Alert: OMB Pause on Federal Grants/Loans/Assistance

Please let us know how this issue is impacting your organization!

Summary: On January 27, the Office of Management and Budget (OMB) - an executive branch agency - issued a Memo to all federal agency heads entitled "Temporary Pause of Agency Grant, Loan, and Other Financial Assistance Programs".  

We recommend everyone read the full Memo here.

OMB's memo directs agencies to pause all federal grants/loans/assistance that are potentially subject to Executive Orders until a full review can be conducted - effective at 5:00PM January 28. This INCLUDES grants/loans/assistance to nonprofits. It does not include assistance direct to individuals. 

Update: At 4:57PM on January 28, three minutes before the freeze on funding was to go into full effect, U.S. District Judge Loren L. AliKhan issued a temporary freeze on the agency's order through the afternoon of February 3 - a court hearing is set for that morning. Read the Judge's full order here. Special thanks to our friends at National Council of Nonprofits, who alongside other industry partners, whose lawsuit triggered this court action.

The pause was originally slated to be in place at least through February 10, when agencies are to report a list of impacted grant/loan/assistance programs to OMB. Agencies are directed to have the process overseen by a senior political appointee. OMB will review all identified programs and issue further guidance to each agency. There is no clear timeline on when that guidance will be issued.

Note: OMB is an Executive Branch office. This process does not involve Congress at this time. We are in communication with most of our congressional offices and have offered to assist them in navigating this matter and understanding its impact in SC.

LIVE UPDATES:

We will fold these updates into the full summary as we are able.

• 1/29 @ 1:00PM Memo Rescinded by OMB canceling the order to freeze federal grants, contracts and assistance. 
• 1/28 @ 4:57PM Federal judge temporarily blocks Trump administration freeze on federal grants and loans through February 3. Here's the full court order.
• 1/28 @ 3:15PM Together SC was provided a copy of this document which seems to provide instructions to agencies on reviewing their programs, a list of programs under review, and the questions to be used in assessing programs.
• 1/28 @ 2:15PM The White House held a press briefing where they provided some clarity and further guidance. There are still questions on how broad the impact of this Memo will be for nonprofits.
• 1/28 @ 2:00PM Together SC received a copy of this additional guidance issued by OMB. While it provides some clarity, there are still questions around how broad of an impact this action has given how many federal grant portals are still not accessible.
• 1/28 @ 1:00PM: The National Council of Nonprofits has filed a lawsuit with the DC Court to put a hold on this directive from going into effect.

What You Can Do:

Active Federal Grantees: While there are reports of some funding portals already closing, if you are an active federal grantee, we recommend filing any reimbursements / reports / etc through your federal agencies by February 3, when programs may be closed again (pending court ruling on February 3). 

Let Us Know the Impact: Please fill out this Together SC survey so that we can track potential impacts of this federal action. Or shoot us an email. The aggregate impact will be reported to congressional offices, funding partners, and our national networks so that a full picture can be provided. Names of organizations and contacts will remain anonymous unless permission is explicitly granted to share.

Assess Your Funding: Right now, Together SC recommends organizations who receive federal funding, have been awarded federal funding, have applied for federal funding, or were considering applying for federal funding, to assess the program(s) which they were participating in and the projects in any grant or loan request, and conduct a staff-level review of how this policy may impact you. This includes taking the following steps:

• Identify any federal funding in your organization's orbit.

  • Any funding your organization receives directly or indirectly (awarded).

  • Any projects/programs you anticipate/hope will be funded by the federal government (applied or contemplating).

• Detail the types of federal funds - formula-based, competitive grant, loan.

• Detail the type of federal program - regional/national, urban/rural, population-based, targeted programs, etc.

  • If the program is in statute, try and find that language.

• Review current Executive Orders.

  • Specifically, additional guidance on January 28 included these EOs:
    • Enforcing the Hyde Amendment
    • Defending Women from Gender Ideology Extremism and Restoring Biological Truth to the Federal Government
    • Ending Radical and Wasteful Government DEI Programs and Preferencing
    • Unleashing American Energy
    • Putting America First in International Environmental Agreements
    • Reevaluating and Realigning United States Foreign Aid
    • Protecting the American People Against Invasion

• State Funding Flag: We recommend taking stock of your state funding as well since many state programs receive funds through federal sources. It is unclear (as of this writing) if/how state funding is impacted, particularly when it trickles down to nonprofits.

STAY TUNED: TOGETHER SC MEMBER BRIEFING FRIDAY MORNING. Members of Together SC will get a notice to register for this briefing in their inboxes.

Dive Deeper:

From the Memo:

To implement these orders [Executive Orders], each agency must complete a comprehensive analysis of all of their Federal financial assistance programs to identify programs, projects, and activities that may be implicated by any of the President’s executive orders. In the interim, to the extent permissible under applicable law, Federal agencies must temporarily pause all activities related to obligation or disbursement of all Federal financial assistance, and other relevant agency activities that may be implicated by the executive orders, including, but not limited to, financial assistance for foreign aid, nongovernmental organizations, DEI, woke gender ideology, and the green new deal.

We want to draw your attention to three areas of this particular portion of the Memo, we'll work bottom up from the quote above.

1. "Nongovernmental Organizations": Clearly nonprofits are in the impacted category here. But what's important is the grammar here - it's not just about "DEI, woke gender ideology, and the green new deal," the grammar here is any financial assistance / agency activities to "nongovernmental organizations" in general, plus to other categories. So while the third item on this list is another layer - keep in mind that at first glance, the Memo is talking about funding to all nonprofits.

2. "...to the extent permissible under law": This will be a growing point of interest/contention. The Impoundment Control Act restricts a President's ability to withhold funding from projects/programs which Congress has authorized and appropriated. However, the new Administration is positioning this Act as more of a "cap on spending" and not a "directive" from Congress. Congress historically holds firm to their constitutional authority of setting appropriation levels, so this is a debate to watch.

3. "...may be implicated by any of the President’s executive orders.": This will be where rubber meets the road. OMB's priority here is to assess programs that may be impacted by EOs. Some EOs include broad language, some are specific. OMB's determination of what "implicated" means will be the crux of this issue. There is no clarity at this time on their intended direction.

On January 28, the White House held a press briefing where they gave some clarity around the Memo's directives, though questions still remain as to the broadness of its reach. Additionally, this guidance was offered by OMB directly. One thing it does make a bit more clear is the list of EOs being used to determine "alignment" with the Administration's priorities. Those EOs include:

• Enforcing the Hyde Amendment
• Defending Women from Gender Ideology Extremism and Restoring Biological Truth to the Federal Government
• Ending Radical and Wasteful Government DEI Programs and Preferencing
• Unleashing American Energy
• Putting America First in International Environmental Agreements
• Reevaluating and Realigning United States Foreign Aid
• Protecting the American People Against Invasion

This directive may have wide reaches for nonprofit organizations, and some of their partners. We will keep this page updated with new information as it becomes available.