Many religious associations exhibit internal norms that differ from liberal norms and rules. Such norms often directly contradict the non-discrimination norms and rules that are part and parcel of the liberal democracies in which these associations operate. Religious associations often are considered, in both legal and scholarly writings, exempt from at least some of these norms and rules. This tension between broad societal non-discrimination1 rules and the norms of specific religious associations has won the attention of scholars and courts.2 In many such debates, the background assumption is that these religious groups are voluntary associations functioning within a model of separation between religion and state; that is, such associations operate through the free choices of their members and individuals are as free to leave the associations as they were to form them.3 While theorizing about non-discrimination rules and whether they apply to religious associations that are funded via the contributions of their members is of obvious importance, this article examines a distinct problem: that of discrimination within religious associations that are directly supported by democratic governments. Recent research on religion-state relations4 has pointed out that, in many democratic countries, religious associations are funded by the government to a considerable extent. The tension between non-discrimination norms and the presumed rights of the state-funded religious associations to be exempted from such rules, however, is neglected in the literature. Perhaps this is because the most prominent legal cases of this kind were tried at the European Court of Human Rights5 and the U.K. Supreme Court,6 rather than the more conspicuous U.S. Supreme Court. This article asks the following question: in what way, if at all, does receiving governmental funding change the presumed right of religious associations to be exempted from non-discrimination rules? The ‘immunity thesis’—the idea that religious associations enjoy the right to be exempted from non-discrimination rules—is not challenged here: this article argues that if there is such a right to immunity, receiving governmental funding does not necessarily eliminate it. Much depends on how each case maintains the balance between the autonomy of religious associations7 and the protection of individual citizens from discrimination that impacts important civil interests such as access to jobs or high-quality education. Of the suggested variables identified to test this balance, three are internal to the associations’ structure: the centrality of the potentially illiberal norm to the funded religious association; the kind of violation of non-discrimination rules (either internal or external discrimination, see below); and the willingness of the religious association to internalize the cost of the discrimination. Two additional variables that can be used to test the balance of competing social values are external to the association and depend on the political-legal environment in which the association functions: the quantity of funding that the government makes available to the association, and the process by which potentially competing religious associations can become eligible for recognized and funded status. A multivariable ‘test’ is required in order to determine whether and how governmental funded religious associations can still claim immunity when practicing discriminatory norms.