Federal Funding to Undergo Big Changes

Written By Micayla Gonzales

On August 7, 2025, Donald Trump issued Executive Order (EO) 14332 titled “Improving Oversight of Federal Grantmaking” to make changes to discretionary grants. This EO impacts and tightens regulation on every aspect of the federal grant process - from eligibility requirements, to oversight and compliance, to award termination. 

The EO instructs agencies to:

  1. Appoint a senior political appointee to review Request for Applications (RFA) or Notice of Funding Opportunities (NOFO) before they are released to the public to ensure alignment with administrative priorities.   

  2. Remove legal or technical language and only use plain language in RFAs, allowing nonprofits to apply for federal funding without the need for involvement from subject-matter experts. 

  3. Prioritize applicants with smaller requests for indirect costs, undermining Negotiated Indirect Cost Rate Agreements (NICRA) and the ability of nonprofits to fund administrative costs. 

  4. Eliminate funding opportunities and language that promotes DEI and inclusivity, jeopardizing key funding sources for nonprofits targeting systemic injustices and serving marginalized communities. 

  5. Terminate existing grant awards at their individual discretion, regardless of if the active project is compliant and performing on target (the EO also demands that the Office of Management and Budget updates its Uniform Guidance, or 2 CFR Part 200, to make this allowable). 

Potential Implications for Grantseekers and Awardees

Nonprofits should anticipate slower federal grant processes with the EO necessitating senior appointee review and analysis to ensure political alignment with the Trump administration’s priorities. Further, possible legal action taken against the EO could create additional delays. For months now, Grants.gov has shortened their grant application windows to two weeks or less. This pattern does not seem to be going away anytime soon. Despite all of the uncertainty, the good news is that federal grants are still available. They just require extra diligence and planning to apply and receive funding. 

Actions to Consider

  1. Diversify funding sources to decrease reliance on federal funding. Explore if major donor contributions, capital outlay, or increasing program revenue might be an option for your organization in addition to grants. 

  2. Prepare for federal grant applications ahead of time so that if and when they are released, you will not have to scramble to brainstorm project ideas and finish the application in two weeks. Develop core ideas, engage with stakeholders and potential partners, and draft up a budget for the project you are seeking funding for in advance.  

  3. Fortify compliance, policies, and internal controls to instill practices of accountability and properly documenting use of grant funds in preparation for more detailed reporting. 

  4. Work with leadership and other stakeholders in your organization to develop a contingency plan in case your active federal award is terminated. 

  5. Lean on your community and other nonprofit leaders for support and to share information. Identify if there are any collaborative opportunities that can help you and organizations like yours make the most of limited funding due to slower grant processes. 

Nonprofit Resources

Micayla Gonzales
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