On October 20, 2004, USAID issued its final rule (the "Rule") on participation by religious organizations in USAID programs (22 CFR 205.1).  USAID amended the Rule on April 4, 2016 and June 29, 2016.  The Rule implements USAID regulations in furtherance of Executive Order 13279, Equal Protection of the Laws for Faith-Based and Community Organizations and Executive Order 13559, Fundamental Principles and Policymaking Criteria for Partnerships With Faith-Based and Other Neighborhood Organizations, which prohibit discrimination against all eligible organizations, including faith-based and other community organizations, competing for federal financial assistance to implement social service programs and the beneficiaries of those services. The Rule generally ensures that faith-based and community organizations are able to compete fairly for USAID funding, and that USAID programming decisions are based on the program eligibility criteria, without regard to the religious character or affiliation of applicants. Further, although faith-based organizations may not use direct USAID funds for explicitly religious activities, including activities that involve overt religious content such as worship, religious instruction, or proselytization, they may continue to engage in religious activities as long as they are separate 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.

The Rule's principal provisions include:

• Faith-based and community organizations are eligible to participate in USAID programs on the same basis as any other organization without regard to their religious character or affiliation and may not be excluded from competition for USAID funding. USAID may not discriminate for or against a program applicant because the organization is motivated or influenced by religious faith to provide social services, or because of their religious character or affiliation.  Decisions about awards of USAID financial assistance must be free from political interference or even the appearance of such interference and must be made on the basis of merit, not on the basis of the religious or secular affiliation of a recipient organization.
• Faith-based and community organizations may not use financial assistance from USAID (or any other Federal agency) to support explicitly religious activities, but are otherwise free to engage in such activities. Explicitly religious activities involve content such as worship, prayer meetings, religious instruction and proselytization. These activities must be separated either in time or location from USAID-funded programs, and participation by actual or potential program beneficiaries must be voluntary. Assistance furnished with USAID funding may not be conditioned on participation in any explicitly religious activities.  These limitations on explicitly religious activities do not restrict USAID’s authority under federal law to fund activities that can be directly funded by the Government consistent with the Establishment Clause.
• Faith-based and community organizations will retain their independence and may continue to carry out their religious mission. For example, they may continue to engage in explicitly religious activities, provided they are separated in time or location from their USAID-funded activities. Faith-based and community organizations may use their own space to provide USAID-funded services, without removing religious art, icons or symbols. Additionally, faith-based and community organizations retain authority over their internal governance, may retain religious terms in their organization’s name, select their board members on a religious basis, and include religious references in their organizations' mission statements and other governing documents.
• Faith-based and community organizations may not, in providing USAID-funded program assistance, discriminate against a program beneficiary or potential program beneficiary on the basis of religion or religious belief, refusal to hold a religious belief, or a refusal to attend or participate in a religious practice.
• The Rule’s requirements apply to USAID grants and cooperative agreements, including sub-grants, sub-agreements, and grants awarded under contracts that have been awarded by USAID for the purpose of administering grant programs.

Fact Sheet: Final Rule Implementing Executive Order 13559: Fundamental Principles and Policymaking Criteria for Partnerships with Faith-based and Other Neighborhood Organizations.