Immigration Minister David Coleman announced the scheme on Wednesday as part of the government's migration plan.
The money will go towards various programs to "promote, encourage, celebrate multicultural Australia", the minister said.
Religious tolerance education charity Together for Humanity, chaired by retired teacher and former Liberal Party president Chris McDiven, will receive $2.2 million.
"It is so important as a society that we are cognisant and accepting of our differences," Coleman told reporters in Canberra.
"Religious freedom is so fundamental to this nation."
Coleman said $10 million will be provided to community languages schools, with grants of up to $25,000 on offer to help young Australians connect with cultures.
"It helps to enable them to learn more about the culture that maybe their parents or grandparents have come from," the minister said.
"Of course, there are other kids who learn languages that are not their background culture but also enable them to learn more about the diversity of our nation."