Religious liberty and civil society

Controversy continues south of the border: Religious Liberty and Civil Society. Yuval Levin plausibly explains the origin of the current confusion over the definition of religious freedom in English-speaking democracies:

The English common law tradition of religious toleration, which we inherited, has always had a problem with religious institutions that are not houses of worship—i.e. that are geared to ends other than the practice of religion itself. To (vastly) oversimplify for a moment, that tradition began (in the 16th century, and in some respects even earlier) with the aim of protecting Protestant dissenters and Jews but (very intentionally) not protecting Catholics. And the way it took shape over the centuries in an effort to sustain that distinction was by drawing a line between individual religious practice (in which the government could not interfere) and an institutional religious presence (which was given far less protection).

Because Catholicism is a uniquely institutional religion—with large numbers of massive institutions for providing social services, educating children and adults, and the like, all of which are more or less parts of a single hierarchy—this meant Catholics were simply not granted the same protection as others. Obviously the intent to treat Catholics differently has for the most part fallen away since then, but the evolved legal tradition is very much with us, and it is not a coincidence that it always seems to be the Catholic Church that gets caught up in these situations when the government overreaches. . . .

Does civil society consist of a set of institutions that help the government achieve its purposes as it defines them when their doing so might be more efficient or convenient than the state’s doing so itself, or does civil society consist of an assortment of efforts by citizens to band together in pursuit of mutual aims and goods as they understand them? Is it an extension of the state or of the community?