Matters Trump administration orders federal funding freeze on all public loans, grants and other aid

Date

Jan. 28 2025

Update as of January 28, 2025: The National Council of Nonprofits (NCN), along with small business and public health advocates, filed a lawsuit on January 28 asking the U.S. District Court for the District of Columbia to stop the implementation of the OMB memo.

The lawsuit alleges that OMB’s memo is not allowed under the Administrative Procedures Act because it is: (a) arbitrary and capricious; (b) in violation of the First Amendment to the U.S. Constitution; and (c) beyond OMB’s statutory authority. The NCN lawsuit seeks a temporary restraining order and preliminary injunction that would immediately stop the implementation of the memo, along with a permanent injunction that would invalidate the memo. Shortly before the pause was set to take effect on January 28, the court issued an administrative stay delaying the implementation of parts of the memo until Monday, February 3 at 5 p.m.

As the court explained in its ruling, “[a]n administrative stay ‘buys the court time to deliberate’ when issues are not ‘easy to evaluate in haste.'” The administrative stay ensures that federal agencies may continue to make disbursements to existing grantees through Monday, but it does not allow for the awarding of new grants. The parties to the lawsuit will submit additional briefs to the court this week so that the court can make a ruling on the merits of the case on Monday to determine whether to issue a preliminary injunction and temporary restraining order that would stop the implementation of the grants pause beyond Monday. It is likely that some state and local governments will file similar actions in federal court.

The council will continue to update this page as information is released. For a full chart on how the current Executive Orders affect nonprofits, please see the National Council of Nonprofits webpage.

The Trump Administration has announced a temporary suspension of federal grants, loans and other financial assistance linked to recent executive orders. This decision, which will take effect by 5 p.m. today, impacts a wide range of programs across the nation. Providers can view the decision here. 

 The Providers’ Council’s national partner, the National Council of Nonprofits, is filing a motion for a Temporary Restraining Order in the U.S. District Court for the District of Columbia today to block the White House Office of Management and Budget from pausing all federal agency grants and loans. NCN is filing together with public health and small business leaders, and it will be represented in court by Democracy Forward. 

This freeze raises critical constitutional questions, and other legal challenges are anticipated. Under the directive from the Office of Management and Budget (OMB), federal agencies are required to pause activities related to disbursing financial assistance, as allowed by existing laws. This includes funding for various programs such as foreign aid, nonprofit initiatives and DEI efforts. While Congress has authorized these funds, the Trump administration’s decision to delay their distribution is likely to undergo legal review.  

Critical programs like Social Security, Medicare and direct payments to individuals are excluded from this freeze. However, funding for community programs, research and nonprofit projects may face delays. Federal agencies must provide their reviews to the OMB by February 10, at which point decisions on the paused funding will be made. 

Please reach out to Caroline O’Neill if your organization will be impacted.