That particular LifeSiteNews article points out that Pope Benedict XVI boldly tried to change that situation, and have those Catholic groups separate from the non-Catholic and governmental organizations, which insisted on providing support for those sinful activities. Like you said, it can be a good thing to lose government grants and support for projects, if those grants and that support come loaded with sin.
While God can certainly bring good out of evil, for us humans, the ends do not justify the means.
Good post.