Legislative Session

Federal Funding Freeze

On March 13, the National Council of Nonprofits filed another lawsuit in the U.S. District Court of Rhode Island. The lawsuit is against OMB, DOE, EPA, DOI and USDA for illegally withholding funding to nonprofits and others from the Inflation Reduction Act and the Bipartisan Infrastructure Bill. See the National Council of Nonprofits joint statement.

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On January 27, Acting Director Vaeth released an OMB memo ordering a Temporary Pause of Agency, Grant, Loan, and Other Financial Assistance Programs. The memo caused chaos as some federal departments shut down funding portals before the order was due to take effect. Some federal departments have not re-opened funding portals, even though the memo was rescinded and two U.S. District Courts issued first a Temporary Restraining Order and On February 25, Judge Alikhan ordered a Preliminary Injunction.

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What Nonprofits Can Do

​Share your experiences with the recent funding uncertainties. It will strengthen the case led by the National Council of Nonprofits. And it provide necessary information for our U.S. Representatives and Senators as they negotiate the budget.

Be prepared to enter your information multiple times, on different forms or via email:

• Name and location of your organization

• Sector of the community your organization serves, e.g., children, seniors, people experiencing food insecurity

• Number of people employed by your organization

• Number of community members served

• Percentage of your budget derived from federal funds, either directly or as pass through funding from state or local governments

• How the federal funding freeze affected or would affect your organization and the community members served by it.

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Where to share:

• National Council of Nonprofit's form

• NM Attorney General's form

• Write to Senator Ben Ray Lujan

• Write to Senator Heinrich

• Write to Representative Leger Fernadez

• Write to Representative Melanie Stansbury

• Write to Representative Gabe Vasquez​

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Resources

• "Government Funding Cuts Put Nonprofits at Risk Across Nation" by Laura Tomasko, February 21, 2025 Urban Institute

• "How reliant are nonprofits on government grants?" by Cathleen Clerkin, Anna Koob, and David Wolcheck, February 6, 2025, Candid

• USA Spending, New Mexico

• "Ask Rhea!" Nonprofit Quarterly's fundraising advice column

• "12 Urgent Financial Action Steps for Nonprofits: A 2025 Checklist" by Steve Zimmerman and Ruth McCambridge, Nonprofit Financial Commons

• "How to Simplify and Streamline During a Crisis"by Melanie Lockwood Herman, Nonprofit Risk Management Center

• Federal Grants Update: Recommendations Amid Ongoing Uncertainty, February 17, 2025 YPTC

• "Turn on Your Headlights: How Funders Can Cut Through the Chaos Right Now" by Britt Lake and Melinda Tuan, February 13, 2025, The Center for Effective Philanthropy

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Tracking Activities on the Federal Funding Freeze​

March 6: Judge McConnell issued a preliminary injunction ordering the Trump administration to reinstate funding for essential government services for a range of programs including, but not limited to, public safety, environmental safety, child welfare, energy development, healthcare, and emergency management services. "Attorney General Raúl Torrez and Multistate Coalition Secure Court Order Blocking Trump Administration from Freezing Federal Funds"

 

March 4: The National Council of Nonprofits filed a motion requesting clarification from the court on what is deemed an “open” grant or contract. OMB has interpreted "open awards" to mean open awards that have been partially disbursed. The court has set a quick filing schedule which could lead to clarification sometime next week.

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February 25:  Judge Alikhan granted a Preliminary Injunction. The ruling states that OMB is prohibited from implementing, giving effect to, or reinstating under a different name the unilateral freeze of all new federal spending, attempted under OMB's funding freeze directive. OMB must instruct all federal agencies of the preliminary injunction. "Judge Issues National Injunction to Block Trump Administration's Devastating Attempt to Halt Funding For Essential Services"

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February 20: hearing in U.S. District Court on the coalitions motion for a Preliminary Injunction.

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February 12:  ​Federal administration files opposition to motion for Preliminary Injunction.

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February 11: the National Council and coalition represented by Democracy Forward file for Preliminary Injunction to keep the administration from implementing a blanket federal funding freeze.

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February 3: the National Council and coalition represented by Democracy Forward were back in court. Judge Alikhan issued another Temporary Restraining Order, concluding in the Memorandum of Opinion and Order:

• "that Defendants [Office of Management and Budget] are enjoined from implementing, giving effect to, or reinstating under a different name the directives in OMB Memorandum M-25-13 with respect to the disbursement of Federal funds under all open awards;" and

• "that the parties shall meet and confer and file a joint status report proposing a preliminary injunction briefing schedule on or before February 7, 2025."

 

January 31: Chief Judge John McConnell, Jr., U.S. District Court for the District of Rhode Island issued a Temporary Restraining Order.  The restraining order is to remain in place until "further Order of this Court." Judge McConnell, Jr. stated in the court order: "Defendants shall also be restrained and prohibited from reissuing,  adopting, implementing, or otherwise giving effect to the OMB Directive under any other name or title or through any other Defendants (or agency supervised, administered, or controlled by any Defendant), such as the continued implementation identified by the White House Press Secretary's statement of January 29, 2025."

 

January 29: 22 state Attorneys General, including NM Attorney General Raul Torrez filed for a Temporary Restraining Order of the federal funding pause.

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January 29: White House Press Secretary Karoline Leavitt posted on social media: "This is NOT a rescission of the federal funding freeze. It is simply a rescission of the OMB memo."

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January 29: Acting Director Vaeth released another OMB Memo M-25-14 rescinding the previous OMB Memo M-25-13.

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January 28: U.S. District Judge Alikhan blocked the action until Monday, February 3 at 5:00 pm.

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January 28: the National Council of Nonprofits in Coalition with the American Public Health Association, Main Street Alliance, and SAGE represented by Democracy Forward filed a Motion for a Temporary Restraining Order in the U.S. District Court for the District of Columbia.

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January 27: Acting Director Vaeth released OMB Memo M-25-13 ordering a Temporary Pause of Agency, Grant, Loan, and Other Financial Assistance Programs. The pause was due to go into effect on January 28 at 5:00 pm. However, many payment portals were turned off on January 27 or early on January 28.

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March 13: National Council of Nonprofits files a lawsuit challenging the federal administration’s unlawful freeze on funding from the congressionally-approved Inflation Reduction Act  and the Infrastructure Investment and Jobs Act.