Beginning in 1996, Congress enacted several pieces of legislation that included provisions that have become known as charitable choice rules. Included in legislation for various federally funded social service programs, charitable choice rules were aimed at ensuring that faith-based organizations could participate in federally funded social service programs like other nongovernmental providers. The rules allow religious organizations to receive public funding to offer social services without abandoning their religious character or infringing on the religious freedom of program beneficiaries. No new legislation has been enacted since 2000, but Congress continues to consider the issues associated with charitable choice as the related programs are reauthorized. Much of the controversy that has surrounded these programs has centered on the constitutionality of the federal government funding faith-based social service programs and so-called religious hiring rights, the term often used to refer to religious organizations' selectivity in employment decisions. Supporters of faith-based funding argue that religious organizations have a constitutional right to retain their preferences for co-religionists in hiring as a matter of religious identity and exercise. Opponents argue that allowing organizations that receive public funding to discriminate based on religion violates principles of neutrality guaranteed by the U.S. Constitution. This report will briefly discuss the history of charitable choice provisions and the implementation of the Faith-Based Initiative which extended similar rules to certain executive agencies. It will also analyze the constitutional issues associated with funding faith-based organizations, services, and programs, including the distinction of financial assistance provided directly and indirectly to religious organizations. The report will also detail the legal protections for religious organizations that receive funds under these programs and for the beneficiaries of the services they provide, with particular focus on civil rights and discrimination prohibitions in current law. Finally, the report will analyze who is able to raise judicial challenges to publicly funded faith-based programs and how such lawsuits have been resolved. Charitable choice rules generally direct that religious organizations receiving public funding retain control over their religious identity; prohibit discrimination in awarding funds to applicants based on the organization's religious character; prohibit the government from requiring an organization to alter its internal governance or remove religious symbols as a condition of eligibility; and prohibit the use of public funds received directly by religious organizations for sectarian activities. The rules also specify that receipt of public funds does not alter the exemption that religious organizations have under Title VII of the Civil Rights Act of 1964, which allows such organizations to discriminate based on religion in their employment decisions. The charitable choice provisions also prohibit religious organizations receiving public funds from discriminating against beneficiaries on the basis of religion and provide that the programs must be implemented in a manner consistent with the Establishment Clause of the First Amendment of the U.S. Constitution. Charitable choice rules were included in programs like Temporary Assistance for Needy Families (TANF), the Community Service Block Grant (CSBG), and substance abuse prevention and treatment programs. In 2001, when Congress did not enact legislation to expand charitable choice rules to other programs, President George W. Bush established the Faith-Based Initiative through a series of executive orders directing a wide range of social programs to follow the rubric of charitable choice. Upon taking office in 2009, President Barack Obama issued an executive order which amended President Bush's initial order but essentially retained the core principles of the initiative. Congress continues to review charitable choice rules when the associated programs are due for reauthorization. Constitutional questions arise in the context of charitable choice because of potential Establishment Clause conflicts associated with the government providing public assistance to private religious organizations. The Establishment Clause of the First Amendment provides that "Congress shall make no law respecting an establishment of religion...." The U.S. Supreme Court has construed the Establishment Clause, in general, to mean that the government is prohibited from sponsoring or financing religious instruction or indoctrination. But the Court has drawn a constitutional distinction between aid that flows directly to religious organizations and aid that benefits such organizations indirectly as the result of voucher or tax benefit programs. Thus, the permissibility of government aid to religious organizations generally depends on the purpose for which the aid is distributed and the manner in which it is distributed. Generally, the government may not provide direct aid to religious organizations that use the aid for religious purposes, but the Supreme Court has allowed aid for non-religious purposes. It appears that the purpose of the aid and the types of programs that it was used to fund are the critical factor in the constitutional analysis of direct aid programs, not the type of organization that received and administered the public funds. In other words, the cases challenging charitable choice expenditures likely will depend on the content of the organization's publicly funded program. The extent to which the organization can demonstrate that the funds are restricted to secular uses likely will determine whether the expenditure was constitutionally permissible. With respect to direct aid, the Court has typically applied the tripartite test it first articulated in Lemon v. Kurtzman . The Lemon test requires that an aid program (1) serve a secular legislative purpose; (2) have a primary effect that neither advances nor inhibits religion; and (3) not foster an excessive entanglement with religion. Historically, the primary effect and entanglement prongs were substantial barriers to religious organizations receiving public funds. To avoid a primary effect of advancing religion, the Court had required direct aid programs to be limited to secular use and struck them down if they were not so limited. But even if the aid was limited in such a way, the Court often found the primary effect prong violated anyway because it presumed that some institutions were so "pervasively sectarian" that it was impossible for public aid to be limited to secular use. Alternatively, it often held that direct aid programs benefiting pervasively sectarian institutions were unconstitutional because government had to so closely monitor the institutions' use of the aid to be sure the limitation to secular use was honored that it became excessively entangled with the institutions. The Court's decisions in Agostini v. Felton and Mitchell v. Helms , however, have recast these tests in a manner that has lowered the constitutional barriers to direct aid to sectarian organizations. The Court has abandoned the presumption that organizations are so pervasively sectarian that direct aid either results in the advancement of religion or fosters excessive entanglement. It has also abandoned the assumption that government must engage in an intrusive monitoring of such institutions' use of direct aid. The Court still requires that direct aid serve a secular purpose and not lead to excessive entanglement. But it has recast the primary effect test to require that the aid be secular in nature, that its distribution be based on religiously neutral criteria, and that it not be used for religious indoctrination. For example, under the current interpretation, public resources such as teachers, instructional materials, or equipment may be provided to religious schools if the resources are used for secular educational purposes. The Court's previous assumption that religious organizations were pervasively sectarian implied a belief that any financial assistance to the organization would inevitably support the religious elements of the organization. The Court's abandonment of the presumption indicates a relaxation on the constraints imposed and assumptions made regarding the constitutional permissibility of public funding of certain secular elements of religious organizations, which may be very significant in considering the outcome of future charitable choice cases that may come before the Court. Indirect aid to religious organizations, such as voucher programs where participants use government funds to obtain services from participating providers, has a lesser extent of governmental control than direct aid programs that provide public funds directly to the providers. Accordingly, the Court's jurisprudence has imposed fewer restraints on indirect aid programs and has held aid to be constitutional when the distribution reflects the individual beneficiary's choice. The Court still requires such aid programs to serve a secular purpose; but it does not apply the secular use and entanglement tests applicable to direct aid. The key constitutional question for indirect aid has been whether the initial beneficiaries of the aid had a genuinely independent choice about whether to use the aid for services from secular or religious providers. For example, in the case of school vouchers, the initial beneficiary (typically parents or students) receives a voucher for public funds and makes a choice of which school to attend using the voucher. If the individual who receives the funds can be seen as intervening in the chain of distribution of the funds from the government to a religious organization that is providing services, the aid is considered to be given by the individual beneficiary, rather than the government, thereby negating a threat of establishment. In past indirect aid decisions relating to voucher programs, the Court has held that, if the universe of private choices available was almost entirely religious, the program was unconstitutional because the government, in effect, dictated by the design of the program that a religious option be chosen. But if religious options did not predominate, the Court held the program constitutional even if, in the case of a school voucher program, parents chose to receive services from religious schools. In a 2002 decision also regarding school vouchers, the Court legitimated an even broader range of indirect aid programs by holding that the evaluation of the universe of choices available is not confined to the private providers at which the voucher aid can be used but includes all of the public providers available as well. Overall, the Court has upheld aid programs in which the aid was distributed to the initial recipients on a religion-neutral basis and the initial recipients had a "genuine choice among options public and private, secular and religious." Furthermore, unlike constitutional requirements for direct aid, programs implemented through indirect aid may include religious organizations that offer services that include religious content. Thus, in the context of charitable choice programs, it appears that, although indirect aid programs may include more religious content than direct aid programs, the indirect aid programs are no more susceptible to constitutional challenges so long as beneficiaries have a variety of choices of secular and religious service providers. Much of the attention generated by the Faith-Based Initiative has revolved around two general issues: selectivity in employment by service providers (i.e., hiring rights) and protections for beneficiaries of the programs that religious organizations administer. The issue of selectivity in employment (e.g .