Religious welfare provision has expanded drastically in Europe in the past two decades. Today its welfare organization makes the Catholic Church the largest private employer in Germany. During the neo-liberal decades of the 1990s and 2000s faith based welfare providers were heralded by many European politicians as the perfect way to cut state welfare without decreasing welfare provision or quality. Blair, Schüssel, Prodi and their likes overlooked thereby that the expansion of faith based welfare services creates a number of problems. The dismissal of homosexual employees by Catholic welfare providers in Germany is only one manifestation of distortions that faith based welfare brings in a secular environment. Harder hits that the ascendance of the modern European state resulted from the ability of nations state builders like Bismarck and Cavour to strip religious providers of their century old prerogatives in welfare provision. The handling back of welfare to religious providers today can be interpreted as the reversal of this process. At the end could stand the demise of the modern state.