Federal funding for not-for-profit organizations remains a big question mark as the Trump administration has introduced plans to freeze federally funded programs temporarily. The last few days have seen a flurry of developments causing confusion amongst not-for-profit leaders and advocates, so let’s summarize them here for you:
Recent Events
- January 27, 2025: the Office of Management and Budget (“OMB”) sent out Memorandum M25-13[1] to the heads of executive departments and agencies. The two-page memo proposes a shift in federal spending in response to the latest executive orders signed by President Trump. Due to this shift in spending, the OMB has directed Federal agencies to temporarily pause all federally funded activities starting on January 28, 2025, at 5:00 PM.
- January 28, 2025: U.S. District Judge Loren L. AliKhan temporarily blocked the funding freeze before its scheduled effective start time.
- January 29, 2025: The OMB rescinded Memorandum M25-13, but the White House has commented that the temporary pause on federal funding is still in effect.
Based on these recent events, it’s no surprise that the not-for-profit industry has been busy deciphering all these developments. Yet, despite the memo being rescinded by the OMB, it is still important for organizations that receive federal funding to understand its potential impact.
M25-13 required Federal agencies to review all Federal financial assistance programs and supporting activities to ensure that such programs and activities align with the latest executive orders. Programs whose missions related to foreign aid, DEI, gender, and environmental issues were singled out by these executive orders, which has caused concerns for many not-for-profit organizations. These organizations that rely on federal funding will have to adapt and be prepared for potential changes, as any future funding policies can be introduced to further align with recent executive orders. Other organizations that were not singled out could also find funding to be scarce if the administration’s fiscal priorities do not align with a particular organization’s mission statement.
As it stands, M25-13 has been rescinded, but the administration is steadfast in its fiscal policies. We at WG are aware that not-for-profit organizations create their budgets based on their expected cash flow from all funding avenues, and any pause in federal funding can cause many challenges. Therefore, we are following the situation closely and will advise of any further developments. If you or your organization have any questions or concerns, please contact your WG adviser for further guidance and support as we navigate through this together.
