Navigating the Grant Landscape Under a New Administration
Navigating the Grant Landscape Under a New Administration

Published: Jul 09, 2025

Navigating the Grant Landscape Under a New Administration

What Recent Executive Orders and the Review of Federal Financial Assistance Mean for You

**This is a comprehensive blog that covers the key developments, implications, and strategies for grant seekers navigating the landscape of federal financial assistance under the new Administration. Updates to this blog will continue to be made as the situation develops. Blog last updated on July 9, 2025, at 3:17 pm ET**

 

The federal grant landscape was upended early this year by the release of several Executive Orders and Memorandum M-25-13, a sweeping directive that temporarily halted financial assistance programs for a review process aligned with the new Presidential Administration’s policy priorities. While the Administration later rescinded some of these efforts with memorandum M-25-14, grant seekers across all sectors - including public agencies and nonprofits – still face a multitude of questions and uncertainty around the effect of the President’s Executive Orders on federal funding opportunities.

Shortly after the original memo was rescinded, Matthew Vaeth, acting director of the OMB, clarified on January 27, 2025 that federal agencies should “to the extent permissible under applicable law” continue their pause on all activities related to obligation or disbursement of funding that may be impacted by the Administration’s other executive orders.

White House Press Secretary, Karoline Leavitt, further clarified the Administration’s plans for reviews of the federal government’s 2,600 funding programs remain “in full force” and that more executive action to reduce federal funding should be expected.

No further clarification on the OMB’s review – including timeline, expectations, or participating individuals - has been made public at this time. Each federal agency is moving at its own pace in completing its review process. While some agencies have moved forward with new posted grant opportunities, others are updating all their grant program application documentation before issuing new solicitations.


A Timeline of Key Events

  • Week of January 20, 2025 – President Trump issued several Executive Orders targeting federal funding that would support “DEI” (Diversity, Equity, and Inclusion), “Clean Energy” (“Green New Deal”), “Woke Ideology,” and more. In the weeks and months that followed, several institutes of higher education have seen cancellations of grants previously allocated due to alleged antisemitism and/or maintaining DEI initiatives. The status of these funds varies from institution to institution based on a variety of factors. One such institution, Harvard University, experienced a funding freeze of $2.2 billion over multiple years on April 14, 2025, after the university refused to accept the administration's demands to eliminate its DEI programs, enact merit-based hiring and admissions reforms, reduce the power of certain faculty and administrators, and more. In Harvard's response to these demands, their legal team notes they were open to dialogue. On April 21, 2025, Harvard filed a lawsuit against the Trump Administration to restore more than $2.2B in research funding. This case is currently pending. On May 22, 2025, the Trump administration revoked Harvard’s ability to enroll international students, requiring thousands of current students must transfer or leave the country. Also on May 22, 2025, a federal judge blocked the Trump administration “from terminating the legal status of international students nationwide while a court case challenging previous terminations is pending,” barring the “government from arresting, incarcerating, or moving students elsewhere based on their legal status” until the case is resolved. On May 23, 2025, less than 24 hours after DHS moved to bar international students, Harvard filed a lawsuit against the action and was issued a TRO against the administration’s action. On May 29, 2025, the Trump administration sent a letter to agencies to cancel the federal government’s remaining contracts with Harvard, worth an estimated $100 million, by June 6, 2025.


  • January 27, 2025 – In response to the Executive Orders, the Office of Management and Budget (OMB) released Memorandum M-25-13, requiring all federal agencies to halt the obligation, disbursement, and administration of financial assistance programs after 5:00 PM on January 28, 2025. On January 28, 2025, A federal judge temporarily blocked the portion of the memorandum affecting "open grants," allowing already awarded funds to continue flowing until the court hearing on February 3, 2025. On January 29, 2025, the federal Office of Management and Budget (OMB) released Memorandum M-25-14, formally rescinding its previous memo and allowing federal financial assistance to flow to recipients. The Administration reaffirmed its intentions to complete full funding reviews of all agencies and departments. Funding pauses put into effect by other Executive Orders remained in effect.


  • February 3, 2025 – The U.S. District Court keeps the temporary block on the federal funding freeze in place, indicating recission of M-25-13 did not resolve the matters before the Court. On February 25, 2025, U.S. District Judge Loren L. AliKhan expanded the preliminary injunction against the Office of Management and Budget (OMB) and related agencies, blocking the enforcement of OMB Memorandum M-25-13. The court's order mandates that all federal agencies cease implementing the directives of the memorandum and resume the release of any funds that were halted due to its provisions. The order specifies that it applies to all related actions and executive orders and is not satisfied by rescission of the original Memorandum. Additionally, the administration was required to inform all relevant agencies of this injunction and provide a compliance status report by February 28, 2025. On March 6, 2025, in response to a lawsuit filed by attorneys general from 22 states and the District of Columbia, U.S. District Judge John J. McConnell Jr. issued a preliminary injunction halting the freeze of federal funding, including grants from the Federal Emergency Management Agency (FEMA). On April 4, 2025, following word that FEMA had continued to halt the disbursement of millions of dollars in grant funding since early February, Judge McConnell ruled the Trump administration had violated his March 6th injunction and ordered FEMA and the U.S. Department of Homeland Security (DHS) to cease reviews and comply. On April 28, 2025, FEMA appealed the April 4th order enforcing the preliminary injunction to the First Circuit Court of Appeals. In a statement issued by a DHS official in response, FEMA “will continue to ensure that U.S. taxpayer dollars are being used for mission-critical efforts.” On April 15, 2025, Sen. Ed Markey (D-MA) and Sen. Lisa Murkowski (R-AK) sent a letter to FEMA requesting a release of Next Generation Warning System funding promised to public broadcasters to improve emergency alerting systems, grant monies that have been frozen since February 19, 2025. Funding for NextGen Warning Systems remained intact for the 2025 annual discretionary budget that was passed in March 2025. Other ongoing litigation has continued to be brought to the courts as grant awards continue to be pulled back. Also on April 15, 2025, in response to a lawsuit brought against the Environmental Protection Agency for withholding climate-friendly grant funding, a federal judge ordered frozen Greenhouse Gas Reduction Fund monies be released immediately because the EPA failed to provide significant evidence of conflicts of interest and potential fraud. And in addition, on April 15, 2025, in response to a lawsuit filed by Democracy Forward on behalf of six nonprofit environmental groups, a federal judge ordered the Trump administration to unfreeze funding allocated in the Inflation Reduction Act and the Infrastructure Investment and Jobs Act. On May 13, 2025, attorneys general from 20 states filed a lawsuit against DHS/FEMA/US Coast Guard to block efforts by FEMA to withhold emergency preparedness and response funding from states that do not cooperate with this administration's immigration enforcement efforts. Also on May 13, 2025, attorneys general from the same states filed suit against the Department of Transportation (DoT), challenging the administration's efforts to withhold funding to maintain and build avenues of transportation from states that do not cooperate with this administration's immigration enforcement efforts. 


  • February 5, 2025 – The newly appointed Attorney General ordered a temporary pause in federal funding flowing from the Department of Justice to sanctuary cities. The stated purpose of the pause is to review current agreements and ensure they do not violate the law. A similar move during the previous Trump Presidential Administration was largely unsuccessful when reviewed by the courts. On February 7, 2025, several local jurisdictions, led by San Francisco and Santa Clara County, sued the Federal Government in response to the Attorney General's order to pause the flow of DOJ funding to "sanctuary cities". On April 24, 2025, the court granted the plaintiff “sanctuary cities” a preliminary injunction preventing the administration from enforcing the Executive Order. On May 21, 2025, a lawsuit filed on behalf of the Vera Institute of Justice, the Center for Children & Youth Justice, Chinese for Affirmative Action, FORCE Detroit, and Health Resources In Action argues that the termination of $820 million in DoJ grants is unconstitutional. On May 29, 2025, the Council on Criminal Justice released a brief of their findings on the elimination of 373 grants, valued at around $819.7 million. The brief details the impact of these cuts, affecting 554 different organizations in 48 states and territories. 

  • On February 5, 2025 – As a follow-up to one of his January 20th Executive Orders, President Trump issued an EO rescinding all funding from educational institutions that allow women who were not assigned female at birth to participate in women’s sports on the basis that doing so is a violation of Title IX. The Maine Principals’ Association and the Governor of Maine publicly opposed this EO on the basis that it conflicted with state law, and on April 2, 2025, Governor Mills was notified that the USDA would be pausing funding “in response to the governor’s ‘defiance of federal law.’” On April 7, 2025, the state of Maine filed a complaint that this was done without following mandatory steps before termination of funding, and on April 12, 2025, a federal judge issued a temporary restraining order (TRO) ordering the Trump administration to unfreeze that funding. On May 5, 2025, in a court-approved settlement between the USDA and Maine, the USDA agreed to stop freezing funds to the state. In addition to the USDA, the Department of Education and the Department of Health and Human Services have investigated the state of Maine and the DoEd, after alleging that Maine is in violation of Title IX and refusing to comply with the department, and referred their case to the Justice Department. The DoJ filed suit on April 16, 2025, to retroactively pull $864M in federal funding. U.S. Attorney General Pamela Bondi has stated “many, many” other states are at risk of losing federal funding over alleged civil rights violations. This case is still pending. On June 30, 2025, the Trump administration notified states "the Department [of Education] is reviewing the FY 2025 funding for the [Title 1-C, II-A, III-A, IV-A, IV-B] grant program(s), and decisions have not yet been made concerning submissions and awards for this upcoming year," withholding over $6 billion in previously approved federal education grants.

 

 

  • February 7, 2025 – Through Notice Number NOT-OD-25-068, the NIH has updated its policy to cap indirect costs at 15 percent, which overrides existing negotiated indirect cost rate agreements (NICRAs). The cap applies to all future grants and existing awards to institutions of higher education (IHEs) on payments made after February 9, 2025. On February 10, 2025, a federal court issued a nationwide injunction blocking the implementation of NOT-OD-25-068. The NIH cannot cap indirect costs at 15 percent while the court order remains in place. Since that time, various organizations representing researchers, plus labor unions and 16 states have sued the Department of Health and Human Services for the cancellation of grants from NIH and other agencies, and on March 5, 2025, a federal judge issued a temporary order blocking the administration from limiting NIH funding for medical research. On April 5, 2025, at the request of U.S. Attorneys, the same federal judge issued an order that converted the previous order from temporary to permanent, setting the stage for an appeal. On April 11, 2025, the Department of Energy announced it would cap indirect costs of research funding at 15 percent for colleges and universities. On April 13, 2025, several universities, including MIT and Brown, filed a lawsuit seeking to halt those cuts. On April 16, 2025, a federal judge temporarily blocked this new policy. On May 2, 2025, the National Science Foundation (NSF) announced it will cap indirect costs for new awards at 15%. On May 5, 2025, the day the cap took effect, a group of universities and higher education associations filed a lawsuit alleging the cap violates the law and will have "immediate and irreparable" effects. On May 14, 2025, the Department of Defense (DOD) issued a memo implementing a 15% cap on indirect costs on assistance awards to institutions of higher education.  On June 16, 2025, some of NIH's cuts to federal research funding were deemed "void and illegal" by a federal judge who also accused the Trump administration of "racial discrimination and prejudice against LGBTQ individuals." On June 17, 2025, a federal judge issued a TRO, blocking the DOD's implementation of their 15% cap. On June 24, 2025, in an internal memo, NIH directed staff not to cancel any additional research projects. 

 

  • February 10, 2025 – According to Memorandum M-25-13, Federal agencies had to submit reports to the Office of Management and Budget (OMB) detailing funding programs that may conflict with executive orders or administration policies. The administration released further details on targeted program cuts or modifications, based on those agency reports. On June 24, 2025, a coalition of 22 states, led by New Jersey Attorney General Matthew Platkin, filed a lawsuit against several federal agencies for their "unprecedented and unlawful campaign to terminate billions of dollars in critical federal funding appropriated by Congress" at the direction of President Trump and DOGE. 

 

  • February 21, 2025 – In response to President Trump's executive order requiring agencies terminate "equity-related" grants or contracts, a federal judge granted a preliminary injunction ruling the government could not freeze or cancel "equity-related" contracts or require recipients of grants to certify their programs do not promote diversity, equity, or inclusion (DEI). On March 17, 2025, in a lawsuit brought on by the American Association of Colleges for Teacher Education, the National Center for Teacher Residencies, and the  Maryland Association of Colleges for Teacher Education, a federal judge ordered the Department of Education had to reinstate the TQP, SEED, and TSL grant awards for educator preparation. On April 4, 2025, in contradiction to the previous order from a federal judge, the Supreme Court ruled that $65 million from the Department of Education appropriated for teacher training and professional development could remain on hold while the lawsuit is litigated through the lower courts.

 

  • February 26, 2025 - The administration issued an Executive Order titled Implementing the President's DOGE Cost Efficiency Initiative. The order directs federal agencies to collaborate with the Department of Government Efficiency team to review government contracts and grants. Where legally permissible, agencies are instructed to terminate or renegotiate these agreements to reduce overall spending and reallocate funds for greater efficiency. Additionally, the order mandates that every government payment include a brief statement explaining its purpose. It also imposes a 30-day freeze on federal employee credit card usage, with certain exceptions. As of May 15, 2025, the new Administration has not provided any update or publicly available information on the results of these requested efforts. On May 28, 2025, Elon Musk ended his time as a Special Government Employee with DOGE.

 

  • March 5, 2025 – The Supreme Court rejected an appeal by the executive branch of a lower court decision, which issued a TRO that would force the administration to unfreeze more than $2 billion in foreign aid that was previously appropriated by Congress. The Supreme Court noted that the District Court could move forward with clarifying the TRO and compelling the administration to distribute the funding.

 

  • March 14, 2025 - President Trump signed Executive Order "Continuing the Reduction of the Federal Bureaucracy" to continue "the reduction in the elements of the Federal bureaucracy that the President has determined are unnecessary." Several agencies are required to submit a report confirming compliance with the EO within 7 days, explaining what components or functions need to continue because they are "statutorily required" and to what extent. The EO also states the OMB should "reject funding requests for such governmental entities (identified in the EO) to the extent they are inconsistent with this order." On March 31, 2025, the Institute of Museum and Library Services (IMLS), an independent federal agency that awarded $266 million in grants and research funding in 2024 and one of the agencies referenced in the above EO, placed their entire staff on administrative leave for up to 90 days following a meeting with DOGE and IMLS Leadership and on May 1, 2025, a federal judge ordered that IMLS cannot be dismantled. On April 3, 2025, the National Endowment for the Humanities (NEH) cancelled millions of dollars of grant awards, citing changes in priorities under this administration. On May 3, 2025, the National Endowment for the Arts (NEA) announced similar cuts. Since that time, there have been reports noting a few of these grants being reinstated. Additionally, the Department of Transportation announced the termination of seven grants totaling $54 million on May 2, 2025, because they did not align with the current administration's priorities. The National Institutes of Health (NIH), Department of Transportation (DOT), Department of Housing and Urban Development, and other agencies have also seen significant staffing cuts as a result of this Executive Order. While staffing cuts or elimination of federal departments do not eliminate grant programs they administer, it is likely to cause delays as responsibilities shift to other agencies.



  • March 14, 2025 – The Continuing Resolution keeping the government funded was set to expire, requiring Congressional action to pass a new budget and potentially influencing the future of grant programs. On March 11, 2024, the House passed a Continuing Budget Resolution that would lock in 2024 funding levels for the remainder of Fiscal Year 2025 (ends September 30, 2025). The bill moved on to the Senate, where it needed 60 votes to pass and avoid a government shutdown. On March 14, 2025, the Senate passed the continuing resolution (CR). President Trump signed the CR into law on March 15, 2025, averting a government shutdown. The short-term spending bill will fund the government through the end of September. The fiscal year 2026 federal budget must be passed by September 30, 2025, to avoid a shutdown. On May 16, 2025, a small group of House Republicans in the House Budget Committee voted against President Trump’s agenda bill, demanding more spending cuts from Medicaid and federal clean energy programs. On May 22, 2025, the House passed the One Big Beautiful Bill Act (215-214), dealing with the debt ceiling, making tax cuts permanent, adding new rules and cuts for Medicaid and Food Stamps, as well as eliminating some clean energy tax credits built into the IRA.  


  • March 20, 2025 – President Trump signed an executive order to close the Department of Education. On May 22, 2025, a federal judge issued a TRO blocking this EO and ordered the reinstatement of fired employees after two lawsuits argued that the closure left the department unable to fulfill congressional mandates.

 

 

  • April 18, 2025 – At DOGE’s order, the National Science Foundation, one of the largest funders of basic research in the world, froze all new research grants and released new guidance on NSF priorities. On May 29, 2025, 16 states filed suit against the trump administration’s cuts to NSF research grants. April 21, 2025 - The National Institutes of Health (NIH) stated they will not give awards to any university that has diversity and inclusion programs or any boycotts of Israeli companies. Their notice states that this applies to all domestic recipients of new, renewal, supplement, or continuation awards. This order has been challenged in court by several associations. On June 16, 2025, a federal judge ruled the termination of NIH grants for research on diversity-related topics violated federal law and reinstated grants awarded to organizations and states that sued.



  • April 29, 2025 – The Department of Education announced that they discontinued $1 billion in grants that supported school-based mental health programs, funded under the Bipartisan Safer Communities Act. They have stated that they will “re-envision and re-compete its mental health program funds.”



  • May 9, 2025 – The State Digital Equity Planning and Capacity Grants program, funded through the Infrastructure Investment and Jobs Act and appropriated by Congress, was deemed unconstitutional by the President because it used "impermissible and unconstitutional racial preferences" and was terminated. States were notified via a letter from the US Department of Commerce. The program was designed to help advance internet adoption and digital skills. Each state and territory received funds to create digital equity plans, which have already been established. Additional funds were then awarded for capacity grants, which gave states and territories the opportunity to administer competitive grant opportunities or use funds to carry out their digital equity plans. States began the process to subaward funds to eligible applicants in 2024, with several states already collecting applications. States such as Mississippi, Indiana, South Carolina, Wisconsin, Maine, and California had active deadlines, but, as of May 14, 2025, announced they have stopped their programs. Maine had an earlier deadline, and they shared that they are exploring options to respond to the legality of the grant termination. It is anticipated that more states will follow suit. As of May 15, 2025, all State Digital Equity Capacity grant announcements have been removed from the NTIA's website. As of May 19, 2025, at least 20 states have seen planning and capacity grant funding pulled, some being notified that continuing project initiatives “will not be reimbursed for any project costs incurred,” and there is no right to an administrative appeal. On June 6, 2025, a letter objecting to the termination of the Digital Equity Act, signed by 14 Members of Congress, was sent to DoC Secretary Howard Lutnick.



  • June 6, 2025 – The Department of Commerce’s National Telecommunications and Information Administration (NTIA) released new policies for the Broadband Equity, Access, and Deployment (BEAD) program, rescinding the approval of final spending plans for Louisiana, Delaware, and Nevada, as well as all preliminary awards.



  • June 27, 2025 - In a 6-3 decision, the Supreme Court ruled "universal injunctions likely exceed the equitable authority that Congress has given to federal courts," granting "the Government's applications for a partial stay of the injunctions" and asked lower courts to "reconsider their broad rulings..." This ruling centered on whether lower courts had the ability to implement nationwide injunctions stopping executive actions and has the potential to affect many court cases related to the Administration’s decisions on funding and grants (i.e., sanctuary cities, indirect costs, etc). While not all nationwide injunctions are struck down as a result of this ruling, the government will need to go to judges in each case where such an order is in place and ask for it to be stricken down based on this decision. In some cases, judges may still issue such an injunction and in other cases, plaintiffs will ask courts to certify class action relief for a defined class, for instance, in the birthright citizenship case that stemmed this ruling, the plaintiffs can ask the court to issue relieve (stop executive action) for those born in the U.S. after February 19, 2025, the effective date of the birthright executive order. The ruling makes it harder to issue nationwide injunctions to stop executive actions quickly; however, other routes are available and will likely be used to get large, wide-reaching injunctive relief.

 

 
What was inside Memorandum M-25-13?

The stated goal of Memorandum M-25-13 was to temporarily pause federal funding distribution to ensure taxpayer dollars are used to advance Administration priorities. This includes:

  • Strengthening national security
  • Reducing inflation
  • Promoting energy independence and U.S.-based manufacturing
  • Ending Diversity, Equity, and Inclusion (DEI) initiatives
  • Eliminating support for green energy programs

Federal agencies were provided with a spreadsheet by the OMB to designate which Federal financial assistance programs, projects, and activities may conflict with recent executive orders. They were further tasked with (1) assigning a “senior political appointee” to ensure all funding conforms to new administrative priorities, and (2) reviewing pending awards of Federal financial assistance to ensure compliance. In total, this review would encompass more than $3 trillion across 2,600 funding programs.

According to the memo, documentation must be submitted to the Administration by February 10, 2025. The OMB and senior political appointees of the new Administration were expected to review this information and make recommendations on programs that are inconsistent with Administration priorities in the weeks that followed. Each federal agency is moving at its own pace in completing its review process. While some have moved forward with new posted grant opportunities, others are updating all their grant programs before issuing new solicitations.

 

What does this mean for Grant Seekers? 

While the impacts of executive action around grant funding continue to solidify, the broad scope of this conflict creates immediate challenges for those relying on federal grant funding. Here are the key takeaways:

  1. Awarded Grants Can Continue (For Now)

Memorandum M-25-14 effectively ended the temporary hold on federal financial assistance. This means that existing grant program monies that have already been awarded should continue to be disbursed. However, individual programs will be subject to judicial action. For instance, the Supreme Court recently allowed teacher training grants to remain on hold while the court process plays out on that particular lawsuit.

  1. New Grant Funding Remains in Limbo

The OMB’s recommendation to pause distribution and obligation of funding means that all pending or currently active Notice of Funding Opportunities (NOFOs) should still expect to be placed under review and could be modified or withdrawn to align with the Administration’s goals. The Administration is expected to continue in its fact-finding mode, collecting data on more than 2,600 programs, including school meal initiatives, foreign aid, and veteran reintegration programs. Several federal grants have already had their notices of funding opportunity (NOFOs) modified to reflect the removal of DEI-related initiatives. Expect to see additional changes along these lines to other programs in the coming weeks and months.

  1. Discretionary Programs Are Most at Risk

Grant programs that allow federal agencies significant discretion in funding priority decisions are the most vulnerable to changes or cuts. However, statutory grant programs, those written into law with clear funding priority parameters, are more insulated from sudden cuts or modifications by the administration, as an act of Congress would be required to amend those funding parameters.

  1. Legal and Political Uncertainty Continues

Several lawsuits have already been filed by states, nonprofits, and active grant award recipients challenging the legality of the President's original memorandum and subsequent actions to withhold awarded funds. While rescinding the overriding memorandum provides some relief, the long-term outlook depends on future judicial rulings and potential Congressional intervention.

Also, note that grant-seeking organizations may take different approaches to the moves being made by the administration. Grant recipients may take certain actions on their open grant awards based on their specific interpretation of the legal landscape.

 

Looking Ahead: Impact of Recently Passed Reconciliation Legislation and the Upcoming 2026 Federal Budget

The Reconciliation Process

Background

The budget reconciliation process has been around since 1974, with the current rules codified in the Congressional Budget Act of 1990. Reconciliation was created to expedite certain approval actions for the federal fiscal year budget, specifically by allowing crafted budget legislation to bypass the three-fifths supermajority required to overcome a filibuster in the United States Senate. It essentially sets up a streamlined process to pass budget measures when one party controls both chambers of Congress and the Presidency. Congress may use the process to address three primary budgetary functions: 1) revenue (taxes), 2) mandatory spending, and 3) the debt ceiling (borrowing authority). However, Congress is restricted as it can only use the process once per federal fiscal year, for each budget function.

Despite small majorities in Congress, the reconciliation legislation known as the One Big Beautiful Bill Act (OBBB) was signed into law on July 4, 2025, with provisions that impact taxes, spending, and increase the debt ceiling. The key provisions of the legislation can be summarized as follows:

  • Revenue – The legislation extended the tax cuts authorized by the 2017 Tax Cuts and Jobs Act (TCJA), which would have expired at the end of the current federal fiscal year.
  • Mandatory Spending – The OBBB makes significant changes to the structure and funding for social safety net programs, including Medicaid and the Supplemental Nutrition Assistance Program (SNAP). Overall, Medicaid and SNAP make up the bulk of spending cuts in the legislation. Alternatively, spending on defense and national security will increase substantially over the next decade. The Department of Defense and Department of Homeland Security are set to receive $150 billion and $165 billion, respectively.
  • Debt Ceiling – The reconciliation legislation raises the debt ceiling, or borrowing authority of the U.S. Government, by $5 trillion. The debt ceiling restricts the ability of the government to borrow to spend money previously appropriated by Congress.

Impact on Grants

Despite its size and notwithstanding the massive impact of the OBBB on tax policy and spending, it has very little influence on the overall grant funding landscape at the federal level. Most federal grant programming is appropriated through the annual discretionary budget process (see below). A significant limitation of reconciliation is that Congress can only make changes to mandatory spending. Mandatory programs are those that do not require annual appropriations, including Social Security, Medicare, Medicaid, and the Supplemental Nutrition Assistance Program (Food Stamps). In terms of grants, the major exceptions would include the Inflation Reduction Act of 2022 (IRA) and the American Rescue Plan Act of 2021 (ARPA), as both measures were passed through reconciliation and are considered mandatory spending. While the IRA was a prime target of spending cuts under the OBBB (mostly through the elimination of tax cuts on clean energy), ARPA funds have largely been obligated and were left mostly untouched.

While the OBBB has a minimal impact on most grant programs, some provisions are worth highlighting:

  • $850 million is rescinded from the Public Wireless Supply Chain Innovation Fund, as authorized under the CHIPS Act of 2022, which supported investments in domestic 5G and wireless infrastructure.
  • Rescinds unobligated forestry grants that were appropriated through the Inflation Reduction Act (IRA).
  • Restructures (e.g., new funding cap) Pell Grants, which are used to finance higher education for low-income families. The legislation also expands the use of Pell Grants to support short-term training programs. Meanwhile, $60 million in new funding is appropriated to support student scholarships at 1890 institutions, which are historically black colleges and universities designated as land-grant entities.
  • In addition to phasing out clean energy tax credits and deductions authorized by the IRA, the OBBB also rescinds many climate and environmental programs administered by the Environmental Protection Agency (EPA). Effected programs include EPA Grants to Reduce Pollution in Schools, Environmental and Climate Justice Block Grants, and the Neighborhood Access and Equity Grant Program.
  • $50 billion is allocated to create the Rural Health Transformation Program, which aims to assist rural hospitals and healthcare providers in implementing transformational initiatives. Starting in FFY 2026, $10 billion will be distributed each year through FFY 2030.
  • Within the $165 billion earmarked for the Department of Homeland Security (DHS), there is $10 billion appropriated to support the State Border Security Reinforcement Fund. States will be able to use the funds to support border security efforts, including physical structures, stopping illicit substances from entering the United States, and enforcing immigration law. A separate $500 million fund will provide states and localities with grants to track and monitor unmanned aircraft systems. $450 million in additional funding is also provided for the Operation Stonegarden Grant Program, which aims to enhance cooperation and coordination of law enforcement agencies to improve border security.
  • The legislation authorizes additional funding for popular Department of Justice programs, including the Edward Byrne Memorial Justice Assistance Grant Program. These additional funds will need to be appropriated through the annual discretionary budget process and will be subject to cooperation with federal law enforcement on immigration and border security efforts.

On that note, when it comes to grant programs, the heavy lifting happens with the annual discretionary budget, which is governed by a separate set of rules and procedures.

Passing the Annual Discretionary Budget

Background

The annual federal discretionary budget is where the magic happens when it comes to grant programs. Federal Fiscal Year 2025 started on October 1, 2024, and will end on September 30, 2025. In a perfect world, Congress would pass a budget before the fiscal year starts. Congress has only met this deadline three times in the past fifty years, most recently in 1997. When Congress fails to enact a budget for the upcoming fiscal year prior to its start, this leads to a government shutdown, unless it instead passes a Continuing Resolution (CR). Continuing Resolutions essentially keep funding levels consistent with the previous year’s approved budget. Federal agencies have grown used to operating in this environment over the last fifty years. There have been three CRs this year, the first extending federal funding until December 20, 2024, and the second until March 14, 2025. A third CR was passed in the Spring to cover the remainder of the 2025 federal fiscal year (ending September 30, 2025).

 

Preparing for Fiscal Year 2026

Since the annual discretionary budget is not subject to the reconciliation process, it must be passed under standard procedures in Congress. To pass the annual budget, both the House and Senate must pass identical budget bills before the legislation can move on to the President to be signed into law. The Senate requires a three—fifths majority approval to move proposed legislation, including the discretionary budget, forward for a vote. Under House rules, a simple majority is all that is necessary to pass the proposed budget legislation. While one might assume that means Republicans in the House will not need Democratic support, that belies recent history. Considering the diversity of priorities among GOP legislators, particularly fiscal conservatives and moderates, Republicans typically must negotiate and rely on votes from Democrats to move things forward. Further, even if the House passed a partisan bill, there currently is not a filibuster-proof GOP majority in the Senate.

 

Current Status of 2026 Budget Negotiations

2026 Budget negotiations were at a standstill as Congress focused its attention on passing the reconciliation legislation, which was signed into law on July 4, 2025. Once legislators return from holiday break, it is expected that they will spend the next couple of months negotiating the 2026 discretionary budget.

 

Impact on Grant Programs

Given the standard procedures discussed above, Congress will need bipartisan support to pass the FFY26 federal budget (funding the government from October 1, 2025, through September 30, 2026). This is the primary explanation as to why the annual discretionary budget is so consistent over time. The cross-aisle negotiation required to move legislation forward makes it very difficult to cut spending, particularly when it comes to popular grant programs. As such, we anticipate the 2026 budget to look very similar to 2025's, with approximately $1.6 trillion available to maintain the current grant funding landscape. The main question becomes: how do we get to that point?

 

This information will be updated as 2026 Budget negotiations continue.

 

Moving Forward: Strategies for Grant Seekers

Despite the uncertainty, there are still ways to navigate the evolving grant landscape effectively:

  1. Explore Alternative Funding Sources
  • State & Local-Sourced Grants: Many states and municipalities administer their grant programs that may not be affected by federal actions.
  • Private & Corporate Foundations: Nonprofit and corporate philanthropy organizations may fill some funding gaps. Private funders have a history of stepping up in situations where public funding falls short or is temporarily jeopardized (i.e., most recently with the global Coronavirus pandemic).
  • Industry Partnerships: Businesses may seek public-private partnerships to support innovation and development projects.
  1. Stay Informed and Agile
  • Monitor updates from the OMB, federal agencies, and Grants Office to track funding opportunities and potential reinstatements.
  • Be ready to pivot if a target grant program’s priorities shift away from previous competitions—consider adjusting proposals to align with Administration priorities where feasible. Be prepared with backup grant opportunities that your organization is also willing to consider for pursuit.
  1. Advocate and Engage with Policymakers
  • Contact Congressional representatives to express concerns about program cuts and advocate for continued funding in critical areas.
  • Participate in industry coalitions or trade associations that may have a voice in lobbying efforts.

 

Final Thoughts: Adaptation is Key

While these executive actions have created significant disruption, it does not signal the end of federal grant programs. History shows that grant funding remains a core mechanism for public investment, and bipartisan Congressional support for key initiatives will ensure that many essential programs continue.

At Grants Office, LLC, we are committed to guiding grant seekers through this complex and rapidly changing environment. Whether it is identifying alternative funding sources, interpreting new policies, or adjusting grant strategies, we are here to help.

Stay connected with us for ongoing updates and insights into the evolving federal grant landscape by joining our free Community of Grantseekers.

 

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View and download our recent Grantscasts and additional resources:
Making Sense of Recent Executive Orders and the Impact on Federal Grant Funding

Episode 1: The Pause on Federal Funding

The latest in a flurry of Executive Orders has hit home for grant-funded agencies across the country. Despite the rescission of M-25-13, which placed a temporary pause on "all activities related to obligation or disbursement of all Federal financial assistance," there are plenty of questions surrounding the future of federal funding. All federal agencies are expected to submit reports to the Office of Management and Budget (OMB) by February 10th detailing all programs, projects, or activities that will be impacted by recent Executive Orders.

Two of Grants Office's most experienced executives discuss the implications for federal grants in the near term and proactive steps government and nonprofit leaders can take to ensure they are ready to make the most of federal grant opportunities in 2025 and 2026.

We discussed:

  • What happened with OMB Memorandum M-25-13
  • The current review process is underway by federal agencies to comply with recently issued Executive Orders
  • What we expect to happen after the pending February 10 reporting deadline and the upcoming federal budget process
  • Strategies for proactive grantseekers to capture more federal funding over the next two years

With the new administration in place and significant changes afoot to both the structure and function of the federal government, complacency is not an option for grantseekers. We must stay attentive to the shifting funding landscape. As always, Grants Office will be here to help you navigate it.

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Episode 2: Continuing the Conversation

When it comes to federal grant funding, you may find yourself struggling to keep up with the frantic pace of Executive Orders and other actions being taken by the new administration. As the Courts get involved, it can be difficult to know exactly where things stand and project how the dust will settle, with each decision made by the Federal Government.

Join two of Grants Office's most experienced executives for a follow-up discussion on the impact of recent decisions by the Executive Branch on federal grant funding. Whether you are concerned about your open grant awards or your future grantseeking efforts, we have our pulse on the grant-funding landscape and will keep you informed on the latest developments.

We discussed:

  • Where things stand with the current federal funding review initiated under several Executive Orders.
  • Other Federal Agency directives, including the NIH’s attempt to cap indirect costs and the DOJ’s decision to review funding flowing to “sanctuary cities.”
  • What to expect over the next several weeks and months.
  • Strategies for proactive grantseekers to capture more grant funding over the next two years.

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Episode 3: Running Back 2024: A Review of the 2025 Continuing Budget Resolution and the Grants it will Fund this Year

Congress recently passed a Continuing Budget Resolution that funds the government through the rest of FY2025. Join our 30-minute live webinar for a comprehensive overview of the US federal budget, recent trends, and how it impacts funding opportunities across various sectors! Learn how the government allocates its resources, key priorities in the annual budget, and what this means for funding programs in areas such as education, healthcare, infrastructure, and more.

Whether you're a nonprofit, educational institution, or governmental agency seeking federal funding, this session will help you navigate the complex landscape of government spending and position your organization for success. The webinar will also feature a live Q&A session, where you can get answers to your specific questions. Plus, learn how Grants Office services can assist you in understanding the budget’s impact on your grantseeking efforts.

Do not miss this valuable opportunity to unlock funding insights and plan strategically for future funding success!

 

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