The proposal, announced on Monday, calls for the establishment of a White House office to distribute federal funds to charities and religious groups during the next 10 years.
But the proposal has left some local leaders with serious reservations regarding the separation of church and state.
The aim of the program is to let such groups compete for taxpayer money to provide services such as after-school programs, prison ministries and drug treatment.
Bush stated in a press release that religious groups must be part of the solution for society's ills.
"A compassionate society is one which recognizes the great power of faith," the statement read. "We in government must not fear faith-based programs. We must welcome faith-based programs."
Bush will meet with leaders of religious and charitable organizations later this week to discuss his next move on the proposal, which is receiving lukewarm reviews from local religious leaders.
Becky Egan, associate campus minister at UNC's Newman Catholic Student Center, said she would support the program as long as it met the needs of the people it served without pushing religion.
"I can see people's issues with (the program) because it could cross the line of church and state."
But other campus religious leaders are not in favor of Bush's proposal. Bob Phillips, a minister with UNC Baptist Campus Ministries, said he opposes the plan because he fears it would be difficult to divide funds among the nation's many religious groups.