Religious organizations who choose to do charity work should, however, be able to provide services which are not faith-based, and receive federal/state assistance for that portion of their work.

I don't see that happening in a fair and balanced way either. If a Wiccan Coven was doing charitable work that was not faith-based, I seriously doubt that they would be granted any money. And then there's the matter of cults. They would have the same claim to grant money as mainstream religions. I don't see the fundamentalist religions in this country tolerating that for a nanosecond.