In the case of Hunt v. McNair, Governor of South Carolina et al., 1972, the US Supreme Court ruled on a matter concerning the separation of church and state. The Baptist College at Charleston sought to improve its facilities using revenue bonds issued by South Carolina's Educational Facilities Authority under an Act that allowed such assistance for higher education institutions including those with religious affiliations. Daniel Hunt, a taxpayer in South Carolina, challenged this action arguing it violated the First Amendment’s Establishment Clause which prohibits government support for religion-related activities. However, the court held in a 5-4 decision that there was no violation as long as public funds were not directly given to religiously affiliated schools or used for religious purposes within them; instead they could be used only for secular aspects like buildings or infrastructure improvements. Furthermore, these benefits were available to all colleges regardless of their affiliation -religious or otherwise-, thus maintaining neutrality towards religion rather than promoting one over another.

In the dissenting opinion for Hunt v. McNair, Justice William O. Douglas argued that the majority's decision violated the Establishment Clause of the First Amendment by allowing public funding to support religious institutions indirectly. He contended that even though funds were not directly given to a religious institution, they still benefited from it through reduced interest rates on bonds issued by South Carolina Educational Facilities Authority under its revenue bond act. This financial benefit was seen as an indirect subsidy and thus a violation of church-state separation principles in his view. Furthermore, he asserted that this case differed significantly from previous cases where aid was provided for secular purposes because here, there was no way to separate secular and sectarian activities within these educational facilities funded by state-issued bonds.