61716 Federal Register / Vol. 69, No. 202 / Wednesday, October 20, 2004 / Rules and Regulations 

AGENCY FOR INTERNATIONAL 

DEVELOPMENT 

22 CFR Parts 202, 205, 211, and 226 

RIN 0412–AA52 

Participation by Religious 

Organizations in USAID Programs

AGENCY: Agency for International 

Development (USAID).

ACTION: Final rule.

SUMMARY: This final rule implements 

Executive Branch policy that, within the 

framework of constitutional guidelines, 

religious (or ‘‘faith-based’’) 

organizations should be able to compete 

on an equal footing with other 

organizations for USAID funding. This 

final rule revises USAID regulations 

pertaining to grants, cooperative 

agreements and contracts awarded for 

the purpose of administering grant 

programs to ensure their compliance 

with this policy and to clarify that faithbased organizations are eligible to 

participate in programs on the same 

basis as any other organization, with 

respect to programs for which such 

other organizations are eligible.

EFFECTIVE DATE: October 19, 2004.

FOR FURTHER INFORMATION CONTACT:

Linda Shovlain, Acting Director, Center 

for Faith-Based and Community 

Initiatives, USAID, Rm. 3.9.031, 1300 

Pennsylvania Ave., NW., Washington, 

DC 20523; telephone: (202) 712–4080 

(this is not a toll-free number).

SUPPLEMENTARY INFORMATION: On June 7, 

2004, the Agency for International 

Development published in the Federal 

Register (69 FR 31773) notice of a 

proposed rule to implement, in part, 

Executive Order 13280, published in the 

Federal Register on December 16, 2002 

(67 FR 77145), and Executive Order 

13279, published in the Federal 

Register on December 16, 2002 (67 FR 

77141). As more fully explained below, 

these orders, among other things, 

directed the Agency for International 

Development to end discriminatory 

treatment of religious or ‘‘faith-based’’ 

organizations in the administration of 

Agency grants and programs. The 

Agency provided a 60-day comment 

period on the proposed rule, which 

ended on August 6, 2004. The Agency 

also offered the public the opportunity 

to submit comments by surface mail, email or fax. 

I. Background 

Religious (or ‘‘faith-based’’) 

organizations make an important 

contribution to the delivery of 

humanitarian and economic assistance 

in much of the world. Faith-based 

organizations acting alone or in 

partnership with local and national 

governments, community-based 

organizations, institutions of higher 

education, and other private 

organizations do much good work to 

meet the pressing needs of countries 

and their citizens, consistent with the 

objectives of the U.S. foreign assistance 

program. 

Faith-based non-profit organizations 

have been implementing humanitarian 

and development activities for USAID 

for decades. Nevertheless, this final rule 

seeks to further facilitate the 

contribution of faith-based and 

community organizations to increase the 

reach and effectiveness of its programs. 

We believe this rule will strengthen 

USAID’s overall efforts, given priority in 

the national security strategy of the 

United States, to respond to the 

humanitarian and economic 

development needs of countries worldwide. 

President Bush has directed Federal 

agencies, including USAID, to take steps 

to ensure that Federal policy and 

programs are fully open to faith-based 

and community groups in a manner that 

is consistent with the Constitution. The 

Administration believes that such 

groups possess an under-appreciated 

ability to meet the needs of 

disadvantaged people overseas 

struggling to make a better life, recover 

from a disaster or live in a free and 

democratic country. The Administration 

believes that there should be an equal 

opportunity for all organizations—both 

religious and nonreligious—to 

participate as partners in Federal 

programs. 

As part of these efforts, President 

Bush issued Executive Order 13198 on 

January 29, 2001. The Order, which was 

published in the Federal Register on 

January 31, 2001 (66 FR 8499), created 

Centers for Faith-Based and Community 

Initiatives in five Cabinet departments—

Housing and Urban Development, 

Health and Human Services, Education, 

Labor, and Justice. The Executive Order 

charged the Centers to identify and 

eliminate regulatory, contracting, and 

other programmatic obstacles to the 

participation of faith-based and 

community organizations in the 

provision of social services by their 

Departments. On December 12, 2002, 

President Bush issued Executive Order 

13280. That Order, published in the 

Federal Register on December 16, 2002 

(67 FR 77145), created Centers in two 

additional agencies—the United States 

Agency for International Development 

and the Department of Agriculture—and 

charged those Centers with duties 

similar to those set forth in Executive 

Order 13198. On December 12, 2002, 

President Bush also issued Executive 

Order 13279, published in the Federal 

Register on December 16, 2002 (67 FR 

77141). That Executive Order charges 

Executive Branch agencies to ensure 

equal protection of laws for faith-based 

and community groups that apply for 

funds to meet and administer social 

service programs domestically and 

abroad. President Bush called for an end 

to discrimination against faith-based 

organizations. He further directed that 

faith-based organizations be allowed to 

retain their religious autonomy over, 

among other things, their internal 

governance and composition of boards 

and over their display of religious art, 

icons, scriptures, or other religious 

symbols when participating in 

government-funded programs. President 

Bush directed each Executive Branch 

agency, including USAID, to implement 

these policies, in a manner consistent 

with the First Amendment to the United 

States Constitution. This rule fulfills in 

part USAID’s responsibilities under 

these Executive Orders. The rule is 

similar to rules adopted by other 

Executive Branch agencies charged with 

implementing the Faith-Based and 

Community Initiative Executive Orders 

described above. 

II. This Rule

A. Purpose of Rule 

Consistent with the President’s 

Initiative, this rule revises USAID’s 

regulations to ensure that there are no 

unwarranted barriers to the equal 

participation of faith-based 

organizations in USAID’s programs. The 

objective of the rule is to ensure that 

USAID’s programs are open to all 

qualified organizations, regardless of 

their religious character, and to 

establish clearly the proper uses to 

which funds may be put and the 

conditions for receipt of funding. In 

addition, this rule is designed to ensure 

that the implementation of USAID’s 

programs is conducted in a manner 

consistent with the requirements of the 

Constitution. 

B. USAID Regulations Amended by Rule 

This rule revises in its entirety 22 CFR 

part 205, Payments to and on Behalf of 

Participants in Nonmilitary Economic 

Development Training Programs. The 

new title is ‘‘Participation by Religious 

Organizations in USAID Programs.’’ 

This rule also amends the following 

USAID regulations: 

1. 22 CFR part 202, Overseas 

Shipment of Supplies by Voluntary 

Non-Profit Relief Agencies. 

Federal Register / Vol. 69, No. 202 / Wednesday, October 20, 2004 / Rules and Regulations 61717

1As used in this rule, the terms ‘‘direct USAID 

assistance’’ or ‘‘direct financial assistance from 

USAID’’ refers to direct funding within the meaning 

of the Establishment Clause of the First Amendment 

as it has been interpreted to apply in the domestic 

context. For example, direct USAID assistance may 

mean that the government or an intermediate 

organization with similar duties as a governmental 

entity under a particular USAID program selects an 

organization and enters a grant relationship with 

the organization for provision of needed services. In 

contrast, many indirect funding scenarios place the 

choice of service provider in the hands of a 

beneficiary, and then pay for the cost of that service 

through a voucher, certificate, or other similar 

means of payment.

2. 22 CFR part 211, Transfer of 

Commodities for Food Use in Disaster 

Relief, Economic Development, and 

Other Assistance. 

3. 22 CFR part 226, Administration of 

Assistance Awards to U.S. NonGovernment Organizations. 

C. Regulatory Amendments to Title 22 

The revised part 205 applies to all 

Federal financial assistance (including 

grants, cooperative agreements and 

contracts that administer grant 

programs) awarded by USAID. Award 

documentation for such Federal 

financial assistance will include 

standard clauses that incorporate the 

requirements of part 205, and USAID 

internal directives will highlight, 

explain, and incorporate part 205 by 

reference. The rule also makes 

corresponding changes to existing parts 

202, 211 and 226 of 22 CFR that relate 

to aspects of Federal financial assistance 

programs administered by USAID. 

1. Participation by religious 

organizations in USAID programs. The 

rule makes clear that organizations are 

eligible to participate in USAID 

programs without regard to their 

religious character or affiliation, and 

that organizations may not be excluded 

from the competition for USAID 

assistance awards or sub-awards simply 

because they are religious. Specifically, 

religious organizations are eligible to 

compete for funding on the same basis, 

and under the same eligibility 

requirements, as all other nonprofit 

organizations. The Federal government 

and intermediary organizations 

administering USAID funds are 

prohibited from discriminating for or 

against organizations on the basis of 

religious character or affiliation. 

Nothing in this rule, however, precludes 

those administering USAID funded 

programs from accommodating religious 

organizations in a manner consistent 

with the Religion Clauses of the First 

Amendment to the Constitution, as they 

have been interpreted to apply in the 

domestic context. 

2. Inherently religious activities. The 

rule describes the requirements 

applicable to all recipient and subrecipient organizations regarding the 

use of USAID funds for inherently 

religious activities. Specifically, a 

participating organization may not use 

direct financial assistance 1 from USAID 

to support inherently religious 

activities, such as worship, religious 

instruction, or proselytization. If the 

organization engages in such activities, 

the activities must be offered separately, 

in time or location, from the programs 

or services funded with direct USAID 

assistance, and participation must be 

voluntary for the beneficiaries of the 

USAID-funded programs or services. 

This requirement ensures that direct 

financial assistance from USAID to 

religious organizations is not used to 

support inherently religious activities. 

Such assistance may not be used, for 

example, to conduct worship services, 

prayer meetings or any other activity 

that is inherently religious.

This restriction does not mean that an 

organization that receives USAID funds 

cannot engage in inherently religious 

activities. It simply means that such an 

organization cannot fund these activities 

with direct financial assistance from 

USAID. Thus, faith-based organizations 

that receive direct financial assistance 

from USAID must take steps to separate, 

in time or location, their inherently 

religious activities from the direct 

USAID-funded services that they offer. 

In addition, the rule clarifies that the 

legal restrictions applicable to religious 

programs within correctional facilities 

will sometimes be different from the 

legal restrictions that apply to other 

USAID programs, on account of the fact 

that the degree of government control 

over correctional environments 

sometimes warrants affirmative steps by 

prison officials, in the form of 

chaplaincies and similar programs, to 

ensure that prisoners have access to 

opportunities to exercise their religion 

in the prison. 

3. Independence of religious 

organizations. The rule clarifies that a 

religious organization that participates 

in USAID programs will retain its 

independence and may continue to 

carry out its mission, including the 

definition, practice, and expression of 

its religious beliefs, provided that it 

does not use direct financial assistance 

from USAID to support any inherently 

religious activities, such as worship, 

religious instruction, or proselytization. 

Among other things, a faith-based 

organization may use space in its 

facilities to provide USAID-funded 

services without removing religious art, 

icons, scriptures, or other religious 

symbols. In addition, a USAID-funded 

religious organization may retain 

religious terms in its organization’s 

name, select its board members and 

otherwise govern itself on a religious 

basis, and include religious references 

in its organization’s mission statements 

and other governing documents.

4. Use of USAID funds for acquisition, 

construction, or rehabilitation of 

structures. The rule clarifies that USAID 

funds may be used for the acquisition, 

construction, or rehabilitation of 

structures only to the extent that those 

structures are used for conducting 

eligible activities under the specific 

USAID program. Where a structure is 

used for both eligible and inherently 

religious activities, the rule clarifies that 

USAID funds may not exceed the cost 

of those portions of the acquisition, 

construction, or rehabilitation that are 

attributable to eligible activities. 

Additionally, USAID funds may not be 

used for acquisition, construction, or 

rehabilitation of sanctuaries, chapels, or 

any other room that a religious 

congregation that is a recipient or subrecipient of USAID assistance uses as its 

principal place of worship. 

5. Nondiscrimination in providing 

assistance. The rule clarifies that USAID 

and any organization that receives direct 

financial assistance from USAID shall 

not, in providing program assistance, 

discriminate for or against a program 

beneficiary or potential program 

beneficiary on the basis of religion or 

religious belief. Accordingly, religious 

organizations, in providing services 

directly funded in whole or in part by 

USAID, may not discriminate for or 

against current or prospective program 

beneficiaries on the basis of religion or 

religious belief. 

6. Assurance requirements. This rule 

directs the removal of those provisions 

of USAID’s agreements, covenants, 

memoranda of understanding, policies, 

or regulations that require only USAIDfunded religious organizations to 

provide assurances that they will not 

use monies or property for inherently 

religious activities. All organizations 

that participate in USAID programs, 

including religious ones, must carry out 

eligible activities in accordance with all 

program requirements and other 

applicable requirements governing the 

conduct of USAID-funded activities, 

including those prohibiting the use of 

direct financial assistance from USAID 

to engage in inherently religious 

activities. In addition, to the extent that 

provisions of USAID’s agreements, 

covenants, policies, or regulations 

disqualify religious organizations from 

participating in USAID’s programs 

because they are motivated or 

61718 Federal Register / Vol. 69, No. 202 / Wednesday, October 20, 2004 / Rules and Regulations 

2 It is possible that a less stringent standard would 

apply to foreign assistance. Cf. DK Memorial Fund

v. AID, 887 F.2d 275 (D.C. Cir. 1989). Given that 

this regulation satisfies the standards that apply in 

the domestic context, it follows a fortiori that it 

would also satisfy any less stringent standard.

influenced by religious faith to provide 

social services, or because of their 

religious character or affiliation, the rule 

removes that restriction, which is not 

required by governing law. 

7. National Security/Foreign Policy 

Waiver. The rule also permits the 

Secretary of State to waive all or any 

part of the rule, on a case-by-case basis, 

where the Secretary determines that 

such waiver is necessary to further the 

national security or foreign policy 

interests of the United States. 

III. Response to Comments Received on 

the Proposed Rule 

The Agency received comments from 

a small number of individuals and nongovernmental organizations, including 

national religious organizations, some of 

whom indicated a special interest in 

church/state issues. Most of the 

comments opposed allowing faith-based 

organizations to compete for 

government funds and/or believed 

greater restrictions should be placed on 

their receipt of funds. In contrast, one 

comment recommended that the 

restrictions on inherently religious 

activities be removed, in order to permit 

more effective assistance to religious 

organizations that provide social welfare 

services. 

The following is a summary of 

comments by issue, and the Agency’s 

responses to those comments. 

Participation of Religious Organizations 

in Government-Funded Programs 

Comment: Several commenters 

questioned whether the rule violates the 

Establishment Clause of the First 

Amendment to the U.S. Constitution. 

One commenter declared that the rule 

‘‘anticipates the implementation of a 

patently unconstitutional grant of 

government money to pervasively 

sectarian institutions.’’ Commenters 

were concerned with the potential 

promotion by government of particular 

religious groups or of religion in 

general; the likelihood that religious 

organizations would conform their 

religious practices and activities to the 

rule’s requirements; and the general 

prospect of government entanglement 

with religion. 

USAID Response: We disagree with 

the commenters. The regulations ensure 

that there is no direct USAID funding 

for inherently religious activities, 

consistent with current precedent 

involving domestic programs.2

Specifically, organizations receiving 

direct USAID funds must ensure that 

inherently religious activities are 

separate in time or location from 

USAID-funded services, and they must 

also ensure that participation in such 

religious activities is voluntary. 

Furthermore, in programs supported by 

direct USAID funds, organizations are 

prohibited from discriminating for or 

against a program beneficiary on the 

basis of religion or religious belief.

In addition, the Supreme Court’s 

‘‘pervasively sectarian’’ doctrine—

which held in the domestic context that 

there are certain religious institutions in 

which religion is so pervasive that no 

government aid may be provided to 

them, because their performance of even 

‘‘secular’’ tasks will be infused with 

religious purpose—no longer enjoys the 

support of a majority of the Court. Four 

Justices expressly abandoned it in 

Mitchell v. Helms, 530 U.S. 793, 825–

829 (2000) (plurality opinion), and 

Justice O’Connor’s opinion in that case 

set forth reasoning that is inconsistent 

with its underlying premises, see id. at 

857–858 (O’Connor, J., concurring in 

judgment, joined by Breyer, J.) 

(requiring proof of ‘‘actual diversion of 

public support to religious uses’’). Thus, 

six members of the Court have rejected 

the view that aid provided to religious 

institutions will invariably advance the 

institutions’ religious purposes, and that 

view is the foundation of the 

‘‘pervasively sectarian’’ doctrine. We 

therefore believe that USAID may fund 

all service providers, without regard to 

religion and free of criteria that require 

the provider to abandon its religious 

expression or character, in accordance 

with this rule. 

The rule does not endorse religion in 

general or any particular religious view. 

In fact, the rule specifically prohibits 

discrimination ‘‘for or against an 

organization on the basis of the 

organization’s religious character or 

affiliation.’’ (emphasis added). Under 

the rule, all organizations, whether 

religious or non-religious, are eligible to 

apply and compete for USAID funding 

according to the same criteria. And it 

again merits emphasis that the rule 

forbids the use of direct government 

assistance for inherently religious 

activities and states that any such 

activity must be voluntary and 

separated, in time or location, from 

activities directly funded by USAID. 

The limitation on the use of the direct 

funds is not meant to put an 

organization in the position of having to 

deny or alter its core religious 

perspectives on social issues or reject 

government funds for its activities that 

are otherwise consistent with the 

purposes of USAID programs. We 

recognize that, while the government 

regards services like feeding the hungry 

and housing the poor as social services 

or secular work, some organizations 

may regard these same activities as acts 

of mercy, spiritual service, fulfillment of 

religious duty, good works, or the like. 

Nevertheless, as a general matter, an 

activity such as providing food for the 

hungry or shelter for the homeless 

would constitute an appropriate use of 

funds, as long as any inherently 

religious activities offered by the 

provider are separate in time or 

location, privately funded, and 

voluntary. 

As to whether religious organizations 

will conform to the requirements of the 

regulations, as mentioned above, the 

Supreme Court has rejected the 

presumption that religious organizations 

will inevitably divert government funds 

and use them for their own religious 

purposes. USAID rejects the view that 

organizations with religious 

commitments cannot be trusted to fulfill 

their written promises to adhere to grant 

requirements.

Similarly, we do not agree that the 

rule poses a danger of excessive 

government entanglement with religion. 

The rule expressly provides that 

religious organization grantees will 

retain their independence, including 

with respect to religious symbols, 

selection of board members, and 

internal governance. Religious 

organizations receiving USAID funding 

will be subject to the same program 

eligibility and ex-post funding 

restrictions that apply to non-religious 

organization grantees. USAID will apply 

the same cost-accounting principles to 

all organizations. Because inherently 

religious activities are non-USAID 

activities, USAID need not distinguish 

between program participants’ religious 

and nonreligious non-USAID activities; 

the same mechanism by which USAID 

polices the line between eligible and 

ineligible activities will serve to exclude 

inherently religious activities from 

funding. The amount of oversight of 

religious organizations necessary to 

accomplish these purposes is no greater 

than that involved in other publiclyfunded programs that the Supreme 

Court has sustained. 

Some organizations may be unable or 

unwilling to separate their inherently 

religious activities in time or location, 

as required. Those organizations would 

not qualify for direct funding by the 

Agency, but might be eligible for 

indirect funding. 

Comment: One commenter advocated 

less stringent eligibility requirements for 

religious organizations’ participation in 

Federal Register / Vol. 69, No. 202 / Wednesday, October 20, 2004 / Rules and Regulations 61719

USAID programs. This commenter 

argued that, because many religious 

organizations ‘‘integrated’’ social and 

health-related services with spiritual 

activities, the prohibition on direct 

funding of ‘‘inherently religious 

activities’’ should be removed, waived 

or at least narrowed. The commenter 

advanced numerous arguments for this 

view, including the overall magnitude 

and urgency of the global HIV/AIDS 

crisis; the reported effectiveness of 

combining humanitarian and spiritual 

services; the lack of formal church-state 

separation requirements in many host 

countries; the adequacy of ‘‘coercion 

safeguards’’ in place of a flat prohibition 

on inherently religious activities; and 

the impracticalities of separating 

humanitarian and spiritual activities 

and funds of religious organizations. 

USAID Response: The Agency agrees 

that religious organizations may 

contribute significantly to efforts to 

address global challenges such as HIV/

AIDS. In addition, we recognize that 

some religious organizations have 

unique strengths and skills in providing 

comprehensive social and welfare 

services. For those and other reasons, 

this rule makes clear that religious 

organizations are eligible for Agency 

funding according the same criteria as 

non-religious organizations. The rule 

prohibits direct funding of ‘‘inherently 

religious activities.’’ At the same time, 

the rule makes clear that a religious 

organization receiving USAID funds 

retains its independence, including the 

definition, practice, and expression of 

its religious beliefs. The Agency 

believes that the rule sets up 

appropriate parameters for the affected 

programs in light of current precedent’s 

interpretation of the constitutional 

provisions that govern expenditures of 

U.S. funds, particularly in light of the 

judicial precedents applicable in the 

domestic context. 

USAID-Funded Structures 

Comment: One commenter believed 

that nothing in the rule would prevent 

a faith-based organization from 

converting a USAID-funded portion of a 

structure for a prohibited religious use 

at some future date. Other commenters 

suggested that the rule require that the 

USAID-funded portions of a structure be 

used for secular purposes for the life of 

the building. It was also suggested that 

USAID establish procedures for 

recapturing the Federal assistance if the 

USAID-funded portion of the structure 

is ever used for a religious purpose. 

Finally, one commenter objected to 

phrasing in the proposed rule that 

would allow USAID and religious 

organizations to split the cost of 

acquiring, constructing, or rehabilitating 

a facility, asserting that the line between 

religious and nonreligious activities is 

not clear and that this would result in 

unseemly negotiations about what 

constituted religious activity and 

intrusive USAID monitoring of religious 

organizations’ activities within dual use 

facilities. 

USAID Response: In a neutral 

program in which the government 

directly funds the capital improvements 

of institutions that administer Federal 

social welfare programs, even in the 

domestic context the government need 

only put in place safeguards to ensure 

that public money is not used to finance 

inherently religious activities. The rule 

satisfies this standard by prohibiting the 

use of USAID funds for the acquisition, 

construction, or rehabilitation of 

structures to the extent that those 

structures are used for inherently 

religious activities. There is no need for 

any requirement prohibiting use of nonUSAID-funded portions of buildings for 

inherently religious activities. 

With respect to concerns about the 

funding of capital improvements for 

religious structures that are later 

converted to non-USAID uses, the rule 

states that the disposition of USAIDimproved property after the term of 

grants to religious organizations, and 

changes in the use of property improved 

for use by religious organizations, are 

subject to government-wide regulations 

governing real property disposition. The 

Agency has promulgated regulations 

(see 22 CFR Part 226) that address the 

terms under which such grantees must 

use the property for eligible activities, 

and the terms under which Federally 

funded improvements must be ‘‘bought 

back’’ if such grantees decide to 

discontinue their involvement in the 

program. 

We do not agree with comments that 

preventing the use of direct USAID 

capital-improvement funds for 

inherently religious activities would 

necessarily fail or, in the process, 

excessively entangle the government in 

the affairs of recipients or sub-recipients 

that are religious organizations. In 

addition, some monitoring is necessary 

to ensure that direct USAID funding is 

not used to support inherently religious 

activities. However, we do agree that the 

phrasing of the proposed rule would 

benefit from further clarification. 

Therefore, the final rule clarifies this 

requirement by stating that USAID 

funds may not be used for acquisition, 

construction, or rehabilitation of 

sanctuaries, chapels, or any other rooms 

that a religious congregation that is a 

recipient or subrecipient of USAID 

assistance uses as its principal place of 

worship. 

Time or Location Restrictions 

Comment: A commenter suggested 

that the rule’s ‘‘time or location’’

provision be tightened to require that 

religious organizations separate 

religious and any secular, government 

funded activities by both time and 

location. In a similar vein, other 

comments suggested that the time or 

location requirement be made specific 

to provide better guidance for 

compliance. 

USAID Response: We decline to adopt 

either suggestion. As an initial matter, 

USAID does not believe that the 

requirement is ambiguous or 

necessitates additional regulation for 

proper adherence. Moreover, USAID 

believes that separation in both time 

and location is legally unnecessary and 

would impose an unnecessarily harsh 

burden on small religious organizations, 

which may have access to only one 

location that is suitable for the provision 

of the USAID-funded service(s). The 

rule is clear that, when an organization 

receives direct government assistance, 

any inherently religious activities that 

the organization offers must simply be 

offered separately—in time or place—

from the activities supported by direct 

USAID funds. For example, an 

organization may receive direct USAID 

funding to distribute food in a needy 

community. This same organization 

may also host a privately-funded prayer 

meeting that it invites participants to 

attend. This privately-funded prayer 

meeting would need to be held either in 

a separate location or at a separate time 

from the food distribution. And it 

should be made clear that beneficiaries 

of the food distribution program should 

understand that whether they join the 

prayer meeting is up to them, and that 

their decision will have no bearing on 

whether they receive services.

Display of Religious Art, Icons and 

Images 

Comment: One commenter stated that 

the rule fails to consider that the display 

of religious art, icons and images alone 

may create a ‘‘pervasively sectarian 

atmosphere’’ which could deter 

intended program beneficiaries of a 

different religion. Similarly, another 

commenter was concerned with 

possible tension, stigmatization, or 

abuse if religious organization grantees 

were permitted to use their own or dualuse facilities to provide social services. 

USAID Response: USAID disagrees 

with these comments. As discussed 

above, even in the domestic context the 

Supreme Court has abandoned the 

61720 Federal Register / Vol. 69, No. 202 / Wednesday, October 20, 2004 / Rules and Regulations 

‘‘pervasively sectarian’’ doctrine. 

Additionally, with respect to the display 

of religious art, icons and images, a 

number of Federal statutes affirm the 

principle embodied in this rule. (See, 

e.g., 42 U.S.C. 290kk–1(d)(2)(B). For no 

other program participants do USAID 

regulations prescribe the types of 

artwork, statues, or icons that may be 

placed within or without the structures 

or rooms in which USAID-funded 

services are provided. A prohibition on 

the use of religious icons would make 

it more difficult for many faith-based 

organizations to participate in the 

program than other organizations by 

forcing them to procure additional 

space. It would thus be an inappropriate 

and excessive restriction, typical of the 

types of regulatory barriers that this 

final rule seeks to eliminate. Consistent 

with constitutional guidelines, a faithbased organization that participates in 

USAID programs will retain its 

independence and may continue to 

carry out its mission, provided that it 

does not use direct USAID funds to 

support any inherently religious 

activities. Accordingly, this final rule 

continues to provide that faith-based 

organizations may use space in their 

facilities to provide USAID-funded 

services, without removing religious art, 

icons, scriptures, or other religious 

symbols. 

As to the concern about religious 

stigma, the rule contains a number of 

safeguards for the rights of beneficiaries. 

It prohibits use of direct government 

funding for inherently religious 

activities and provides that any 

participation by beneficiaries of such 

programs in privately funded religious 

activities must be voluntary. In 

addition, the rule makes clear that a 

provider receiving direct USAID funds 

cannot discriminate against 

beneficiaries on the basis of religion or 

religious belief. In light of these 

straightforward provisions, we do not 

believe that any additional regulatory 

changes are required. 

Nondiscrimination in Providing 

Assistance 

Comment: One comment concerned 

the rule’s requirement that program 

beneficiaries not be denied services 

based on religion or religious belief. The 

commenter noted that this restriction 

could still permit passive compulsion, 

such as being required to hear 

proselytizing messages, or observe 

religious instruction or worship. The 

commenter recommended that Section 

205.1(e) provide specifically that 

services may not be denied to a 

beneficiary based on a ‘‘refusal to 

participate in religious practice[s],’’ and 

another commenter requested 

clarification that a provider could not 

discriminate on the basis of a lack of 

religious belief. Additionally, a 

commenter proposed that the rule 

require participating religious 

organizations to provide notice to 

program beneficiaries that their receipt 

of social services is not conditioned 

upon participation in the provider’s 

inherently religious activities. 

USAID Response: We believe that the 

provision prohibiting faith-based 

organizations from requiring program 

beneficiaries to participate in religious 

activities suffices as written. In 

addition, the prohibition on 

discrimination against beneficiaries ‘‘on 

the basis of religion or religious belief’’

is explicit enough to include 

beneficiaries who hold no religious 

belief. These provisions are 

straightforward and require no further 

elaboration. 

We also decline to require that 

religious organizations provide a notice 

to a beneficiary or potential beneficiary 

that participation in religious activities 

would be entirely on a voluntary basis. 

Grantees are encouraged to take steps to 

ensure that clients and prospective 

clients have a clear understanding of the 

services offered by their organization 

and the strictly voluntary nature of any 

inherently religious activities, and thus 

the individual’s right not to participate 

in any such activities, while still 

accepting or receiving services. The 

requirement that participation be 

voluntary, however, is sufficient to 

address concerns about the religious 

freedom of program beneficiaries. 

Comment: The rule does not prevent 

government funds flowing to ‘‘antiSemitic, racist or bigoted 

organizations.’’

USAID Response: USAID disagrees. 

While it is not the topic of this rule, 

Federal law prohibits persons from 

being excluded from participation in 

USAID services or subjected to 

discrimination based on race, color, 

national origin, sex, age, or disability, 

and this final rule does not in any way 

alter those existing prohibitions. 

Employment Discrimination 

Comment: Another comment argued 

that the rule’s preservation of the 

religious organizations exemption 

contained in Title VII would permit 

government-funded employment 

discrimination based on religion. 

USAID Response: We do not agree 

with these objections to the rule’s 

recognition that a religious organization 

does not forfeit its Title VII exemption 

when administering USAID-funded 

services. The rule is intended to 

eliminate administrative barriers to 

religious organizations that would 

otherwise be eligible for USAID program 

funding. Applicable Federal statutory 

nondiscrimination requirements are not 

altered by this rule. 

The Equal Employment Opportunity 

Act of 1972 expanded the exemption for 

religious organizations found in Title 

VII of the Civil Rights Act of 1964 to 

cover all positions offered by a faithbased employer (as opposed simply to 

positions directly related to their 

ministries). Congress establishes the 

conditions under which religious 

organizations are exempt from Title VII; 

this rule simply recognizes that these 

requirements, including their 

limitations, are fully applicable to 

Federally funded organizations unless 

Congress says otherwise. In 1987, the 

Supreme Court addressed and 

unanimously upheld the 

constitutionality of Title VII’s protection 

for religious organizations. See Corp. of 

the Presiding Bishop of the Church of 

Jesus Christ of Latter Day Saints v. 

Amos, 483 U.S. 327 (1987). 

As to the suggestion that the 

Constitution restricts the government 

from providing funding for social 

services to religious organizations that 

consider faith in hiring, that view does 

not accurately represent the law. The 

employment decisions of organizations 

that receive extensive public funding 

are not attributable to the state, see 

Rendell-Baker v. Kohn, 457 U.S. 830 

(1982), and it has been settled for more 

than 100 years that the Establishment 

Clause does not bar the provision of 

direct Federal grants to organizations 

that are controlled and operated 

exclusively by members of a single faith. 

See Bradfield v. Roberts, 175 U.S. 291 

(1899); see also Bowen v. Kendrick, 487 

U.S. 589, 609 (1988). 

Also, we would note that section 

702(a) of the Civil Rights Act of 1964 is 

permissive. It allows religious staffing, 

but does not require it. And, religious 

organizations are subject to Federal civil 

rights laws that prohibit employment 

discrimination on the basis of race, 

color, and national origin. 

Finally, Title VII recognizes that for a 

faith-based organization to define or 

carry out its mission, it is important that 

it be able to choose its employees based 

on its vision and beliefs. We note that 

allowing religious organizations to 

consider faith in hiring when they 

receive Federal government funds is no 

different than allowing Federally 

funded environmental organizations to 

hire those who share its views on 

protecting the environment—both 

groups are allowed to consider ideology 

and mission, which improves their 

Federal Register / Vol. 69, No. 202 / Wednesday, October 20, 2004 / Rules and Regulations 61721

effectiveness and preserves their 

independence and integrity. 

For the foregoing reasons, the Agency 

declines to amend the final rule to 

require religious organizations to forfeit 

their Section 702 exemption from 

liability under Title VII. 

Vouchers 

Comment: One commenter stated that 

the rule contemplated the 

‘‘voucherization’’ of USAID-funded 

social services. In the view of this 

commenter, voucher programs under 

the rule would go beyond what is 

permitted under the Supreme Court’s 

decision in Zelman v. Simmons-Harris, 

536 U.S. 639 (2002), since many USAIDfunded beneficiaries may not have 

access to comparable secular 

alternatives. As a result, said this 

commenter, beneficiaries might feel 

compelled to accept services from 

pervasively sectarian institutions and to 

submit to worship, religious education 

or proselytizing. 

USAID Response: The Agency 

respectfully declines to adopt any 

changes to the regulation. USAID 

currently does not operate any voucherstyle programs, so any further 

regulations in this regard would be 

purely hypothetical. In addition, any 

voucher-style program that might be 

offered by the Agency would have to 

comply with Federal law. 

Segregation of Program Funds 

Comment: One comment voiced 

concern that the rule did not ensure the 

creation of proper ‘‘firewalls’’ between 

government-funded services and core 

religious activities of a grantee recipient. 

The commenter suggested that the rule 

explicitly require that religious 

organization grantees establish a 

separate corporate structure to receive 

and segregate government funds and the 

social services supported thereby. 

USAID Response: The Agency 

disagrees with this suggestion. An 

organization is, of course, free to create 

a separate account for its USAID funds. 

However, it would be unfair to require 

religious organizations alone to comply 

with these additional burdens. Further, 

USAID finds no basis for requiring 

greater oversight and monitoring of 

faith-based organizations than of other 

program participants simply because 

they are faith-based organizations. All 

program participants must be monitored 

for compliance with program 

requirements, and no program 

participant may use USAID funds for 

any ineligible activity, whether that 

activity is an inherently religious 

activity or a nonreligious activity that is 

outside the scope of the program at 

issue. Many secular organizations 

participating in USAID programs also 

receive funding from several sources 

(private or governmental) to carry out 

activities that are ineligible for funding 

under USAID programs. In many cases, 

the non-eligible activities are secular 

activities but not activities that are 

eligible for funding under USAID 

programs. All program participants 

receiving funding from various sources 

and carrying out a wide range of 

activities must ensure through proper 

accounting principles that each set of 

funds is applied only to the activities for 

which the funding was provided. 

Applicable policies, guidelines, and 

regulations prescribe the cost 

accounting procedures that are to be 

followed by all recipients in using 

USAID funds. This system of 

monitoring is more than sufficient to 

address the commenters’ concerns. 

Monitoring 

Comment: The commenters 

questioned how USAID would enforce 

the separation of government funds 

from religious-use funds and what 

measures would be taken to prevent and 

remedy violations. 

USAID Response: USAID has not 

revised the regulation in response to 

these comments because existing 

Agency mechanisms and procedures are 

sufficient to address these concerns. 

USAID has a responsibility to monitor 

all program participants to ensure that 

USAID funds are used in accordance 

with its program and any other 

applicable U.S. government 

requirements. The risks of inappropriate 

use of Agency funds or non-compliance 

with Agency program requirements 

exist with all program participants, not 

only religious organizations. All USAID 

program participants must carefully 

manage their various sources of funds, 

ensure that USAID funds are used only 

for eligible program activities, and abide 

by OMB or other cost accounting 

methods that may be specified in 

individual program regulations. Failure 

of any organization to ensure that the 

USAID portion of their funds is not used 

for prohibited purposes will result in 

the imposition of sanctions or penalties 

on the organization, including 

termination of participation in USAID 

programs. Moreover, any inherently 

religious activities would not be funded 

directly by USAID, so the normal 

monitoring procedures would not 

require the Agency to distinguish 

between religious and nonreligious 

ineligible activities. Those procedures 

also involve the same processes for the 

scrutiny and oversight for all grantees. 

Finally, as mentioned above, 

consistent with Supreme Court 

precedent in the domestic context, the 

Agency believes that religious 

organizations are no less trustworthy 

than non-religious grantees in fulfilling 

their obligations under USAID grants 

and programs. In issuing this rule, 

USAID’s general approach is that faithbased organizations are not a category of 

applicants or program participants that 

require additional requirements or 

oversight in order to ensure compliance 

with program regulations. Rather, the 

Agency believes that faith-based 

organizations, like other recipients of 

USAID funds, fully understand the 

restrictions on the funding they receive, 

including the restriction that inherently 

religious activities cannot be undertaken 

with direct Federal funding and must 

remain separate from Federally funded 

activities. For the foregoing reasons, the 

Agency does not see the need for 

additional requirements or guidance in 

this area. 

Definition of Religious Organization 

Comment: The rule does not 

distinguish or define ‘‘religious 

organizations’’ and ‘‘faith-based 

organizations.’’

USAID Response: In the preamble, we 

used the terms ‘‘religious organization’’

and ‘‘faith-based organization’’

interchangeably. The rule itself refers 

only to ‘‘religious organizations.’’

Neither the U.S. Constitution nor the 

relevant Supreme Court precedents 

contain comprehensive definitions of 

‘‘religion’’ or ‘‘religious organization’’

that must be applied to this rule. Yet, an 

extensive body of judicial precedent 

provides practical guidance for 

understanding these terms. In addition, 

one of the objectives of this rule is to 

move away from unnecessary Federal 

inquiry into the religious nature, or 

absence of religious nature, of an 

applicant for USAID funds. With respect 

to any applicant for USAID funds, 

USAID’s focus should always be that (1) 

the applicant is an ‘‘eligible applicant’’, 

as that term is defined for that program; 

(2) the applicant meets any other 

participation or eligibility criteria that 

the program may require; and (3) the 

applicant commits to undertake only 

eligible activities with USAID funds and 

to abide by all program requirements 

that govern those funds. Regardless of 

how an organization labels itself, it will 

be treated the same under the rule. 

The Exemption for Prison Chaplains 

Comment: One commenter suggested 

a narrowing of the rule’s exemption for 

direct funding of inherently religious 

activities conducted by chaplains and 

61722 Federal Register / Vol. 69, No. 202 / Wednesday, October 20, 2004 / Rules and Regulations 

religious organizations providing 

assistance to chaplains in prisons, 

detention facilities or community 

correction centers. This comment 

voiced concern that the exemption 

would allow an otherwise improper 

blending of religious doctrine with 

secular counseling. 

USAID Response: We continue to 

believe the rule’s exemption is 

appropriate, given the unique nature 

and circumstances of a penal or 

correctional facility. This exception to 

the rule’s prohibition on direct funding 

of inherently religious activities 

contemplates services provided by 

prison clergy and individuals and 

organizations who work with them. 

Correctional institutions are heavily 

regulated, and extensive government 

control over the prison environment 

means that prison officials must 

sometimes take affirmative steps, in the 

form of chaplaincies and similar 

programs, to provide an opportunity for 

prisoners to practice their religious 

beliefs. Without such efforts, religious 

freedom might not exist for prisoners. 

Of course, religious activities must be 

voluntary for inmates. 

Miscellaneous 

Comment: One commenter expressed 

the view that the rule discriminates 

against foreign family planning nongovernmental organizations (NGOs) that 

use other funding sources to perform, 

promote or advocate abortions, since 

those NGOs are ineligible for U.S. 

government assistance. The commenter 

stated that the rule created ‘‘special 

class’’ status for faith-based 

organizations, relative to at least those 

NGOs because, while the rule only 

required religious organizations to 

separate proscribed religious activities 

from USAID funded programs and 

services, abortion advocacy NGOs were 

wholly ineligible to receive funds under 

the Mexico City Policy (66 FR 17303). 

The commenter recommended that the 

Mexico City Policy be rescinded. 

USAID Response: The rule seeks to 

level the playing field generally between 

religious organizations and nonreligious organization entities in respect 

of Agency programming and grant 

eligibility. The rule is not intended to 

alter or rescind other rules or 

regulations that may disqualify certain 

organizations—religious or nonreligious—for reasons other than their 

status as a religious organization. The 

Agency adheres to the Mexico City 

Policy regarding religious organizations 

and other entities that advocate or 

engage in abortion-related activities. 

IV. Findings and Certifications 

Paperwork Reduction Act of 1995 

No new information collection 

requirements are imposed by these 

regulations, nor are any existing 

requirements changed as a result of their 

promulgation. Therefore, the 

requirements of the Paperwork 

Reduction Act of 1995 (44 U.S.C. 

3507(d)), regarding reporting and record 

keeping, are not applicable. 

Executive Order 12866—Regulatory 

Planning and Review 

Executive Order 12866, Regulatory 

Planning and Review, requires that 

regulations be reviewed to ensure that 

they are consistent with the priorities 

and principles set forth in the Executive 

Order. The Agency has determined that 

this rule is consistent with these 

priorities and principles. The Office of 

Management and Budget (OMB) 

reviewed this rule under the Order and 

determined that this rule is a 

‘‘significant regulatory action’’ as 

defined in section 3(f) of the Order 

(although not an economically 

significant regulatory action under the 

Order) and, accordingly, has reviewed 

the rule. This rulemaking implements 

statutory authority and reflects our 

response to comments received on the 

proposed rule that we published on 

June 7, 2004 in the Federal Register (69 

FR 31773). 

Regulatory Flexibility Act 

The Regulatory Flexibility Act (5 

U.S.C. 605(b)) requires the Federal 

government to anticipate and reduce the 

impact of rules and paperwork 

requirements on small businesses and 

other small entities. In accordance with 

that Act, the USAID Administrator has 

reviewed and approved this rule, and in 

so doing certifies that this rule will not 

have a significant economic impact on 

a substantial number of small entities. 

Unfunded Mandates Reform Act 

Title II of the Unfunded Mandates 

Reform Act of 1995 (2 U.S.C. 1531–

1538) establishes requirements for 

Federal agencies to assess the effects of 

their regulatory actions on State, local, 

and tribal governments, and on the 

private sector. This rule does not 

impose any Federal mandates on any 

State, local, or tribal governments, or the 

private sector, within the meaning of the 

Unfunded Mandates Reform Act of 

1995.

Assessment of Federal Regulation and 

Policies on Families 

Section 654 of the Treasury and 

General Government Appropriations 

Act of 1999 requires Federal agencies to 

determine whether a proposed policy or 

regulation may affect family well-being. 

If the agency’s determination is 

affirmative, then the agency must 

prepare an impact assessment 

addressing seven criteria specified in 

the law. The Agency has determined 

that these regulations will not have an 

impact on family well-being as defined 

in the legislation. 

Executive Order 13132 

Executive Order 13132, Federalism, 

requires that Federal agencies consult 

with State and local government 

officials in the development of 

regulatory policies with federalism 

implications. The Agency has 

determined that this rule does not have 

federalism implications that require 

special consultations with State and 

local government officials. 

Intergovernmental Review 

This final rule affects direct grant 

programs that are subject to Executive 

Order 12372 and the regulations in 34 

CFR part 79. The objective of the 

Executive Order is to foster an 

intergovernmental partnership and to 

promote Federalism by relying on 

processes developed by State and local 

governments for coordination and 

review of proposed Federal financial 

assistance. 

The Agency has concluded that this 

rule will not create or affect any Federal 

financial assistance to States. However, 

to the extent this rule falls under the 

Order, we intend this document to 

provide early notification of the 

Agency’s specific plans and actions for 

the affected programs. 

Congressional Review 

This regulation is not a major rule as 

defined in 5 U.S.C. chapter 8. 

Catalog of Federal Domestic Assistance 

Numbers 

The Catalog of Federal Domestic 

Assistance program numbers for the 

programs affected by this rule are 

98.001, 98.002, 98.003, 98.004, 98.005, 

98.006, 98.007, 98.008, 98.009. 

Electronic Access to This Document 

You may view this document, as well 

as other Agency for International 

Development documents published in 

the Federal Register, in text or Adobe 

Portable Document Format (PDF) on the 

Internet. 

To use PDF you must have Adobe 

Acrobat Reader, [which is available free 

at this site]. If you have questions about 

using PDF, call the U.S. Government 

Printing Office (GPO), toll free, at 1–

Federal Register / Vol. 69, No. 202 / Wednesday, October 20, 2004 / Rules and Regulations 61723

888–293–6498; or in the Washington, 

DC area at (202) 512–1530.

Note: The official version of this document 

is the document published in the Federal 

Register. Free internet access to the official 

edition of the Federal Register and the Code 

of Federal Regulations is available on GPO 

Access at: http://www.gpoaccess.gov/nara/

index.html. (The Catalog of Federal domestic 

Assistance Number does not apply.)

List of Subjects 

22 CFR Part 202 

Foreign aid, Grant programs, 

Nonprofit organizations. 

22 CFR Part 205 

Foreign aid, Grant programs, 

Nonprofit organizations. 

22 CFR Part 211 

Agricultural commodities, Disaster 

assistance, Food assistance programs, 

Foreign aid, Grant programs, Nonprofit 

organizations, Reporting and 

recordkeeping requirements. 

22 CFR Part 226 

Accounting, Colleges and universities, 

Foreign aid, Grant programs, Hospitals, 

Nonprofit organizations, Reporting and 

recordkeeping requirements.

■ For the reasons stated above, Chapter 

II of title 22 of the Code of Federal 

Regulations is amended as follows:

PART 202—OVERSEAS SHIPMENT OF 

SUPPLIES BY VOLUNTARY NONPROFIT RELIEF AGENCIES

■ 1. The authority citation for part 202 is 

revised to read as follows:

Authority: 22 U.S.C. 2381(a).

■ 2. Add § 202.10 to read as follows:

§ 202.10 Participation by faith-based 

organizations.

The procedures established under this 

part shall be administered in 

compliance with the standards set forth 

in part 205, Participation by Religious 

Organizations in USAID Programs, of 

this chapter.

■ 3. Revise part 205 to read as follows:

PART 205—PARTICIPATION BY 

RELIGIOUS ORGANIZATIONS IN 

USAID PROGRAMS

Authority: 22 U.S.C. 2381(a).

§ 205.1 Grants and cooperative 

agreements. 

(a) Religious organizations are 

eligible, on the same basis as any other 

organization to participate in any 

USAID program for which they are 

otherwise eligible. In the selection of 

service providers, neither USAID nor 

entities that make and administer subawards of USAID funds shall 

discriminate for or against an 

organization on the basis of the 

organization’s religious character or 

affiliation. As used in this section, the 

term ‘‘program’’ refers to Federally 

funded USAID grants and cooperative 

agreements, including sub-grants and 

sub-agreements. The term also includes 

grants awarded under contracts that 

have been awarded by USAID for the 

purpose of administering grant 

programs. As used in this section, the 

term ‘‘grantee’’ includes a recipient of a 

grant or a signatory to a cooperative 

agreement, as well as sub-recipients of 

USAID assistance under grants, 

cooperative agreements and contracts. 

(b) Organizations that receive direct 

financial assistance from USAID under 

any USAID program may not engage in 

inherently religious activities, such as 

worship, religious instruction, or 

proselytization, as part of the programs 

or services directly funded with direct 

financial assistance from USAID. If an 

organization conducts such activities, 

the activities must be offered separately, 

in time or location, from the programs 

or services funded with direct financial 

assistance from USAID, and 

participation must be voluntary for 

beneficiaries of the programs or services 

funded with such assistance. These 

restrictions on inherently religious 

activities do not apply to programs 

where USAID funds are provided to 

chaplains to work with inmates in 

prisons, detention facilities, or 

community correction centers, or where 

USAID funds are provided to religious 

or other organizations for programs in 

prisons, detention facilities, or 

community correction centers, in which 

such organizations assist chaplains in 

carrying out their duties. 

(c) A religious organization that 

participates in USAID-funded programs 

or services will retain its independence 

and may continue to carry out its 

mission, including the definition, 

practice, and expression of its religious 

beliefs, provided that it does not use 

direct financial assistance from USAID 

to support any inherently religious 

activities, such as worship, religious 

instruction, or proselytization. Among 

other things, a religious organization 

that receives financial assistance from 

USAID may use space in its facilities, 

without removing religious art, icons, 

scriptures, or other religious symbols. In 

addition, a religious organization that 

receives financial assistance from 

USAID retains its authority over its 

internal governance, and it may retain 

religious terms in its organization’s 

name, select its board members on a 

religious basis, and include religious 

references in its organization’s mission 

statements and other governing 

documents. 

(d) USAID funds may not be used for 

the acquisition, construction, or 

rehabilitation of structures to the extent 

that those structures are used for 

inherently religious activities. USAID 

funds may be used for the acquisition, 

construction, or rehabilitation of 

structures only to the extent that those 

structures are used for conducting 

eligible activities under this part. Where 

a structure is used for both eligible and 

inherently religious activities, USAID 

funds may not exceed the cost of those 

portions of the acquisition, 

construction, or rehabilitation that are 

attributable to eligible activities in 

accordance with the cost accounting 

requirements applicable to USAID funds 

in this part. Sanctuaries, chapels, or 

other rooms that a USAID-funded 

religious congregation uses as its 

principal place of worship, however, are 

ineligible for USAID-funded 

improvements. Disposition of real 

property after the term of the grant, or 

any change in use of the property during 

the term of the grant, is subject to 

government-wide regulations governing 

real property disposition. (See 22 CFR 

part 226). 

(e) An organization that participates 

in programs funded by financial 

assistance from USAID shall not, in 

providing services, discriminate against 

a program beneficiary or potential 

program beneficiary on the basis of 

religion or religious belief.

(f) No grant document, contract, 

agreement, covenant, memorandum of 

understanding, policy, or regulation that 

is used by USAID shall require only 

religious organizations to provide 

assurances that they will not use monies 

or property for inherently religious 

activities. Any such restrictions shall 

apply equally to religious and secular 

organizations. All organizations that 

participate in USAID programs, 

including religious ones, must carry out 

eligible activities in accordance with all 

program requirements and other 

applicable requirements governing the 

conduct of USAID-funded activities, 

including those prohibiting the use of 

direct financial assistance from USAID 

to engage in inherently religious 

activities. No grant document, 

agreement, covenant, memorandum of 

understanding, policy, or regulation that 

is used by USAID shall disqualify 

religious organizations from 

participating in USAID’s programs 

because such organizations are 

motivated or influenced by religious 

faith to provide social services, or 

61724 Federal Register / Vol. 69, No. 202 / Wednesday, October 20, 2004 / Rules and Regulations 

because of their religious character or 

affiliation. 

(g) A religious organization’s 

exemption from the Federal prohibition 

on employment discrimination on the 

basis of religion, set forth in Sec. 702(a) 

of the Civil Rights Act of 1964, 42 U.S.C. 

2000e–1, is not forfeited when the 

organization receives financial 

assistance from USAID. 

(h) Many USAID grant programs 

require an organization to be a 

‘‘nonprofit organization’’ in order to be 

eligible for funding. Individual 

solicitations that require organizations 

to have nonprofit status will specifically 

so indicate in the eligibility section of 

a solicitation. Grantees should consult 

with the appropriate USAID program 

office to determine the scope of any 

applicable requirements. In USAID 

programs in which an applicant must 

show that it is a nonprofit organization, 

other than programs which are limited 

to registered Private and Voluntary 

Organizations, the applicant may do so 

by any of the following means: 

(1) Proof that the Internal Revenue 

Service currently recognizes the 

applicant as an organization to which 

contributions are tax deductible under 

section 501(c)(3) of the Internal Revenue 

Code; 

(2) A statement from a state taxing 

body or the state secretary of state 

certifying that: 

(i) The organization is a nonprofit 

organization operating within the State; 

and 

(ii) No part of its net earnings may 

lawfully benefit any private shareholder 

or individual; 

(3) A certified copy of the applicant’s 

certificate of incorporation or similar 

document that clearly establishes the 

nonprofit status of the applicant; or 

(4) Any item described in paragraphs 

(b)(1) through (3) of this section if that 

item applies to a state or national parent 

organization, together with a statement 

by the State or parent organization that 

the applicant is a local nonprofit 

affiliate. 

(i) The Secretary of State may waive 

the requirements of this section in 

whole or in part, on a case-by-case basis, 

where the Secretary determines that 

such waiver is necessary to further the 

national security or foreign policy 

interests of the United States.

PART 211—TRANSFER OF FOOD 

COMMODITIES FOR FOOD USE IN 

DISASTER RELIEF, ECONOMIC 

DEVELOPMENT, AND OTHER 

ASSISTANCE

■ 1. The authority citation for part 211 is 

revised to read as follows:

Authority: 7 U.S.C. 1726a(c).

■ 2. Add § 211.13 to read as follows:

§ 211.13 Participation by religious 

organizations. 

The funds provided under this part 

shall be administered in compliance 

with the standards set forth in part 205, 

Participation by Religious Organizations 

in USAID Programs, of this chapter.

PART 226—ADMINISTRATION OF 

ASSISTANCE AWARDS TO U.S. NONGOVERNMENTAL ORGANIZATIONS

■ 1. The authority citation for part 226 is 

revised to read as follows:

Authority: 22 U.S.C. 2381(a).

■ 2. Amend § 226.1 to add the following 

text at the end of the section:

§ 226.1 Purpose and applicability. 

* * * This part shall be administered 

in compliance with the standards set 

forth in part 205, Participation by 

Religious Organizations in USAID 

Programs, of this chapter.

Dated: October 14, 2004. 

Frederick W. Schieck, 

Deputy USAID Administrator.

[FR Doc. 04–23566 Filed 10–18–04; 12:25 

pm] 

BILLING CODE 6116–01–P