(a) Organizations that are faith-based are eligible, on the same basis as any other organization, to participate in the Grant Program under this part. Decisions about awards of Federal 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 religion or religious belief or lack thereof.

(b)(1) No organization may use direct financial assistance from VA under this part to pay for explicitly religious activities such as religious worship, instruction, or proselytization; or equipment or supplies to be used for any of those activities.

(2) References to financial assistance are deemed to be references to direct Federal financial assistance, unless the referenced assistance meets the definition of indirect Federal financial assistance in this part.

(c) Organizations that engage in explicitly religious activities, such as worship, religious instruction, or proselytization, must offer those services separately in time or location from any programs or services funded with direct financial assistance from VA under this part, and participation in any of the organization's explicitly religious activities must be voluntary for the participants of a program or service funded by direct financial assistance from VA under this part.

(d) A faith-based organization that participates in the Grant Program under this part will retain its independence from Federal, State, or local governments 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 VA under this part to support any explicitly religious activities, such as worship, religious instruction, or proselytization. Among other things, faith-based organizations may use space in their facilities to provide VA-funded services under this part, without concealing, removing, or altering religious art, icons, scripture, or other religious symbols. In addition, a VA-funded faith-based organization retains its authority over its internal governance, and it may retain religious terms in its organization's name, select its board members and otherwise govern itself on a religious basis, and include religious reference in its organization's mission statements and other governing documents.

(e) An organization that participates in the Grant Program shall not, in providing legal services, discriminate against a program participant or prospective participant regarding legal services on the basis of religion or religious belief.

(f) If a State or local government voluntarily contributes its own funds to supplement federally funded activities, the State or local government has the option to segregate the Federal funds or commingle them. However, if the funds are commingled, this provision applies to all of the commingled funds.

(g) To the extent otherwise permitted by Federal law, the restrictions on explicitly religious activities set forth in this section do not apply where VA funds are provided to faith-based organizations through indirect Federal financial assistance. A faith-based organization may receive such funds as the result of a participant's genuine and independent choice if, for example, a participant redeems a voucher, coupon, or certificate, allowing the participant to direct where funds are to be paid, or a similar funding mechanism provided to that participant and designed to give that participant a choice among providers.