Jan
28
2025
Building Movement Project has been monitoring executive orders being issued by the Trump Administration with an emphasis on understanding the impact on nonprofit organizations. The Building Movement Project is monitoring executive orders issued by the Trump Administration to assess their impact on nonprofit organizations and the communities they serve. Please complete our brief survey to help us create a comprehensive field assessment that we will share with participating organizations and the broader nonprofit sector.
Here, we provide a brief summary of the memorandum that the White House released on January 27, 2025 related to federal financial assistance.
February 3rd Updates: A federal court in DC issued a Temporary Restraining Order (TRO) blocking any version or iteration of the Office of Management and Budget (OMB) memo from being implemented as it pertains to nonprofits, small businesses, and health organizations that receive federal assistance with open awards.
January 31st Updates: A federal court in Rhode Island issued a TRO blocking any version or iteration of the OMB memo from going into effect as it pertains to federal assistance provided to the individual states.
January 28th Updates: A federal court has issued an administrative stay of the memo until February 3rd. Twenty-two states have filed suit against implementation of the policy.
January 29th Update: The Trump Administration has rescinded the federal funding freeze memo. See the statement from Democracy Forward here.
What does the White House memorandum do?
The memorandum directs federal agencies to temporarily freeze all federal financial assistance programs and supportive activities starting on January 28 at 5pm ET through at least February 10. During this time, federal agencies must identify and review all federal financial assistance programs and supporting activities to determine their consistency with the President’s policies outlined in previous Executive Orders.
The memorandum includes an exemption for federal benefits such as Medicaid and Social Security that individuals directly obtain from the federal government. However, nonprofits receiving federal funds to serve vulnerable communities, including those facing hunger, homelessness, and violence, may find that grants and awards are paused, and perhaps later on, after the review, even canceled.
How could nonprofit organizations receiving federal funds be affected?
Nonprofits receive and access federal funds directly or via pass-through entities for a range of activities to support their communities around health, education, infrastructure, safety, outreach, and more. Even short or temporary pauses in funding can lead to disastrous consequences for communities. The types of federal funds and grants that might be affected range from pandemic relief to community food projects to rural education. See this list from the New York Times of 2600 federal programs that may be under scrutiny including funds related to the protection of victims of crime to the prevention of trafficking of girls to disaster relief.
In fact, the National Council of Nonprofits noted: “This order is a potential 5-alarm fire for nonprofits and the people and communities they serve. From pausing research on cures for childhood cancer to closing homeless shelters, halting food assistance, reducing safety from domestic violence, and shutting down suicide hotlines, the impact of even a short pause in funding could be devastating and cost lives.”
Additionally, the memorandum signals that federal agencies should assess the alignment of federal funding programs with the Administration’s priorities, “including, but not limited to, financial assistance for foreign aid, nongovernmental organizations, DEI, woke gender ideology, and the green new deal.” This means that groups working on certain issues might lose access to federal funding in the future. In fact, BMP’s recent report, Sounding the Alarm: Nonprofits on the Frontlines of a Polarized Political Climate, reveals how organizations working on issues deemed to be controversial, from immigrant justice, LGBTQ rights, and DEI, are already facing loss in philanthropic funds, reputational harm, and attacks on safety and security. The additional layer of a federal funding freeze will be devastating for nonprofit frontline responders.
Democracy Forward has filed a lawsuit on behalf of nonprofits and small businesses that challenges the source of OMB’s legal authority to target federal grant programs and the potential impact on grant recipients to exercise their First Amendment rights.
What can nonprofits do?
- Use this link to document questions and concerns that are coming up internally and from community members.
- Express concerns with the relevant federal, state or local agencies about the potential impact of the loss of federal funds for programs that serve vulnerable communities.
- Ensure that individual community members know that direct individual assistance such as Medicare, Social Security benefits and other forms of assistance from the federal government is not being paused.
- Reach out to funders and ask them to provide additional funding pathways in response to this withdrawal of funds.
- Mobilize with others facing similar cuts to determine what collective action can be taken across the sector
- Develop contingency budgets and operational plans for various funding scenarios
- Seek out legal advice to prepare for any contingencies, as well as potential ways to engage in emerging policy challenges if nonprofits receive federal funds and find that their grants are being cancelled
- Support funders to advocate with congressional leaders to challenge this attack on the nonprofit sector.
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