DOJ Opinion Challenges HHS Limits on Religious Use of Federal Funds
The Justice Department’s Office of Legal Counsel issued a memorandum on August 25, 2026, challenging the legal basis for longstanding limits on how religious organizations may use some direct federal funds.
The opinion, prepared for the Department of Health and Human Services’ Office for Civil Rights, says restrictions on worship, religious instruction, proselytization and certain religion-based provider practices are not required by the Establishment Clause. It concludes that restrictions based on anticipated religious use can violate the Free Exercise Clause when the government cannot show a compelling interest.
Those are the OLC’s legal conclusions, not a court ruling. The memorandum does not repeal federal statutes, amend HHS regulations or automatically change every program that receives federal money.
Which programs are involved
The opinion addresses provisions connected to the Personal Responsibility and Work Opportunity Reconciliation Act, the Public Health Service Act and the Child Care and Development Block Grant Act.
The laws apply to programs that can involve welfare services, child care and substance-use prevention or treatment. The memorandum also discusses HHS regulations governing direct grants and contracts to religious organizations, including rules for certain substance-abuse and social-service programs.
The statutory provisions generally say that specified federal funds may not be used for “sectarian worship, instruction, or proselytization.” The OLC says those use-based restrictions are presumptively unconstitutional under its reading of recent Supreme Court precedent. That is different from a rule excluding an organization simply because it is religious, which the Supreme Court has separately addressed in cases involving religious status.
Direct grants are different from vouchers
A central distinction is how federal money reaches a provider.
HHS’s published guidance says direct grants go straight to organizations and may not pay for inherently religious activities. It says explicitly religious activities should be separated in time or location from government-funded services, and that recipients should account carefully for federal money.
The guidance treats indirect aid differently. One example is a child-care certificate that a parent can use at a participating provider of the parent’s choice. The Child Care and Development Block Grant Act expressly distinguishes those certificates from grants or contracts and allows their use for sectarian child care when freely chosen by the parent.
The OLC memorandum focuses on direct assistance but argues that the Constitution does not permit the government to impose special burdens on generally available funding because a provider expects to use some of its own program activities for religious purposes. It relies in part on Espinoza v. Montana Department of Revenue, Kennedy v. Bremerton School District and Carson v. Makin.
The opinion does not mean that every religious activity may immediately be paid for with federal money. Program-specific statutes, regulations, grant conditions, agency action and future court decisions still matter.
Beneficiary protections remain part of the dispute
HHS regulations for direct-aid programs prohibit recipients from discriminating against a program beneficiary or prospective beneficiary based on religion, religious belief, refusal to hold a religious belief, or refusal to attend or participate in a religious practice.
The statutes and regulations also address alternatives for people who object to receiving services from a religious provider. The OLC memorandum points to provisions requiring accessible alternative services in some programs and to parental choice in child-care assistance.
That creates a practical question for people receiving services: how will HHS balance provider autonomy with protections against coerced prayer, religious instruction, proselytization or unequal treatment? For parents using child-care assistance, people seeking addiction treatment and families receiving social services, the immediate issue is not whether every program has already changed. It is whether HHS will revise guidance, grant conditions or enforcement practices.
What changes now—and what does not
Office of Legal Counsel opinions provide executive-branch legal guidance, but they do not themselves amend regulations or repeal laws passed by Congress. The memorandum says the current restrictions are unconstitutional under its analysis, but implementation would still require decisions by HHS and, in some cases, formal regulatory or statutory action.
Possible next steps include revised guidance, changed grant notices, enforcement decisions or rulemaking. Congress could respond through oversight or legislation, and affected organizations, beneficiaries or civil-liberties groups could bring lawsuits.
HHS’s published FAQ still says direct federal funds cannot support worship, instruction or proselytization and that explicitly religious activities should be separated from federally funded services. The page was last reviewed August 11, 2014. It shows HHS’s published position, but it does not establish what the agency will do after the August 25 memorandum.
Opposing reactions
The Freedom From Religion Foundation criticized the opinion, warning that it could allow taxpayer-funded services to become vehicles for religious teaching. FFRF said religious organizations may practice their faith but should not use taxpayer dollars for prayer, preaching or proselytization. That is an advocacy position, not an independent ruling on the memorandum’s legal effect.
First Liberty Institute welcomed the memorandum. The religious-liberty organization said it recognizes a right for religious organizations to participate in federal funding programs without separating their religious character from funded work. First Liberty’s interpretation is also an advocacy position.
What to watch next
The next concrete signals will come from HHS and, potentially, Congress and the courts. Watch for revised grant notices, changes to agency guidance, enforcement decisions, proposed regulations, congressional hearings or lawsuits.
Until then, the August 25 memorandum is best understood as a significant executive-branch legal opinion challenging the existing church-state framework for some HHS-funded services—not as an immediate authorization for all federally funded religious providers to use public money for prayer or proselytization.
Sources
- HHS guidance on funding religious activity
- DOJ religious-liberty guidance, July 23, 2026
- Congressional Research Service constitutional background
Look for updates to this story
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