This article describes the changing legal context for community development by faith-based organizations and accordingly encourages public service and outreach by institutions of higher education. Although many colleges and universities already partner with churches and other faith-based organizations to accomplish public service goals, recent changes in federal legislation offer new opportunities for collaboration. To take advantage of these opportunities, leadership by institutions of higher education is needed to stimulate and facilitate faith-based community development. Potential roles for institutions of higher education are discussed and the legal context for involvement is reviewed. With proper guidance, the unrealized potential of collaborations between institutions of higher education and faith-based organizations may be more fully realized.