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Despite its status as a public university, the university had a close relationship with Christianity for much of its first 100 years. Students had to attend daily chapel or Sunday church service, and the distribution of Bibles to graduating seniors was a commencement tradition until the mid-1970s. In 1859 the Young Men's Christian Association (YMCA) opened a chapter on campus and students held their own religious services and Bible study groups. The YMCA Building opened in 1907, funded by private donations. The Young Women's Christian Association arrived in 1935 and then merged with the YMCA in 1963 to form what is now known as the Campus Y. Today more than forty student organizations have a faith or religious affiliation, which reflects the variety of religious traditions among the student body.

Religion has also been the focus of controversy in university history. In the early decades President Joseph Caldwell and later President David Lowry Swain had to refute religious leaders who argued that the state university was a threat to the growth of church-affiliated schools. Other critics claimed at various times that the campus was dominated by Presbyterians, or Episcopalians, although the facts never supported this charge.

UNC had a small number of Jewish students and even faculty members before the twentieth century. That number began to grow in the 1920s. UNC never imposed a quota for Jewish students at the undergraduate level, as many American colleges and universities did around this time. In 1933, however, Isaac Manning, dean of the medical school, denied admission to an applicant because he was Jewish. Manning maintained a quota because, he claimed, it was difficult to place Jewish students in further study at other schools. Morris Krasny, the applicant, appealed to UNC president Frank Porter Graham, and Graham ordered the medical school to accept him. Manning resigned rather than change his decision.

In 2002 the book selection committee for the annual Summer Reading Program for new students chose Approaching the Qur'an: The Early Revelations, by Michael Sells. Committee members saw a need for Americans to better understand Islam after the attacks of September 11, 2001. After criticism from conservative journalists about the selection, the Family Policy Network (FPN) filed suit against the university (Yacovelli v. Moeser) on behalf of several students. FPN claimed that the university had violated the Establishment Clause of the First Amendment, but the network lost in court and on appeal. Meanwhile, for students who did not wish to take part in discussions, the university offered the option of writing a paper.

The university has had a Department of Religious Studies since 1946, which has bachelor's, master's, and doctoral degree programs. Faculty teach and conduct research in historical and contemporary topics across an array of religious traditions, including Christianity, Judaism, Islam, Buddhism, and Hinduism.

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