By Chris LaPage, Chief Services Officer & Ashley Schultz, Manager of Community Engagement
For grant professionals, the start of a new federal fiscal year usually brings a familiar sense of déjà vu. We track the process from the President's initial budget announcement through Congress's final vote, anxiously anticipating when federal agencies will finally open their competitive and allocation grant cycles.
However, the 2026 funding landscape will be built upon a vastly different process from previous years. This year’s budgetary cycle was paralyzed by the longest government shutdown in U.S. history and further complicated by aggressive executive realignments. Navigating these legislative delays requires grantseekers to cut through the headline noise and pinpoint the actual drivers that will impact their grant funding pipeline. Ultimately, the most successful organizations will be those ready to identify emerging priorities and adapt their programmatic strategies to the realities of the current administration.
This article will outline the major federal budgetary updates from 2026, breaking down how these shifts impact the grantseeking landscape. For more targeted insights, please refer to our sector-specific breakdowns available throughout this issue.
The Theoretical Pathway to a Federal Budget
To understand the severity of the current funding delays, we must first look at how the modern federal budget process is supposed to work under the mandates set forth by the Congressional Budget Act and Impoundment Control Act of 1974.
The process kicks off each year on the first Monday in February with the President's executive budget request. While such requests under the Trump administration have often generated attention-grabbing headlines about sweeping funding cuts, eliminated grants, and shuttered agencies, it's important to remember that the executive budget created by any Presidential administration is largely a political instrument. It acts as an opening bid that signals the administration's core priorities for the upcoming year. The document itself contains no actual legislative measures to appropriate federal dollars, as the U.S. Constitution places the ultimate power of the purse squarely with Congress.
To exercise that power, the House and Senate Budget Committees come together to create a concurrent budget resolution by April 15th each year. This resolution establishes the nation’s overarching spending and revenue targets for the upcoming federal fiscal year. With these top-line limits set, the Appropriations Committees then divide the federal budget into 12 groups, called sub-allocations. Specialized subcommittees then draft the specific funding allotments for each sub-allocation based on close communication with the federal agencies. Once drafts are complete, the 12 groups are then passed individually by both chambers and signed by the President before the new fiscal year begins on October 1st.
While this process feels quite logical and balanced, it operates more like a lab-based experiment - amounting to an idealized set of conditions that rarely stand up in the real world. Since the Congressional Budget Act was passed in 1974, Congress has passed all its appropriation bills on time in only four years: 1977, 1989, 1995, and 1997. The deadline has been missed in every single federal fiscal year since 1997. Such delays are almost guaranteed when Congress is sharply divided on legislative intent and operating with slim voting margins. In the last two decades, building the consensus required for this theoretical pathway has proven nearly impossible to achieve.
The 2026 Minibus Marathon
When Congress falls behind its own timelines, lawmakers pass stopgap Continuing Resolutions (CRs). These CRs keep the government funded at the previous year's levels - essentially freezing agency budgets and preventing the launch of new programs until a full budget is signed. This temporary measure is often used to buy time for negotiations while allowing government operations to continue and ensuring federal employees are paid. Government shutdowns occur when Congress fails to pass both a federal budget on time and a CR as a stopgap measure.
The 2026 budget cycle began with the longest US federal government shutdown in history, spanning from October 1 to November 12, 2025, due to Congress’s inability to approve appropriations legislation for the new fiscal year. Critically, the agreement that finally ended the shutdown in November was not a full budgetary measure for the new year, it was a CR to continue funding the government at previous levels so the debate in Congress could continue.
To make headway in a deeply divided Congress, the House and Senate Budget Committees opted to forgo the traditional Omnibus spending package – a tactic where all 12 appropriation bills are bundled into a single, massive, must-pass piece of legislation. In lieu of an Omnibus, lawmakers utilized a series of "minibus" packages. This action allowed them to approve the budgets for federal agencies that were less controversial – including the Department of Commerce, NASA, and the Department of the Interior – while they continued to negotiate on budgetary matters for USAID, the Department of Education, and others.
As a result, the 2026 budget cycle utilized an iterative minibus strategy, releasing funding in three distinct stages:
- The First Minibus (November 12, 2025): The first breakthrough came with H.R. 5371, providing full-year funding for Agriculture, Rural Development, the FDA, Military Construction, Veterans Affairs, and the Legislative Branch.
- The Second Minibus (January 23, 2026): Lawmakers passed H.R. 6938, providing full-year appropriations for Commerce, Justice, Science, Energy and Water Development, and the Interior and Environment.
- The Third Minibus (February 3, 2026): The final major package, H.R. 7148, was signed into law, covering the Labor, Health, Education, Defense, and Transportation, and Housing efforts.
The Resulting Roadblocks (Potholes?) for Grantseekers
It is important to note that the federal fiscal year ends on September 30th – regardless of when it officially ‘started’ with Congressional go-ahead. By the time federal grantmakers finally received their budgets in January and February, they had already lost four months of their fiscal year. These agencies are now being forced to compress their typical grant cycles, rushing to draft and publish Notices of Funding Opportunity (NOFOs) based on their current capacity. For grantseekers, this means the standard 60-day application window is being drastically shortened to allow reviewers time to read through and approve applications. Furthermore, applicants must navigate through two different versions of NOFOs, as some agencies released solicitations before their budgets were passed featuring the dreaded "funded subject to federal appropriations" disclaimer. Ultimately, these compressed timelines leave little room for error and significant room for confusion. The frantic pace to meet year-end deadlines frequently forces organizations to choose between submission speed and programmatic accuracy.
Remaining Challenges in the 2026 Budget Journey
While the minibuses unlocked many federal grant programs, grantseekers are still navigating three major ongoing disruptions.
The DHS Holdout
At the time of publication, President Trump has signed DHS funding measures into law, ending the record-long partial DHS shutdown of most DHS agencies, including TSA, FEMA, Coast Guard, Secret Services, and CISA through September 30, 2026. This law does not, however, include funding for ICE and Border Patrol/CBP operations.
The Ongoing Executive Order Effect
The administration launched 2025 with sweeping Executive Orders that targeted grant funding in support of Diversity, Equity and Inclusion (DEI), environmental justice, and green infrastructure. These acts by the executive branch caused unprecedented pauses on federal financial assistance in the legislative branch. While federal injunctions have since challenged or blocked several of these freezes, the administration's intent to modify the grant landscape remains clear. Federal agencies have and still are actively reviewing hundreds of longstanding grant funding programs to ensure alignment with executive priorities. While the number of forecasted grants has increased on federal grant dashboards in recent months, grant programs remain vulnerable to sudden modifications or withdrawal.
The Return of Earmarks
For years, competitive grant pools were protected by the politics of representation. Because Congressionally Directed Spending (earmarks) were largely banned, elected representatives relied on robust, competitive grant programs to ensure federal dollars flowed back to their home districts. These days, earmarks have returned in full force. The Department of Transportation, for example, is distributing over $2.3 billion to earmarked projects in this cycle, while the Department of Justice’s Byrne Community Project earmarks increased by 54%. As legislators bypass the competitive process to directly fund their own preferred projects, some discretionary grant pools that grantseekers have relied on in the past are shrinking.
Strategic Takeaways for Grantseekers
Despite the compressed timelines and political uncertainty, grant funding is still flowing. There remain several highly effective ways for grantseekers to navigate this evolving landscape and secure funding for their projects.
- Audit Your Organization’s Grant Risk.
It is important to know how government-based grant funding reaches your organization, and how the government classifies that funding. At the highest level, ensure your leadership and grantseeking team know exactly which of your grants are funded by the federal government. If you receive state funding, check to see if that money originates at the federal level and is simply ‘passed-through’ to your state. From there, spend time learning which pieces of Congressional legislation drive your most critical funding sources. In the process, be sure to distinguish between discretionary and statutory programs. Discretionary grants must be debated and approved from scratch within the federal budget each year. Because agencies also have significant leeway in choosing awardees and determining project scopes, these funds are more vulnerable to sudden budget cuts or major NOFO rewrites. Conversely, statutory programs lie completely outside of the annual federal budget process. They are established through their own independent legislative packages, and lawmakers simply add funding to them during each budget cycle. Because their existence and structure aren't renegotiated every year, they remain at an overall lower risk of change.
- Monitor Your Alignment with Federal Agency Changes.
Successful federal grantseeking has always involved adjusting your project scope to fit program requirements, but more work may be needed than before to align your organization with the evolving political climate. Even if the core of your work stays the same, simple steps like updating your terminology to reflect the administration's preferred focus areas can help your application navigate federal review processes. For instance, consider reframing "climate resiliency" as "supply chain hardening," or shifting equity initiatives toward language emphasizing "workforce readiness" or "economic mobility." To stay ahead of these shifts, spend time monitoring press releases from relevant federal agencies and read the Joint Explanatory Statements attached to passed budget bills to understand unpublicized directives.
As you watch these changes take shape in Washington, it is important to acknowledge there may come a time when a grantmaking agency's sweeping changes exceed your organization's interest or capacity to adapt. If contorting your program to fit a newly rewritten federal mandate compromises your core mission, have an honest conversation with your leadership and grantseeking teams about the ongoing pursuit of that specific grant. In these instances, it may be more strategic to step away from that federal program and focus your energy on seeking other public or private funders whose priorities better align with your own.
- Explore Alternative Funding Sources.
Because the federal funding landscape can be unpredictable, diversifying your grant portfolio is a practical way to prevent sudden gaps in your operating budget. If a federal agency pauses a program or drastically compresses its timeline, having alternative revenue streams already identified will be essential to keeping your projects moving forward. Take some time to consider alternative sources, including:
- State & Local-Sourced Grants: Many state and municipal programs, fueled by state tax revenues or localized municipal bonds, remain largely unaffected by federal executive actions and Congressional gridlocks. Consider engaging with your city council or county commissioners to help identify more localized opportunities.
- Private & Corporate Foundations: Private philanthropy has a strong history of stepping up to fill the gaps when public funding falls short or experiences delays. Furthermore, corporate foundations - particularly in the security, manufacturing, and technology sectors - often provide grants or in-kind contributions that align well with new national mandates for hard infrastructure and workforce development.
- Industry Partnerships: Exploring mutually beneficial public-private partnerships with local businesses and larger corporations can yield significant support. By tapping into corporate social responsibility (CSR) initiatives, your organization can secure funding for innovation and development projects while offering partners a chance to visibly invest in their own communities.
- Advocate, Engage, and Prepare.
Last, and certainly not least, do not navigate this landscape passively. Consider contacting your Congressional representatives to express concerns about potential program cuts and to advocate for continued funding in critical areas. Research participation in industry coalitions or trade associations to help amplify your voice in broader lobbying efforts. This is also an excellent time to speak with federal Program Officers - reaching out while they are also waiting for finalized directives can be a great way to build foundational relationships.
Because compressed timelines often result in significantly shorter submission windows for Notices of Funding Opportunity (NOFOs), getting a head start is essential. Utilizing this waiting period to build your community partnerships, gather your outcome data, update your federal registrations, and draft your core narratives will ensure your team is positioned for success the moment those competitive cycles finally begin.
SECTOR BUDGET SUMMARIES
Critical Infrastructure: https://www.grantsoffice.com/Learn-from-Us/Grant-News?article=1845
Education: https://www.grantsoffice.com/Learn-from-Us/Grant-News?article=1846
Research & Innovation: https://www.grantsoffice.com/Learn-from-Us/Grant-News?article=1847
Healthcare: https://www.grantsoffice.com/Learn-from-Us/Grant-News?article=1848
Nonprofits & Community Services: https://www.grantsoffice.com/Learn-from-Us/Grant-News?article=1849