From the Heritage Foundation:
In his speech today on faith-based programs, Sen. Barack Obama (D-Ill.) proposed that religious groups cannot compete for government contracts unless they give up their freedom to consider religion in their hiring decisions, a radical proposal that effectively repeals Charitable Choice:
In order to receive federal funds to provide social services, faith-based organizations … must comply with federal anti-discrimination laws, including Title VII of the Civil Rights Act of 1964. Religious organizations that receive federal dollars cannot discriminate with respect to hiring for government-funded social service programs.
This is a complete reversal of the Charitable Choice language that President Bill Clinton signed in 1996. Obama’s plan says that when a faith-based organization takes federal dollars, it could be forced to hire an atheist or else lose its federal funding. Since people make policy, by losing the ability to control its people, the group would lose its ability to preserve its faith-based character. In other words, it would strike at the heart of the faith-based initiative.