Salvation Army Challenge Survives

Federal judge says anti-gay charity’s government social service contracts may be at risk

Contracts between state and local government agencies in the New York metropolitan area and the Salvation Army may violate the Establishment Clause of the First Amendment, a federal district court judge in Manhattan ruled on September 30.

Judge Sidney H. Stein found that such contracts may run afoul of the U.S. Constitution if the charitable organization actually uses some of that money for the purposes of its evangelical Christian work as charged by current and former employees in a pending federal lawsuit.

The outcome of this case could significantly affect the Bush administration’s proposals to increase government funding to “faith-based” organizations to provide social services, while at the same time they are able to discriminate on the basis of religion and sexual orientation in employing people to staff such programs. Recognizing the danger to its program, the federal government filed a brief as a “friend of the court” to argue that there was no constitutional problem with the contracts.

In his ruling, Stein’s granted a number of motions by the Salvation Army and a host of governmental agency defendants to dismiss many of the constitutional and statutory claims filed by the18 individual plaintiffs, but the judge left intact two significant legal theories for further consideration. In addition to the Establishment Clause claim, he found that the employees may be able to claim unlawful retaliation under the New York State and New York City human rights laws.

The case resulted from a decision by the Salvation Army to reassert its identity as an evangelical Christian organization by intensifying enforcement of its personnel policies requiring that all employees adhere to its definition of Christian principles, including an absolute bar on homosexual conduct. That policy would not be legally problematic if the Salvation Army were purely a church organization funded only by private donations, but the group today is mainly funded in providing social services by government contracts.

The plaintiffs in Lown v. The Salvation Army, Inc. claim that nearly 90 percent of the clients in programs administered by the group’s Social Services for Children (SSC) program, for which 16 of the plaintiffs work, are referred or assigned by, or are in the custody of government agencies in New York City and Long Island with which the program has contracts. Many of the clients find their way to SSC involuntarily. The plaintiffs also alleged that SSC derives more than 95 percent of its annual budget from its government contracts, and crucially diverts about 10 percent of that money to the Salvation Army Church for “administrative overhead expenses,” even though they allege that SSC receives very little actual administrative support from the church.

In other words, the plaintiffs claim that the contractual relationship between the Salvation Army and the government results in tax dollars going to fund the evangelical work of the organization through a diversion of funds. They also claim that many clients in the programs are subjected to religious indoctrination activities, in violation of the contracts between the Salvation Army and the government agency funders.

Within Stein’s detailed summary of the allegations was one an incident in which a Salvation Army official demanded that an SSC administrator submit a list of all “homosexuals” employed by the agency. Several of the plaintiffs claim they lost their jobs for opposing the anti-gay crackdown, and others quit because of the resulting “hostile environment” for anybody who did not toe the line. SSC contracts specifically said that all state and local nondiscrimination laws must be observed.

Stein, however, found that federal, state, and local laws, in various ways, exempt religious organizations from complying with religious and sexual orientation discrimination provisions. But that exemption, the judge concluded, does not extend to retaliation claims under state and locals laws, which are more narrowly framed, and he refused to dismiss the portion of the complaint dealing with retaliation.

As gay rights groups have done elsewhere, the plaintiffs tried to argue that SSC is funded almost entirely by taxpayer dollars and performs functions on behalf of the government, so it should be held to the standards of a government agency and forbidden to discriminate in violation of the Equal Protection Clause or the First Amendment Free Exercise of Religion clause. That argument has rarely been successful, however, and Stein ruled that the Salvation Army remains a private entity, not subject directly to constitutional claims. He found that the Salvation Army enjoys immunity from the discrimination claims.

Stein ruled, however, that the plaintiffs also have standing as taxpayers who can assert claims against the government agency defendants that their tax dollars are improperly used to further religious ends. Therefore, he refused to dismiss the Establishment Clause claims. The alleged diversion of 10 percent of the contracts from SSC to the Salvation Army Church was key in this regard.

“Government aid to religious organizations may not be diverted to religious uses,” Stein wrote, citing a string of federal cases, from the Supreme Court on down, in support of this contention. The judge also noted the plaintiffs “have also alleged facts giving rise to the inference that the Salvation Army may be using government funds to support indoctrination of clients whom the government defendants compel to participate in SSC programs.” The plaintiffs claimed that as social workers they have an obligation to counsel clients on “particular topics (such as safe sex, sexual orientation or substance abuse) that potentially conflict with the religious mission of the Salvation Army.”

Depending on how damning the evidence that the Salvation Army is using government money for religious purposes turns out to be as the result of discovery in the case, government defendants may well have to rethink their relationship with the group, which is one of the largest officially homophobic social service employers in the metropolitan area. The Salvation Army may not only lose contracts but may be required to return government funds demonstrably diverted to religious activities.