Because of this revision of the meaning of marriage, despite its long history as a partner, so to speak, with governmental agencies in getting children placed, the Catholic charity cannot both take government money and be faithful to scriptural proscriptions.
So the federal money has to go, more's the pity, for the children who won't be helped.
Again this is way oversimplifying it.
Any foster child is a ward of the state, so the church cannot make up its own rules wanting to foster that child. I repeat:
You cannot disconnect the state when the state is the one who has actual custody. Even if the child is housed at a Catholic agency or religious group home, the state is still the one who has actual custody. Even if the Catholic agency wants to pay for most of the child's care themselves, that is fine, but that doesn't give them actual custody. This is why it is the state that is held liable if something goes wrong and can be sued.
The only way around this that I can see is if the agency wanted to act as foster parents and not a placement agency or group home, went through the court system and was awarded guardianship custody, becoming foster parents for real instead of a group home or agency helping out the state. The process usually takes several months, sometimes up to a year. If the state and judge agree to issue custody to the Catholic service, then to adopt out the Catholic service would have to go to court again and say they want to relinquish custody of the child and transfer it to another parent or home. This would be complicated, costly, time consuming, and more stressful for the child. This would also very much limit how many children they could take in - more than 3/4 different. The agencies don't do this because it doesn't make sense - it benefits no one, certainly not the child, or them, or prospective adopters, or the state. No one.
The bottom line is that it is connected to the State and State Law, this is nothing new, but it wasn't an issue before now because at the time State Law agreed with the Catholic services about marriage. Now that this law has changed, either the Catholic service needs to stop fostering children or it needs to agree to abide by state law.