SPRINGFIELD, Ill. – As a state senator, Democrat Barack Obama awarded $75,000 in government grants to a Chicago social service organization led by a rabbi who is also his wife's cousin, records show.

In 1999, Obama arranged for $50,000 for adult literacy and counseling services offered on Chicago's South Side by a group called Blue Gargoyle. A $25,000 grant for the group's youth services followed the next year.

The group's executive director when the grants were awarded was Capers Funnye, a South Side rabbi and Michelle Obama's first cousin once removed.

Funnye (pronounced fun-NAY) said Monday there was nothing improper about the way Blue Gargoyle obtained the grants. Obama did not encourage him to apply for the money, he said, and Funnye denied using family connections to pressure Obama to approve the application.

Obama's presidential campaign said the grants supported valuable services.

“State Sen. Obama joined other legislators in securing funding for a well-established social services agency in his district that provided job training, employment counseling, and alternative education programs to approximately 1,200 Chicago residents each year,” campaign spokesman Ben LaBolt said.

Funnye noted that Blue Gargoyle got similar grants from another state legislator who had no family ties to the group.

“There was nothing funny, nothing below board,” Funnye said. “Everything was done according to whatever guidelines the state of Illinois had in place.”

But guidelines were practically nonexistent.

At the time, Illinois legislators were handing out hundreds of millions of dollars in grants. The money was part of a deal that legislative leaders cut with the governor to approve a major public-works program.

Each legislator could award money to favored groups and projects with basically no oversight. The grants were known as “member initiatives” and were similar to the congressional “earmarks” often criticized in Obama's presidential campaign against Republican John McCain.

Obama awarded about $6 million for everything from literacy programs and park improvements to drill team uniforms and jazz appreciation events.

Founded in 1968, Blue Gargoyle provides job training and placement, tutoring, counseling and an alternative high school for dropouts. It's name refers to gargoyles on buildings at the University of Chicago, where the founders started their charitable work, Funnye said.

Funnye said he was executive director from late 1997 until summer 2002. Obama would have been familiar with the organization's work even before his wife's cousin took over, he added.