In this paper, we model several aspects of the relationship between religious nonprofits and the government in the context of recent governmental programs such as the Faith-Based and Community Initiatives. The government has the responsibility of providing a social service to its citizens. It decides whether to award the funds to a religious nonprofit, secular nonprofit or produce the service itself. Religious charities are willing to provide the service at lower costs if they can use the funds as an opportunity to proselytize their doctrine. This is because they gain utility from preaching to more individuals, which allows them to gain more adherents. This provides them with an advantage over non-religious providers and rival religious charities. The choice of which religious denomination(s) to award the funds to will determine the nature of the change in believers' preferences due to the proselytizing, which will in turn affect the religious 'balance of power' between denominations in the society. In a situation of equal grants to competing religious charities, this is shown to have the significant consequence of reducing the number of extremists in all denominations and increasing the proportion of moderates as a result. Furthermore, the model postulates that strict or conservative religious denominations may discriminate against secularists or non-religious individuals in the provision of the social service. This is due to the risk that preaching to this group of the population may lead to the undesired effect of benefiting less strict or more liberal denominations. The results of the model suggest important policy implications with regards to recent and future public policies towards faith-based organizations.