Some charities spurn Uncle Sam.

When the Corporation for National and Community Service sought grant proposals from major nonprofits to help smaller organizations qualify for federal assistance last year, United Jewish Communities (UJC) considered the offer.

To determine whether its smaller partners were interested, the New York-based organization took a survey.

"We polled 30 of our agencies in the smallest communities and 15 said, 'no thanks'," said Diana Aviv, vice president for public policy at UJC. The small agencies told their bigger partner that the help being offered wasn't enough to justify setting up the grant application, accounting, compliance and monitoring procedures that federal scrutiny requires.

Given the agencies' lack of interest, "we didn't apply for that grant," said Aviv, even though UJC is an established player in the federal grants game, most recently securing $3.68 million for Jewish agencies serving the elderly.

But the fact that small, faith-based agencies saw no future in Uncle Sam's handout could signal trouble for President George Bush's "Armies of Compassion" initiative.

While Congress ended its work in 2001 without agreeing on a panoply of issues tied to faith-based funding, Aviv and many of her counterparts are not holding their breath for the controversial legislation in an election year.

Should Congress agree on how to expand faith-based funding, some charity executives expect the chief beneficiaries will be agencies already within the federal funding arena, including those receiving Community Development Block Grants through state and local governments.

"If the states are happy with the contracts they have, through programs like Little Tots Day Care and the Salvation Army, there's no reason for them to drop those and instead fund First Baptist Church," said Sharon Daly, vice president for social policy at Catholic Charities USA in Alexandria, Va.

While waiting for Congress to act, Volunteers of America (VOA), also in Alexandria, Va., began setting up faith-based resource centers to assist local faith-based organizations learn what's required to participate in government-funded programs that are already permissible under existing federal laws, said Ron Field, vice president for public policy at VOA.

No existing charitable programs were jeopardized by the failure to pass the faith-based initiative since there wasn't any money allocated for them previously. The delay has prompted some groups to put program planning on hold, however.

The Islamic American Relief Agency had considered the faith-based initiative as a possible funding source for a proposed adoption agency aimed at placing U.S. minority children with Muslim families, said Omar Moad, projects officer at the Columbia, Mo.-based organization. "Since September 11, we put things on hold," Moad said. "We don't know what's going to happen."

U.S. Islamic groups historically have largely faced funding their outreach programs from within their own communities, said Oman Ibrahim Kazerooni, who heads the Islamic Center of Ahl-Al-Beit in Denver. His community supports efforts to provide copies of the Koran, prayer rugs and beads to more than 780 Muslims in 23 Colorado jails and prisons.

"When we approach corporations and (funding agencies), they don't seem to be interested in Islamic groups. They don't respond," Kazerooni said. Even his volunteers have faced harsh treatment at some facilities since the bombings of the World Trade Center and the Pentagon.

The September 11 attack on America and the subsequent freezing of assets of three Islamic charities operating here has made raising money even within the Islamic community more difficult because of the questions raised about which agencies are legitimate charities, said Moad.

Before September 11, passage of some form of legislation to reduce barriers to federal funding of religious organizations seemed so certain that a national association of homosexual churches advised its congregations to prepare funding proposals for work in AIDS ministries. The Rev.Troy Perry, moderator of the Universal Fellowship of Metropolitan Community Churches, said in a letter to his churches that the headquarters will "prepare resources" so congregations can "seek funding for their many community-based services."

Perry's announcement last August was a reversal of the organization's opposition to the Bush initiative and illustrated the difficulty in creating a political base founded on religion. While fundamentalist leaders routinely denounce gays and lesbians, Perry's group vows to fight discrimination and "demonization" of "lesbian, gay, bisexual and transgender" people. The fellowship, founded in 1968 by Perry, a former Pentecostal minister, has 44,000 members in 300 churches.

"I have the greatest respect for my fellow activists and religious leaders who have opposed enactment" of the law, Perry's letter said. But now "we must also focus upon ensuring that the federal government administers this program with neutrality, nondiscrimination, and openness to all religious groups."

Perry's letter came before the religious right ended its support of the Bush initiative and likely contributed to their retreat, observers believe. However, the United States Senate's failure to pass the legislation during 2001 has not led Metropolitan Community Churches to change its position, said Jim Birkitt, director of communications.

"The issue has just been placed on the back burner," he said.

Discrimination ha created further rifts among potential recipients of federal funds, particularly between the Salvation Army (SA) and gay rights organizations. Groups that included PFLAG (Parents and Friends of Lesbians And Gays) picketed Salvation Army bell-ringers after a story in The Washington Post reported that the SA sought exemption from federal discrimination laws in exchange for its support of the faith-based initiative.

When the controversy erupted in July, John A. Busby, SA's national commander, sought to improve the organization's image in an open letter to employees and officers of the organization.

Calling the communications with the White House merely "suggestions," Busby said the organization serves clients without regard to their sexual orientation.

"Among our 45,000 employees in the USA, I know that there are people of all races, religions and sexual orientation," Busby wrote. In a later letter, however, Busby made it clear that the SA provides no benefits for partners of gay or lesbian employees.

In the first months of his administration, Bush showcased the SA as an example of how his faith-based initiative would work. In a visit to a senior citizens center in Portland, Maine, last March, Bush pointed to a banner containing a biblical verse and said: "Faith-based groups need to be free to receive government funding without taking down that kind of sign."

With his legislative agenda still awaiting Senate action before Thanks-giving, Bush visited So Others Might Eat, a Washington interfaith shelter and soup kitchen, where he announced the largest aid package to the homeless in United States history, more than $1 billion.

The funds will be handed out though the U.S. Department of Housing and Urban Development to help homeless people find emergency shelter, transitional housing and a permanent home. The funding will go to state and local governments and nonprofit groups in the 50 states, the District of Columbia, Puerto Rico, the U.S. Virgin Islands and Guam.

More than 1,300 projects will serve homeless veterans, and more than 400 projects -- awarded a total of $133 million -- will be operated by faith-based organizations.

Jeanie Stokes is a reporter for the Denver News Bureau.