It's a cliché, but two items from the Washington Post last week point out to me that we're on our way down one. Last Wednesday, the Post reported that Bush Orders DHS to Create Center for Faith-Based Aid, and on Friday, that Bush Touts Grants to Religious Charities.
While I do have some sympathy for the concept — I don't think an group that does good work should be refused federal funding just because it happens to be connected with a religious organization — I see this as something different, and as stepping over the rise and starting down the slope. We're talking, here, not about whether or not to deny funds, but about explicitly allocating funds and other resources (a "center" implies some significant administrative overhead) to religious organizations. The focus is different, and the message is different.
I believe that funding for charities should be managed individually, charity by charity. Those for which the religious connection is incidental may reasonably get public funds, while those using their charitable work as an adjunct to religious outreach must get their funding from their own communities.