Restored faith: New faith-based legislation. (On Capitol Hill).

A hard-fought legislative compromise and a new director of the Office of Faith-based and Community Initiatives is sparking renewed hope for the Bush Administration's "Armies of Compassion."

The Charity Aid, Recovery and Empowerment (CARE) Act could ignite charitable donations by 15 percent for every nonitemized tax deduction dollar spread across two years, according to Independent Sector.

Increased giving would come predominantly from low-income and middle-income families, spurred to give because of the tax deduction of $400 for individuals and $800 for couples, a senior Bush Administration official said.

The bill's price tag is about $12 billion over 10 years, comprised mostly of the charitable giving tax incentives. The compromise is substantially less than Bush's original proposal of $80 billion for a 10-year period.

Sens. Rick Santorum (R-Pa.) and Joe Lieberman (D-Conn.) spearheaded the compromise after the House-passed bill stalled last year in the Senate.

The announcement comes on the heels of President Bush appointing Jim Towey to lead his Office of Faith-Based and Community Initiatives. Towey, an attorney, succeeds John DiIulio, who resigned last summer.

Towey's efforts in the sector and in human services have revolved around advocacy for the aging. He worked with Mother Teresa's ministry as well as founding Aging With Dignity. He also served as Florida's director of health and rehabilitative services under former-Gov. Lawton Chiles, a Democrat.

Among other things the CARE Act calls for:

* More than $1 billion increase in funding over two years for the Social Services Block Grant, which funds many local programs;

* A $150 million "Compassion Capital Fund" to help smaller charitable organizations improve technical assistance and compete for federal grants;

* Removal of obstacles that prevent faith-based social service providers from receiving federal funding;

* Expanding individual development accounts that help low-income working families attain self-sufficiency;

* Expedites application status for charitable groups to 501(c)(3) status, and waive the application fee for groups whose annual revenues don't exceed $50,000;

* Allows IRA holders to make charitable contributions from their accounts; and,

* Reduces and simplifies the excise tax on foundations from 2 percent to 1 percent to encourage more social investment.

Gone from the proposal is the contentious "charitable choice" provision found in the House bill, which would have allowed religious organizations that hire based on religious views to apply for federal funding. Its replacement is an "equal treatment" provision that targets smaller faith-based social service providers that seek federal funding.

"There's just no good reason to disqualify an otherwise qualified faith-based group just because they have a cross on their wall or a mezuzah on their door, or because they have a religious name in their title, or they have praise for God in their mission statement," Lieberman said in a statement.

Irv Katz, president of the National Assembly of Health Human Service Organizations (NAHHSO) in Washington, D.C., said the proposal could boost participation by grass roots religious and community based organizations. NAHHSO includes 60 national members that collectively serve people through 165,00 facilities across the United States.

"The real nuance of the current discussion in the president's initiative is the inclusion of pervasively religious organizations, grassroots, religious and community-based organizations that probably don't have a tax-exempt vehicle for delivering human services," Katz said. "It's not faith or not-faith. It's more community, grassroots versus established agency. The latter, many of which are community-based, have been delivering health and human services with government funding for decades."

Jill Schumann, president of Lutheran Services in America, based in Baltimore, said the compromise reflects a focus shift from faith-based initiatives to community-based initiatives. She is satisfied with the tax deductions and the Social Services Block Grant funding. But, she said she was disappointed the SSBG funding was less than initially proposed. Original proposals would have increased funding to $2.8 billion immediately, as opposed to $1.975 billion.

Harris Wofford, chairman of America's Promise: The Alliance for Youth, believes the president's call to volunteer for two years or 4,000 hours and the CARE Act intertwine objectives.

"Where do you think a lot of those hours are going to be generated?" Wofford asked. "They are going to be generated through faith-based organizations. The people that can be part of the 'Armies of Compassion' in a very large measure are in religious organizations."

Wofford also chaired a report by the nonprofit group, Search for Common Ground, that influenced the compromise. That group included various people from civil liberties and faith-based groups.

Bush has endorsed the CARE Act, and it reportedly carries bipartisan Senate support.

But despite politicians' backslapping over the compromise, at least one person believes it falls short of original faith-based initiative goals.

"The original idea is that the federal government should not discriminate against groups that are practicing effective compassion regardless of their religious beliefs," said Marvin Olasky, senior fellow at Acton Institute in Grand Rapids, Mich.

"This is like the Bush administration with the ball, fourth down and a long way to go and they decide to punt. I can't fault the tactics of it. But it doesn't accomplish a whole lot."

Lieberman officials said they hope the proposed bill will make it to the Senate floor before Congress recesses for Easter in late March.

But first it must pass through the Senate finance committee, Senate conferencing, and possible opposition in the House because of the removal of the "charitable choice" provision -- not to mention the impact of budget talks.

"This is caught up in the large discussion about spending and taxes and the state of the economy," said Dan Gerstein, Lieberman's spokesman. "The pressure is on the budget."

One other footfall is federal funding of the Social Services Block Grant, which under the bill would increase by more than $1 billion over the next two years. Gerstein said the Bush administration didn't include a $275 million increase in its 2003 budget.

"As far as we're concerned that's the price of admission of this agreement," Gerstein said. "If they pull away from that or don't follow through, this is going to unravel."

A Bush Administration official has said the administration is willing to work with Lieberman on the request.

The compromise has, if nothing else, got the "Armies of Compassion" marching again, although the cost is some muddied political uniforms.

"It's been a mud bowl," Olasky said of the political wrangling. "No one has been very successful in completing passes. It's been a couple of yards and a uniform streaked with mud."