and technical assistance practices
               of other agencies,
               15. coordinates with regional offices to provide technical
               assistance workshops.

            Best Practices for Implementation of Equal Treatment Regulations

    Education

               1. posts a notice of the regulation on its center for faith-based
               and community initiative Web site,
               2. posts a notice of the regulation on Web sites of agency program
               offices,
               3. sends a program memo to state and local administrators of
               agency funds, alerting them to the final rule and asking them to
               ensure that their own processes and policies reflect the rule,
               4. develops materials such as questions and answers, PowerPoint
               presentations, and easily accessible explanations of the rule in
               consultation with WHOFBCI to educate internal and external
               stakeholders about the regulations,
               5. educates agency grant staff, including field offices, that
               manage formula grants on the requirements of the regulation,
               6. arranges training for state and local officials who administer
               funds under the regulation (through White House regional
               conferences and workshops),
               7. educates governors' offices and mayors' offices about the
               requirements of the regulation (through materials to be provided
               at White House regional conferences and workshops),
               8. discusses the regulations at conferences,
               9. encourages organizations that represent grantees to highlight
               the regulations in constituent newsletters,
               10. sends a more detailed policy notice or guidance document to
               state and local officials on how to implement the rule.

    Compliance

               11. enforces existing procedures when monitoring uncovers a
               violation,
               12. conducts a representative survey in consultation with OMB and
               WHOFBCI by program or by state to examine indicators of progress
               in complying with the regulations,
               13. reviews existing mechanisms to determine whether they include
               sufficient monitoring to ensure compliance with the equal
               treatment regulations.

    Appendix IV: Comments from the Department of Justice

    Note: GAO comments supplementing those in the report text appear at the
    end of this appendix.

    See comment 3.

    See comment 2.

    See comment 1.

    See comment 6.

    See comment 5.

    See comment 4.

    See comment 8.

    See comment 7.

    The following are GAO's comments on the Department of Justice's letter
    dated May 22, 2006.

                                      GAO Comments

               1. The statement that Justice cites does not refer to the mission
               of the Administration's Faith-Based and Community Initiative but
               to funds awarded since 2001 through new grant programs. (The goals
               of the initiative are discussed on pages 11 and 40.) On page 25,
               we state that these new programs were created to provide training
               and technical assistance to faith-based and community
               organizations and to increase the participation of these
               organizations in providing federally funded social services. As
               shown in table 4 (pages 26-28), eligibility for several of these
               grants is specifically targeted to faith-based and community
               organizations and the stated purpose of many of these grants is to
               increase participation of faith-based and community organizations
               in providing federally funded social services. For example, the
               stated purpose of Justice's HOPE II program is to "increase the
               development and capacity of faith-based and/or community based
               organizations" to respond to victims in high-crime areas. In
               addition, as noted in HHS news releases, HHS's Compassion Capital
               Fund awards are "designed to help grass roots, faith-based and
               community organizations enhance their ability to provide a wide
               range of social services." We revised our statement on the
               highlights page and on page 22 to more fully reflect the purpose
               of these new grant programs.
               2. We fully explain the safeguard related to inherently religious
               activities in Table 2, p. 13. In regard to the point that this
               safeguard relates to direct and not indirect federal funding,
               table 2 notes that this safeguard refers to "direct" government
               funds. For further clarification, we added a footnote to this
               table to explain that this safeguard does not pertain to providers
               offering services through indirect funding, such as vouchers, and
               clarified throughout the report that inherently religious
               activities cannot be offered unless separate in time or location
               from direct federally funded program activities.
               3. GAO understands the authority of the government to provide
               chaplains and other spiritual accommodation for inmates in
               custody. However, as we discussed with Justice officials during
               our exit meetings, we believe that the scope of the exception for
               community corrections centers stated in Justice's equal treatment
               regulations (28 CFR 38.1 (b) (2)) needs to be clarified and that
               an explanation of this exception should be contained in community
               correction program contracts. Justice currently does not include a
               discussion of this exception in its contracts and we maintain that
               community corrections staff may not understand whether or under
               what circumstances they may engage in religious activities using
               federal funds. Our report also recommends, and Justice agreed that
               the Attorney General should clarify the scope of the exception in
               its equal treatment regulations. We did not include any FBOs
               administering the Community Corrections program when we stated
               that four of the FBOs we visited appeared to violate the safeguard
               related to the prohibition on inherently religious activities
               unless separated in time or location from federally funded
               services.
               4. GAO does not recommend that departments use a "bright line"
               definition of an FBO when collecting data on grantees. Our report
               acknowledges the efforts federal agencies make to collect accurate
               data on grants awarded to FBOs, including the voluntary survey
               used by all the agencies in our review (see page 44). However, as
               we note in the report, producing credible data on outcomes
               achieved through federal programs has historically been a
               challenge for the federal government. Various parties, including
               former officials from the White House Office of Faith-Based and
               Community Initiatives, have raised concerns about the accuracy of,
               and the methods used to collect, data on FBOs. Our report calls
               for efforts among federal agencies to develop an improved method
               for identifying which organizations are faith-based. We note that
               this can be achieved through several options, including ones that
               do not require that agencies define what constitutes an FBO.
               Justice also raises the possibility that the initiative's progress
               can be measured as long as the department distinguishes between
               public agencies and nongovernmental organizations. However, this
               is not how the initiative is currently being measured. The PMA
               lays out the long-term goals of the initiative, one of which
               specifically cites greater participation by faith-based and
               community organizations. The White House published data on the
               number of FBOs receiving direct federal grants for selected
               agencies in 2003-2005 but has not published data on the number of
               grants received by government versus non-governmental
               organizations.
               5. We revised the text on page 8 to reflect our findings in the
               report on the number of pilot program evaluations under way or
               completed. We believe that table 7 on page 48 accurately reflects
               the status of the evaluations to the extent possible based on the
               limited information provided by some of the departments on many of
               these evaluations. In addition, we added a sentence on pages 8 and
               46 that acknowledges the time it may take to collect outcome-based
               data and the fact that many of the pilot programs began recently.
               6. We discussed with Justice officials various competitive
               programs before deciding to review the Community Corrections
               Contracting program. We requested and Justice officials provided
               to us detailed information on several competitive grant programs,
               including information on the Community Corrections Contracting
               program. We chose this program because, in 2004, at least three
               times as many FBOs received grants from this program than any
               other Justice program in that same year.
               7. Appendix II of the draft report provided information on the
               grant program and department from which each of the 26 FBOs
               received its award or contract and table 3 (see page 24) shows
               whether the grant was a project grant, formula grant, or contract.
               8. GAO believes that including information on these safeguards in
               grant documents will improve grantee understanding of the equal
               treatment regulations. Given that Justice's equal treatment
               regulations contain an exception to the safeguard related to the
               prohibition on organizations providing inherently religious
               activities unless separate in time or location from federally
               funded services, we believe that an explanation of this exception
               should be included in the contracts for Justice's correctional
               programs. We do not recommend that an explanation of this
               exception be included in every program document, as Justice
               asserts. Rather, our recommendation clearly states that an
               explanation of the exception should be included in the contracts
               for Justice's correctional programs. Justice states that the
               Bureau of Prisons is open to discussing possible changes to its
               contract language to further clarify the scope of the exception
               for community corrections centers.

    Appendix V: Comments from the Department of Education

    Appendix VI: Comments from the Department of Health and Human Services

    Appendix VII: Comments from the Department of Housing and Urban Development

    Appendix VIII: Comments from the Department of Labor

    Appendix IX: GAO Contacts and Staff Acknowledgments

    GAO Contact

    Cynthia M. Fagnoni (202) 512-7215, FagnoniC@gao.gov

    Staff Acknowledgments

    In addition to the contact named above, Andrew Sherrill, Assistant
    Director, and Elizabeth Morrison, managed this assignment. James Whitcomb,
    Lauren Jones, and Robert Sampson made significant contributions to this
    review. Richard Burkard and Jim Rebbe assisted in the legal analysis, Jean
    McSween provided methodological support, and Jonathan McMurray assisted in
    report development.

    (130451)

    GAO's Mission

    The Government Accountability Office, the audit, evaluation and
    investigative arm of Congress, exists to support Congress in meeting its
    constitutional responsibilities and to help improve the performance and
    accountability of the federal government for the American people. GAO
    examines the use of public funds; evaluates federal programs and policies;
    and provides analyses, recommendations, and other assistance to help
    Congress make informed oversight, policy, and funding decisions. GAO's
    commitment to good government is reflected in its core values of
    accountability, integrity, and reliability.

    Obtaining Copies of GAO Reports and Testimony

    The fastest and easiest way to obtain copies of GAO documents at no cost
    is through GAO's Web site ( www.gao.gov ). Each weekday, GAO posts newly
    released reports, testimony, and correspondence on its Web site. To have
    GAO e-mail you a list of newly posted products every afternoon, go to
    www.gao.gov and select "Subscribe to Updates."

    Order by Mail or Phone

    The first copy of each printed report is free. Additional copies are $2
    each. A check or money order should be made out to the Superintendent of
    Documents. GAO also accepts VISA and Mastercard. Orders for 100 or more
    copies mailed to a single address are discounted 25 percent. Orders should
    be sent to:

    U.S. Government Accountability Office 441 G Street NW, Room LM Washington,
    D.C. 20548

    To order by Phone: Voice: (202) 512-6000 TDD: (202) 512-2537 Fax: (202)
    512-6061

    To Report Fraud, Waste, and Abuse in Federal Programs

    Contact:

    Web site: www.gao.gov/fraudnet/fraudnet.htm E-mail: fraudnet@gao.gov
    Automated answering system: (800) 424-5454 or (202) 512-7470

    Congressional Relations

    Gloria Jarmon, Managing Director, JarmonG@gao.gov (202) 512-4400 U.S.
    Government Accountability Office, 441 G Street NW, Room 7125 Washington,
    D.C. 20548

    Public Affairs

    Paul Anderson, Managing Director, AndersonP1@gao.gov (202) 512-4800 U.S.
    Government Accountability Office, 441 G Street NW, Room 7149 Washington,
    D.C. 20548

    www.gao.gov/cgi-bin/getrpt? GAO-06-616 .

    To view the full product, including the scope

    and methodology, click on the link above.

    For more information, contact Andrew Sherrill at (202) 512-7252 or
    ASherrill@gao.gov.

    Highlights of GAO-06-616 a report to congressional requesters

    June 2006

    FAITH-BASED AND COMMUNITY INITIATIVE

    Improvements in Monitoring Grantees and Measuring Performance Could
    Enhance Accountability

    The Administration's efforts to improve the federal government's provision
    of social services through its Faith-Based and Community Initiative have
    sparked considerable interest. GAO was asked to examine (1) the activities
    of the initiative-related centers in five federal agencies; (2) the grant
    award procedures for selected grants; (3) the extent to which selected
    federal and state agencies are providing information on and ensuring
    compliance with safeguards designed to protect faith-based organizations
    (FBO), beneficiaries, and the government; and (4) how the progress of the
    initiative is being measured. We interviewed government officials
    administering 10 grant programs and officials from 26 FBOs.

    What GAO Recommends

    We recommend that the Director of the Office of Management and Budget
    (OMB) ensure that all agencies with initiative-related centers include
    information on the safeguards in grant documents and in monitoring
    guidelines, improve data on grants awarded to FBOs, and develop a plan for
    reporting on progress toward the initiative's long-term goals. OMB
    generally agreed but expressed some concerns about the practicality of
    implementing a few of the recommendations. We also recommend that the
    Department of Justice clarify its regulations on allowed activities and
    clarify relevant language in its contracts, and Justice generally agreed.

    In 2001 the Administration introduced the Faith-Based and Community
    Initiative and established initiative-related centers in five federal
    agencies. The centers employ a range of activities and resources to
    implement the initiative. Since fiscal year 2002, these centers have
    cumulatively spent more than $24 million on administrative activities.

    In reviewing grant applications and awarding grants, federal and state
    agencies reported using the same process for FBOs as they do for other
    organizations in the 10 grant programs we reviewed. Since 2001, federal
    agencies have awarded over $500 million through new grant programs to
    provide training and technical assistance to faith-based and community
    organizations and to increase the participation of these organizations in
    providing federally funded social services.

    The government agencies administering the programs that we reviewed
    provided grantees with some information on the safeguards designed to
    protect the interests of FBOs, beneficiaries, and the government. Most of
    the agencies provided grantees with an explicit statement on the safeguard
    prohibiting the use of direct federal funds for inherently religious
    activities. If these activities are offered, they must be offered
    separately in time or location from services provided with direct federal
    funds and must be voluntary for the beneficiary. However, we found that
    Justice's regulation and guidance related to these activities is unclear
    for its correctional programs. We also found that only four programs
    provided a statement on the rights of program beneficiaries and only three
    provided information on permissible hiring by FBOs. While officials in all
    26 FBOs that we visited said that they understood that federal funds
    cannot be used for inherently religious activities, a few FBOs described
    activities that appeared to violate this safeguard. Four of the 13 FBOs
    that provided voluntary religious activities did not separate in time or
    location some religious activities from federally funded program services.
    Government agencies are not required to monitor FBO grantees differently
    than secular organizations. Few of the federal and state agencies
    administering these programs included references in their monitoring
    guidelines on grantee compliance with the safeguards.

    OMB and the White House Office of Faith-Based and Community Initiatives
    assess agencies' progress in implementing the short-term goals of the
    initiative and highlight this progress through a number of published
    vehicles. However, it is unclear whether the data reported on grants
    awarded to FBOs provide policymakers with a sound basis to assess the
    progress of agencies in meeting the initiative's long-term goal of greater
    participation of faith-based and community organizations. Moreover, little
    information is available to assess progress toward another long-term goal
    of improving participant outcomes because outcome-based evaluations for
    many pilot programs have not begun. Also, OMB faces other challenges in
    measuring and reporting on agencies' progress in meeting the long-term
    goals of the initiative.
    *** End of document. ***