A grant announcement for the Compassion Capital Fund (CCF) Demonstration Program has been challenged by Americans United for Separation of Church and State (AU) because it instructs intermediary organizations not to consider the religious nature of programs in selecting sub-grantees. AU sent a letter to Clarence Carter, Director of the Office of Community Services at the Department of Health and Human Services (HHS), explaining its objections and asking for a response by September 18. It said the policy might lead to unconstitutional federal support of religious content in programs. AU’s letter points out the instructions violate the administration’s own policy prohibiting federal funds from supporting inherently religious activities. The administration published Guidance to Faith-Based and Community Organizations on Partnering with the Federal Government earlier this year that makes it clear government programs and religious activities must be separated so that government funds do not subsidize the religious activity. AU requested the removal of the language prohibiting inquiries about the religious nature of programs offered by potential sub-grantees from any and all information to intermediaries and sub-grantees. It also asked HHS to withhold approval for intermediary organization plans to distribute sub-awards that do not reflect a clear understanding of both Constitutional and administration restrictions, and a commitment to operate within those limits. Nearly $4.2 million in federal grant funds will be distributed to intermediary grantees under the CCF Demonstration Program. At least a quarter of these funds are to be redistributed to community and faith-based organization sub-grantees for capacity-building activities that sustain their social service provision. The policy would exacerbate problems with tracking the activities of sub-grantees. A study by the Roundtable on Religion and Social Policy published last year found that it is nearly impossible to track how money awarded to sub-grantees is being used. The new Compassion Capital Fund policy makes this accountability problem more serious.