One could claim religious favoritism on the part of those making the grant. The proposal would create an unholy legal mess. Religious animosity and suspicion would fester in communities. But that's just the surface. Digging deeper reveals the devastating nature of this amendment.
Federal regulations accompany federal dollars.
Any non-profit organization that has received federal funding knows about federal regulations. Any school district can testify about the restrictions that go with federal grants. States chaff under federal rules tied to federal dollars. Government funding has strings attached. If so, they are terribly naive.