Government Affairs Digest: What Nonprofits Need to Know (Part 4)
025 has felt eerily similar to 2020—only more divided and chaotic. With government funding reductions and broader challenges facing nonprofits, especially those rooted in DEI-focused work, I found myself instinctively reaching out to fellow nonprofit leaders just to check in. But it quickly became clear that we all needed more.
Kate Hewitt, Executive Director of 21st Century Leaders
February 19, 2025 - This content will be updated as developments unfold.
“2025 has felt eerily similar to 2020—only more divided and chaotic. With government funding reductions and broader challenges facing nonprofits, especially those rooted in DEI-focused work, I found myself instinctively reaching out to fellow nonprofit leaders just to check in. But it quickly became clear that we all needed more. Purpose Possible has positioned itself as a trusted industry leader, resource, and advocate, so it was no surprise that Susannah and Laura helped turn that need for “more” into a truly impactful conversation. There’s an energy and urgency here that I hope we all carry forward—not just to keep the conversations going, but to take action through strategy, collaboration/unity, and accountability.”
Executive Exchange:
On Wednesday, February 12, 2025, in response to Kate’s timely suggestion, Purpose Possible gathered nonprofit leaders from across Metro Atlanta to share and strategize. The attendees represented a cross-section of the sector, including the smallest and largest organizations in our region, as well as a variety of sub-sectors such as housing, homelessness, and youth development. The conversations were candid and thoughtful, and everyone agreed they were much-needed.
The takeaways from this gathering are shared with you here
Purpose Possible is working diligently to understand what is most needed for nonprofit organizations in Atlanta. Over the coming weeks, we will continue to thoughtfully curate resources from expert partners and news highlights while we engage with nonprofits and funders across sectors and budget levels. We welcome suggestions on how we can best support the sector - if you see a particular need or are seeking a particular resource, let us know! Stay tuned to our website and newsletter for upcoming opportunities to be in community with your peers and Purpose Possible.
Navigating the Federal Funding Freeze: What Nonprofits Need to Know (Part 3)
The DOJ issued a directive to begin civil and criminal investigations of NGOs and other private companies engaged in "illegal" DEI work
Secretary Turner announced in a press conference that HUD would immediately halt any pending or future enforcement actions related to HUD’s 2016 Equal Access Rule.
A federal judge has blocked efforts to cut the NIH’s “indirect costs” in the funding it provides to research grants by 50%.
February 13, 2025 - This content will be updated as developments unfold.
Latest Developments:
February 5: The DOJ issued a directive to begin civil and criminal investigations of NGOs and other private companies engaged in "illegal" DEI work. (Ending Illegal DEI and DEIA Discrimination and Preferences)
Read: DOJ Targets Illegal DEI Programs Under New Executive Order - National Law Review
By March 1, 2025, the Civil Rights Division and the Office of Legal Policy are to submit a report containing recommendations to “encourage the private sector to end illegal discrimination and preferences” related to DEI.
Notably, the memo does not prohibit educational, cultural, or historical observances that “celebrate diversity, recognize historical contributions, and promote awareness without engaging in exclusion or discrimination.” Examples of these types of observances include Black History Month and International Holocaust Remembrance Day.
This new effort from the DOJ will likely face legal scrutiny in the coming weeks, as federal courts have routinely upheld private employers’ First Amendment right to promote DEI.
February 6: Secretary Turner announced in a press conference that HUD would immediately halt any pending or future enforcement actions related to HUD’s 2016 Equal Access Rule.
Per the National Alliance to End Homelessness: “The Equal Access Rule itself has not been rescinded; that requires a formal regulatory process.”
Read: Federal Updates & Continuing Advocacy - National Alliance to End Homelessness
February 7: President Trump issued a short memo directing “the heads of executive departments and agencies (agencies) to review all funding that agencies provide to NGOs”
Read: Why We Filed a Lawsuit Against the Administration | National Council of Nonprofits
February 10: A federal judge said on Monday that the White House had defied his order to release billions of dollars in federal grants, marking the first time a judge has expressly declared that the Trump administration is disobeying a judicial mandate.
February 11: A federal judge has blocked efforts to cut the NIH’s “indirect costs” in the funding it provides to research grants by 50%.
Read: NIH Budget Cuts - TIME
February 12: Kennedy Center President Deborah Rutter Steps Down as Trump Is Officially Elected Chair | Playbill
Read: Kennedy Center Responds to Trump's Intentions to Take Control | Playbill
Actions to take:
Guidance and legal orders are changing day to day. Always refer to granting agencies for updated guidelines.
Engage with your local lawmakers to express your concerns and opinions.
5calls.org is a tool that directs you to the right politicians and allows you to focus your efforts on the issues most pressing to you and your organization.
Be a storyteller to demonstrate policy changes' impact and real-world effects.
Participate in nonprofit coalitions actively advocating on behalf of the sector, including Purpose Possible’s newly formed Executive Exchange. Our first meetup was held on 2/12/25 and we will share key takeaways and next steps in a future blog post shortly.
This may be a good time to run through some cash flow forecasts for various scenarios. Here is a tool from the Nonprofit Finance Fund: Nonprofit Budgeting Scenario Planning Tool.
Tools:
Bookmark: National Council of Nonprofits: “Executive Orders Affecting Charitable Nonprofits” - a chart of the most pertinent executive orders, expected impacts, and related actions that will be updated regularly.
Resources:
Georgia Center for Nonprofits US Policy Changes Resource Hub
Minnesota Council of Nonprofits Executive Orders affecting nonprofits
Reading
Navigating the Federal Funding Freeze: What Nonprofits Need to Know (Part 2)
On Monday, February 3rd, the U.S. District Court for the District of Columbia granted a temporary restraining order of the OMB’s freeze on federal grant disbursements that has put essential services across the nation in jeopardy in response to a suit filed by Democracy Forward on behalf of the National Council of Nonprofits, the American Public Health Association, Main Street Alliance, and SAGE.
February 5, 2025 - This content will be updated as developments unfold.
“On January 29, the U.S. Office of Management and Budget (OMB) rescinded M-25-13, which it had issued two days earlier, and which required federal agencies to "temporarily pause all activities related to obligation or disbursement of all Federal financial assistance" and "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."
Days after it was issued on January 27, one federal judge administratively stayed a portion of the memo before the OMB rescinded it altogether. A White House press secretary subsequently explained that the "freeze" was, in fact, still in place, and another judge indicated he intends to issue an injunction soon. While much remains unclear, there are basic parameters and next steps every FFA recipient should consider.”
-Venable LLP. (2025, January). The OMB Issued a Memo Freezing Federal Financial Assistance. And Then Rescinded the Memo, But Not the Freeze. Confused? Read On.
Most Recent Updates:
On Monday, February 3rd, the U.S. District Court for the District of Columbia granted a temporary restraining order of the OMB’s freeze on federal grant disbursements that has put essential services across the nation in jeopardy in response to a suit filed by Democracy Forward on behalf of the National Council of Nonprofits, the American Public Health Association, Main Street Alliance, and SAGE.
Full press release from National Council of Nonprofits
What does this mean?
National Council of Nonprofits President, Diane Yentel explained on LinkedIn:
The judge presiding over our case - National Council of Nonprofits et al vs. Office of Management and Budget - GRANTED another Temporary Restraining Order against the admin’s ability to halt federal grants and loans!!
The DOJ’s motion to dismiss was DENIED.
OMB is ENJOINED from implementing, giving effect to, or reinstating under a different name the directive to halt federal spending broadly.
OMB must provide notice to all federal agencies, and instruct all such agencies to release any funding that was paused under the directive. OMB has to update the court on Feb 7th on how they have notified the agencies.
Much more to come but make no mistake - this is a significant setback to the administration’s plans to halt federal funding.
Actions to take:
In response to the Federal Funding Freeze announcement on Tuesday, January 27, Purpose Possible issued a statement to its clients titled "Navigating the Federal Funding Freeze: What Nonprofits Need to Know.” Despite the court’s ruling on Feb. 3rd, PP is strongly encouraging all of our clients to take steps to ensure the resilience and solvency of their organizations with or without government funding. No matter what happens with government funding, your organization can only be made stronger by diversifying its funding streams and deepening relationships with donors and private funders.
Tools:
To help start the conversation and navigate the complexities of scenario planning we have designed a flowchart to aid in the decision-making process.
In Community:
Exec Exchange: A Nonprofit Leadership Town Hall
Join Purpose Possible and other nonprofit executive leaders for a candid discussion of recent threats to government funding, recommendations for how to move forward, and a collective call to action.
Date: Wednesday, February 12, 2025
Time: 9:00am - 11:00am EST
Location: East Atlanta Kids Club
at Brownwood Recreation Center
Venue graciously provided by East Atlanta Kids Club
Breakfast will be provided
Resources:
Georgia Center for Nonprofits, Executive Orders & Nonprofit Impact Webinar
(At the time of this article, registration was closed, but we encourage folks to check back as they may expand capacity)
Join us to hear from a panel of experts specializing in nonprofit law and crisis communications. Bring your leaders and your questions, and we’ll provide clarity around the legal developments to date as well as action steps for preparation and advocacy.
Date: Thursday, February 6, 2025
Time: 3:00 - 4:30 pm EST
National Council of Nonprofits presents, Executive Actions and Their Impacts on Charitable Nonprofits Webinar - RSVP, OR Register to Receive the Recording
The last couple weeks have been a whirlwind for many nonprofits, from the more than 100 Executive Orders (EOs) issued by President Trump to the confusion about the funding freeze ordered in a memo from the Office of Management and Budget (OMB). While a judge granted an Administrative Stay in the case filed by the National Council of Nonprofits and others, and OMB rescinded the memo, the EOs are still in effect, and charitable nonprofits with federal grants are still feeling the impact of these decisions. Learn more about EOs, the ones most directly or indirectly impacting charitable nonprofits, and the latest on the legal challenges.Because we expect overwhelming interest for this webinar, please only click the link to register for the live event if you plan to view it live. If you don't anticipate being able to join live, please register to receive the recording so we can keep as many live lines available as possible.
Date: Friday, February 7, 2025
Time: 3:00-4:00pm EST
Kilpatrick Townsend presents, The Changing Landscape of Federal Funding in the Trump Administration - RSVP
Join Kilpatrick Townsend to discuss the new administration's approach to federal funding and its implications for grant and aid funding and policy changes. We will explore topics including, but not limited to, the rescinded federal funding freeze, a shift in DOJ enforcement actions, policy changes affecting grant administration, and what we might see moving forward.
Date: Wednesday, February 12, 2025
Time: 1:00 p.m. to 2:00 p.m. EST
Reading
The American Bar Association: What is an Executive Order?
National Council of Nonprofits: “Executive Orders Affecting Charitable Nonprofits” - a chart of the most pertinent executive orders, expected impacts, and related actions that will be updated regularly.
Navigating the Federal Funding Freeze: What Nonprofits Need to Know (Part 1)
The recent directive from the White House to temporarily freeze federal grants and loans has created uncertainty and concern for many organizations that rely on federal funding to sustain vital programs. This is what we know and what we recommend.
January 29, 2025 - This content will be updated as developments unfold.
The recent directive from the White House to temporarily freeze federal grants and loans has created uncertainty and concern for many organizations that rely on federal funding to sustain vital programs. At Purpose Possible, we understand these concerns and are actively working to gather and share information in an effort to provide clarity, guidance, and support as we navigate this evolving situation together.
What’s Happening?
On Tuesday, January 27, 2025 the Trump White House issued a temporary freeze on federal grants and loans as part of a broader policy review (Roll Call, January 27, 2025). This pause delays funding disbursements and approvals, creating challenges for nonprofits that depend on these resources.
While the full implications of this directive remain unclear, it's important to note that the Impoundment Control Act of 1974 limits the executive branch's power to withhold funds without congressional approval. This means that while delays are possible, permanent cuts to already-appropriated funding are unlikely without further legislative action.
How This Affects Funding
Current Grants and Loans
Late Tuesday afternoon, a federal judge in the District of Columbia temporarily blocked the order in response to a lawsuit filed by Democracy Forward, a liberal organization that argued that the directive violated the First Amendment and a law governing how executive orders are to be rolled out. The judge, Loren AliKhan, said she would issue a more permanent decision on February 3.
On Wednesday, January 28, 2025, the White House rescinded the Office of Management & Budget Memo, M-25-13. White House Press Secretary, Karoline Leavitt did say that some funding freezes would remain in effect. We are awaiting further clarification but can share that clients in the housing sector have reported the reopening of grant reimbursement portals on Wednesday afternoon.
Whether the funding freeze announced this week fully goes into effect or not, it is clear that government funding may not be a reliable source of funding going forward. Read on for recommendations for how to manage these changes in the weeks ahead.
Future Grants and Loans
The announcement or awarding of new funding opportunities may be postponed, which could delay programs in the application or approval stages.
Steps You Can Take Now
Stay Informed
Organizations have been advised to continue submitting budget claims, funding requests, and reimbursements.
Reach out to the program officer at the federal agency from whom you receive funding to seek clarity on the next steps. Stay in contact with this person but also know that they may also be seeking clarity and answers. Be diligent, but be patient.
Familiarize yourself with specific contract terms and conditions related to existing awards, especially regarding termination requirements. Your terms and conditions are part of the contractual agreement, and ensuring your continued compliance with your grant is critical.
Assess Financial Impact
Build a daily cash flow model and run scenarios for paused federal payments (for the next two weeks, next month, three months, etc.) to determine when your organization will be challenged to meet expense obligations.
If you anticipate that this funding halt will impact your ability to operate, contact your bank about immediate cash flow options that may be available.
If your organization has a board-restricted reserve and/or endowment, convene a discussion regarding shifting policy to access these funds, if necessary.
Develop Contingency Plans
Create scenario plans to identify adjustments you could make to programs, staffing, or expenses if federal funding is delayed or reduced.
Draft messaging to donors and stakeholders about the potential impact of the freeze and the need for support.
Develop strategies to diversify funding sources for both immediate and long-term stability.
Advocate for Clarity
Engage with congressional representatives and advocacy groups to emphasize the importance of uninterrupted federal funding for your programs.
Document how the freeze affects your operations and collaborate with peers to amplify concerns.
Moving Forward
While this directive has created uncertainty, Purpose Possible remains committed to helping our communities navigate the challenges ahead. We will continue to monitor developments, provide updates, and offer resources for support during this time.
If you have questions or need assistance, please don’t hesitate to reach out. Together, we can weather this challenge and continue our vital, mission-driven work.
Ways Purpose Possible Can Help:
● Strategize on non-government funding sources to assist with immediate cash flow support and long-term financial stability.
● Understand grant terms and agreements.
● Support in drafting messaging to your individual donors or community to convey the impact of this freeze on your mission and how they can offer their support.
● Support in reviewing your contingency plans.
Here are a few articles and resources:
Other resources:
FEARLESS FUND: What happened & what you need to know
The lawsuit against the Fearless Fund sparked widespread attention, raising questions for nonprofit and philanthropic organizations. Central to the case is whether race-based initiatives, aimed at supporting underfunded groups and addressing systemic inequalities, serve the public interest or violate anti-discrimination laws.
The lawsuit against the Fearless Fund has sparked widespread attention, raising critical questions for nonprofit and philanthropic organizations. Central to the case is whether race-based initiatives, aimed at supporting underfunded groups and addressing systemic inequalities, serve the public interest or violate anti-discrimination laws. Fearless Fund was established to address the gap that exists in venture capital funding for women of color-led businesses. The case has caused a shift in how organizations can seek or provide funding for programs targeting specific racial groups.
Courts are currently debating what is in the greater “public interest”—race-neutral initiatives only or actively trying to remediate systemic inequality with race-based initiatives.
Below are a few key insights from the case and ruling.
Here’s what happened:
On August 2, 2023, the American Alliance for Equal Rights (AAER) filed a complaint on behalf of three of its members against Fearless Fund and related entities.
The lawsuit alleged that a grant program run by Fearless Foundation violates 42 U.S.C. Section 1981, a federal statute enacted as part of the Civil Rights Act of 1866 that prohibits discrimination on the basis of race in the making or enforcement of contracts.
September 26, 2023: A U.S. District Judge denied AAER's request to halt the grant awards process, saying that the program qualifies as charitable giving, a form of protected speech under the First Amendment.
September 30, 2023: A three-person panel on the U.S. Court of Appeals for the 11th Circuit blocked the grant program, saying it was “racially exclusionary” and “substantially likely” to violate a federal law prohibiting racial discrimination in contracting.
Between December 6, 2023, and June 3, 2024, several legal actions were taken. The Fearless Fund sought to reinstate the program by filing a brief with the U.S. Court of Appeals and arguments were presented before a three-judge appeals panel in Miami. Ultimately, the 11th Circuit upheld the injunction in the case.
September 11, 2024: The parties settled the case, with Fearless Foundation agreeing to close the grant program permanently.y.
Here’s what you need to know:
The key word is CONTRACT. You can call something a grant, but if you are requiring any specific activities/requirements in exchange for the money (agreements, accepting the “rules” of the program etc), it’s more likely to be considered a contract, which courts are more likely to find discriminatory.
Specifying that "only applicants of a specific race can apply" in eligibility criteria is considered discrimination and poses a legal liability.
Unrestricted and "trust-based" philanthropy, which operates without formal grant agreements or explicit rules, is less susceptible to litigation.
Qualitative descriptions of overcoming race and discussing unique identity positions seem safe to include as application questions or vetting strategies, but race-based quotas and quantitative benchmarks for admissions or giving are liabilities.
Data to talk about racial injustice to justify any racial focus of a service provided is still okay to use.
Instead of using race as an eligibility criterion, it’s recommended that the application include a qualitative question about how applicants are advancing the organization/funder's racial equity goals.
For organizations that serve or provide services to a specific racial group: that activity is considered an expressive/first amendment right.
It has been recommended that organizations review mission statements and legal documents to ensure that their activities are described in “expressive” terms.
It is recommended that organizations review their insurance policies to ensure that they cover anti-discrimination litigation and that any stated racial focus does not render their policies void.
Purpose Possible is not a legal entity, and the information provided here is for informational purposes only. It should not be considered legal advice. Please consult with a legal professional for specific legal guidance.
Here are some headlines about the Fearless Fund Decision:
What the Fearless Fund Settlement Means for Philanthropic Freedom
(Chronicle of Philanthropy)
What’s Next for Philanthropy After the Fearless Fund Settlement?
(Inside Philanthropy)
Nonprofits, Legal Experts React to the Fearless Fund Decision to Shutter Grant Program to Black Entrepreneurs (Chronicle of Philanthropy)