Early reports about the U.S. Federal Emergency Management Agency (FEMA) reimbursements to faith-based groups for their hurricane relief services were misleading and lacked essential details. At a press conference last week, FEMA announced that it will reimburse churches and faith-based groups; however, this is simply an extension of its Public Assistance Program that currently provides funding to private nonprofit groups that have provided food, shelter and supplies to victims of Hurricane Katrina at the agency's request. A Sept. 27 Washington Post story gave the impression that only faith-based groups would receive such reimbursements, prompting some protest.

Since 1996, the federal Legal Services Corporation (LSC), which funds legal services for the poor, has placed severe restrictions how its funds can be used, and extended these restrictions to private funds raised by legal services programs. In December 2001 four legal service programs in New York City, a private charity and pro bono attorney filed suit against the Legal Services Corporation challenging the constitutionality of restrictions. On December 20, 2004 the United States District Court for the Eastern District of New York struck down application of the rule imposing the restrictions on private funding of legal aid groups. The judge denied the plaintiffs' challenge to the restrictions on direct LSC funding. The case, which has broad implications for the nonprofit sector, is under appeal.

Legislation introduced in the House of Representatives on March 2 would make the White House Office of Faith-Based and Community Initiatives (H.R. 1054) and ten similar federal agency offices a permanent part of the federal government. The Tools for Community Initiatives Act, sponsored by Rep. Mark Green (R-WI), establishes the offices and outlines their responsibilities. It does not include portions of current regulations that address how religious groups handle federal grants.

On March 8, the U.S. Court of Appeals for the District of Columbia ruled that taxpayer funds can subsidize volunteer instructors that teach in religious schools. The ruling reversed a July 2, 2004 decision by U.S. District Judge Gladys Kessler, who admonished the government for failing to monitor programs sufficiently to ensure compliance with the law and called the line between secular and religious activities "completely blurred." The American Jewish Congress (AJC) may appeal the decision.