TANF-ACF-IM-2007-03 (Charitable Choice)

Publication Date: May 16, 2007


State Agencies Administering the Temporary Assistance for Needy Families Program and Other Interested Parties.


Charitable Choice


To remind State agencies of the TANF Charitable Choice requirement.


Title I, Section 104 of the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (PRWORA) (42 U.S.C. 604a), 45 CFR 260.34, 45 CFR 87.2(a), 45 CFR 92.3, 45 CFR 92.13, 45 CFR 92.14, 45 CFR 92.24, 45 CFR 92.36, and 45 CFR 263 Subpart A.


“The paramount goal is compassionate results, and private and charitable groups, including religious ones, should have the fullest opportunity permitted by law to compete on a level playing field, so long as they achieve valid public purposes....  The delivery of social services must be results-oriented and should value the bedrock principles of pluralism, nondiscrimination, evenhandedness, and neutrality."  President George W. Bush, January 29, 2001.

Thus, President Bush has made it one of his Administration’s top priorities to ensure that Federal programs are fully open to faith-based and community groups in a manner that is consistent with the Constitution.

The TANF Charitable Choice provisions in Title I, Section 104 of PRWORA of 1996 (42 U.S.C. 604a) removed unnecessary barriers placed on faith-based programs by allowing States to contract with religious organizations, or to accept certificates, or other forms of disbursement on the same basis as any other nongovernmental provider, without impairing the religious character of the organization and without diminishing the religious freedom of the beneficiaries. [1]   We issued final regulations on September 30, 2003 (68 FR 56449, Sept. 30, 2003), which implemented the TANF Charitable Choice statutory provisions.  The final rule added section 260.34 (“When do the Charitable Choice provision of TANF apply?”) to 45 CFR Part 260, “General Temporary Assistance for Needy Families Provisions.”[2]


“The indispensable and transforming work of faith-based and other charitable service groups must be encouraged.  Government cannot be replaced by charities, but it can and should welcome them as partners.  We must heed the growing consensus across America that successful government social programs work in fruitful partnership with community-serving and faith-based organizations.”  President George W. Bush

Faith-based organizations are an integral part of the social services network of the United States.  Faith-based organizations, including places of worship, non-profit organizations and neighborhood groups, offer a myriad of social services to those in need.

The TANF Charitable Choice provisions apply whenever a State or local government uses Federal TANF funds or expends State or local funds claimed to meet the State’s maintenance-of-effort (MOE) requirement to procure services and benefits from non-governmental organizations, or provides clients with certificates, vouchers, or other forms of disbursement that can be redeemed for services in connection with the TANF program.  When State or local funds are used to meet the State’s MOE requirement, the provisions apply irrespective of whether the State or local funds are commingled with Federal funds, segregated, or expended in separate State programs.  Thus, religious organizations must be allowed to compete on an equal footing to provide the needed benefit or service.[3]

The procurement provisions in 45 CFR Part 92 apply to the TANF program. In particular, 45 CFR 92.36(b)(1) states that “Grantees and subgrantees will use their own procurement procedures which reflect applicable State and local laws and regulations, provided that the procurements conform to applicable Federal law and the standards identified in this section.”  Applicable Federal law includes the TANF Charitable Choice statutory provisions and implementing regulations.  Therefore, we urge State officials to review the details of their procurement practices, including any applicable contract documents, civil rights compliance forms, and communications about procurement opportunities, procurement manuals, and any other applicable documents to ensure that faith-based organizations have the same opportunities as any other service provider to compete for TANF funds to provide the needed TANF benefit or service.

The Charitable Choice provisions preserve both the religious freedom of TANF beneficiaries as well as the religious character of faith-based providers.  In addition, Federal civil rights laws apply to faith-based organizations in the same way as with any other organization that receives Federal program funds.  However, religious organizations have one narrow statutory exemption, which solely relates to staffing practices within its own organization.  Title VII of the Federal Civil Rights Act of 1964 (42 U.S.C. 2000-e) permits a religious organization to hire employees who share its religious beliefs.  This exemption is not lost when a faith-based organization receives Federal TANF funds or State MOE funds to provide a secular service.  Religious organizations are still subject to Federal civil rights laws that prohibit employment discrimination on the basis of race, color, national origin, sex, age, and disability.

Hence, there are no obstacles that should prevent a religious organization from competing for TANF funds.  As such, it is ACF’s policy that whenever a State chooses to procure services and benefits from nongovernmental organizations, the State’s procurement policy must allow faith-based organizations to compete to provide the service.  To do otherwise, might lead to a finding during the required single audit process that the State did not comply with the TANF Charitable Choice provisions.

Another way that faith-based organizations can help States in a significant way is in helping the State meet its cost-sharing (MOE) requirement.  The regulations at 45 CFR Part 92 address cost-sharing requirements and permit States to count toward their MOE requirement allowable, non-Federal, cash or in-kind expenditures by a third party.  Third parties include such entities as a faith-based organization, a non-profit organization, a corporation, or other private party.  The State must have a written agreement with this other party allowing the State to count the expenditure toward its MOE requirement.  We clarified this policy in TANF Policy Announcement TANF-ACF-PA-2004-01, dated December 1, 2004 Visit disclaimer page .  We also addressed this in the interim final TANF rules published in 71 Federal Register on June 29, 2006, by adding all of the particulars to section 263.2(a)(4)(ii) of the TANF MOE regulations.

Since faith-based organizations have a long-standing tradition of caring for people in need, we strongly believe that involving such organizations in helping to meet the needs of your clientele can be a win-win experience for you and the beneficiaries alike.


Inquiries should be directed to the appropriate TANF Regional Program Manager.



Sidonie Squier, Director
Office of Family Assistance

[1]   We use the words “religious organization” and faith-based organization” interchangeably
[2]   This final rule Visit disclaimer page is available on HHS’ Center for Faith-Based & Community Initiatives website.
[3]  The preemption provision in section 104(k) of PRWORA as amended (42 U.S.C.604a(k)) is the only exception to the TANF Charitable Choice provisions.  It states that the Charitable Choice requirements do not preempt any provision of a State constitution or State statute that prohibits or restricts the expenditure of State funds in or by religious organizations.  Pursuant to the TANF regulations at 45 CFR 260.34(j), this preemption provision only applies to the use of segregated State TANF MOE funds or separate State MOE funds.  Therefore, States that have general or specific provisions that prohibit or restrict providing direct or indirect State funds to religious organizations could still use segregated Federal TANF funds or commingled funds to pay for benefits and services provided by religious organizations.


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