I'm not sure this was his main point, but Alan Wolfe makes the atheistic case for more funding for religious social services, by looking at the curious case of Martin Luther:

Once launched into the world, Lutheran orphanages met the same problems of limited budgets, diverse clienteles, and staff professionalization as any other kind of organization; as Thiemann writes, "their missions became shaped more by the demands of external public demands than by a clearly stated internal theological rationale." The lesson for our times is plain: provide public funds for religiously motivated social services if you wish, but do not expect them to remain "religious" if you do. Religion is an excellent incubator for such secular ideals as the modern welfare state.

This sort of logic has always somewhat made sense to me—state support for religion just ends up, well, watering down religion. Make prayer mandatory in schools and you'll cheapen it to the point where no one takes it seriously anymore. (Indeed, when the Supreme Court first banned prayer from private schools, many religious leaders backed the move for this very reason.)

So what about social services? From what little I know, the Netherlands pioneered the Christian-democratic form of governance with its notion of "sphere sovereignty": namely, that the government merely oversees a variety of self-governing religious entities that need to submit to state laws, but otherwise maintain a good deal of autonomy. The Dutch constitution, for instance, allows government funding to be split, without bias, among private and public schools. But the Netherlands didn't become a theocracy, instead—again, correct me if I'm wrong—the world unfolded exactly as Alan Wolfe said; people started shopping around for social services not on the basis of religion, but for services that suited their needs. Religion sort of faded into the background, and Netherlands became the godless heathen place we know and love today—legalized prostitution and gay marriage and all.

Germany is another model, in which public services are, I think, required to enlist churches and other religious organizations when they can for welfare provisions. And the churches and whatnot get a fair amount of independence to do whatever work they want. On the other hand, I think there are a few key differences between what Germany has and, say, President Bush's proposed faith-based initiatives. In particular, the Christian-democratic model entails a good deal of income distribution—giving families the wages and tools they need to be self-sufficient—and Bush, of course, has nothing of that sort in mind. Still, Germany: another godless country, where only 14 percent of people attend church once a week. We can see where this is going.

The other point is that, in the end, it doesn't seem like the form of delivery much matters when it comes to many social services. It's very important for some things (anything to do with reproduction, especially), but as far as anti-poverty programs go, what really makes the difference is how much money actually gets dished out. If our welfare state ended up being administered by churches, ala Germany or the Netherlands, that might work—just don't be surprised when America drifts toward atheism!—but in order for this to be effective at fighting poverty, etc. we'd also have to boost total spending to Germany and Netherlands-esque levels.