The story
From faith + based. The political sense emerged from the 1970s to the 1980s. The term "faith-based organization" dates from 1971.http://books.google.com/books?id=yXLwAAAAMAAJ&q=%22faith-based+organizations%22&dq=%22faith-based+organizations%22&hl=en&ei=zaFrTPbWLcuMOOKMja0B&sa=X&oi=book_result&ct=result&resnum=3&ved=0CDMQ6AEwAg
Etymology from Wiktionary, CC BY-SA 4.0.