What hasn't been reported about this story is that House of Mercy is probably partly funded by the government. From their 990 :

I would consider that story bad enough, especially director Bobby Harris complaining that some people only want to be helped "in their way" (because charity should totally be a means for the helper to control the helpee). He seems to be saying he stalks the people staying at his shelter and then uses the threat of discharge to keep them in line. I'm not sure that's what Jesus calls on people to do, but then I'm not the one with the title of "elder."

A church-run homeless shelter in Columbus, Georgia, kicked two women out because they thought they were gay. While the shelter denies her story, the director is perfectly willing to admit that gay people aren't welcome at that homeless shelter:

(For those of you who can't see the pic, there's an "X" in the box that says that this organization "normally receives a substantial part of its support from a government unit or from the general public," and refers to "section 170(b)(1)(a)(vi).")

House of Mercy got over $326,000 in revenue in 2009 (their most recent 990 filing) from unspecified sources. A "substantial amount" (one-third, according to the Nonprofit Law Blog) had to come from a government body or the general public for them to have checked that box on the 990.

Also, in the FY2011 budget signed by Georgia's governor, the Georgia legislature is looking to give House of Mercy a $75,000 grant (this is from the section of non-binding allocations):

Section 16, pertaining to the Department of Community Affairs, page 31, line 906: The General Assembly seeks to earmark $75,000 for the House of Mercy in Columbus in the Special Housing Initiatives program. The department is authorized to operate the program in accordance with the purpose of the program and its general law powers of the Department.

I'm not in a position to investigate this any more than what I can find on the internet, but perhaps an enterprising journalist in Columbus, Georgia, would want to look into this?

While it's easy to see this as a discriminatory use of government funds, it's part of a larger war on the government that's been waged for decades now. Instead of the government building homeless shelters and shelters for battered women and their children to escape to, they've privatized much of the money and given out contracts to religious organizations to do the work.

That was the basic principle behind the federal government's faith-based initiatives. While conservatives think that the entire government should be privatized with the government itself acting as a giant checkbook that gives out money for all of its basic functions, some jobs can't be assigned to the for-profit businesses. The non-profit sector, though, is more than happy to help out for a price, and this is a way of throwing some cash at churches.

But this is also a way of privatizing public money and reducing access to that money. The woman who got kicked out of that shelter because she violated curfew so that she could get her children's legal documents (how early is this curfew anyway? Or did Harris just suspect she was out doing something that he wouldn't approve of and considered it a curfew violation?) found out that some people will use that money for their own ends and cut entire classes of people off from its benefits.

At the federal level, Obama has allowed churches that receive public money to discriminate when it comes to employment, effectively cordoning off certain government-sponsored jobs for heterosexuals only. My guess is that there are states and municipalities with even less restrictive regulations when it comes to their money, but it doesn't make it any more right.

LGBT people work in this country and their labor and creativity make the country wealthy and we have just as much a claim on that wealth as anyone else does. Homelessness is a problem that the government should be taking care of, completely, with churches helping out on the fringes with their own funds collected from their congregations. Housing the homeless is too important a task to be left to the private sector.