An August 2001 report titled Unlevel Playing Field:� Barriers to Participation by Faith-Based and Community Organizations in Federal Social Service Programs identified 15 obstacles faced by faith-based and community-based organizations that inhibited their ability to serve neighbors in need.  The first six barriers are unique to faith-based organizations, while the remaining barriers are experienced by smaller faith-based and community-based organizations seeking to partner with government:

1. A pervasive suspicion of faith-based organizations on the part of many government officials.
2. The total exclusion of faith-based organizations from some Federal programs.
3. Excessive restrictions on religious activities.
4. Inappropriate expansion of restrictions on religious activities to new programs.
5. The denial of faith-based organizations’ legally established right to take religion into account in employment decisions.
6. Failure to require and assist State and local officials in complying with Charitable Choice.
7. The limited accessibility of Federal grant information.
8. The heavy burden of regulations and other requirements.
9. Heavy requirements that have to be met before a group can apply for funds.
10. Complex grant applications and grant agreements.
11. Questionable favoritism in some programs toward faith-based organizations.
12. An improper bias in some programs in favor of previous grantees.
13. An inappropriate requirement to apply in collaboration with likely competitors.
14. Requiring 501(c)(3) status where a program statute requires only nonprofit status.
15. Inadequate attention in the Federal grant streamlining process to faith-based and community organizations.

The same report found that some Federal agencies retained both formal and informal barriers to funding expressly religious organizations, including

• restricting religious activities that are not prohibited by the Constitution
• not honoring rights that religious organizations have under Federal law
• burdening small organizations with cumbersome regulations and requirements
• imposing anticompetitive mandates on some programs, such as requiring applicants to demonstrate support from government agencies or others that might also be competing for the same funds.

While some limitations on religious organizations within a Federal program are constitutionally required and appropriate, the report found that many Federal policies and practices went well beyond constitutional and legislative requirements, arising from an overriding misperception by federal officials “that close collaboration with religious organizations was legally suspect.”  These policies and practices included

• bans or other limitations on some or all religious organizations applying for funding
• requiring applicants to alter or disguise their religious character to be eligible for funding
• requiring religious organizations to forfeit their right under Title VII of the Civil Rights Act of 1964 to staff on a religious basis
• providing lists of prohibited religious activities without a positive affirmation of eligibility or guidance on how faith-based organizations can legally and effectively partner with government
• excessive restrictions on constitutionally permissible religious activities.