It’s been a wild few days and Community Solutions has watched the unfolding federal funding drama with great interest. Here’s our read as of Wednesday afternoon:
Federal funding IS NOT frozen. But Executive Orders are still in place.
The first attempt didn’t work. There will be another.
Let’s go back to the beginning
- The Executive Orders (EO) coming out of the White House directed the Office of Management and Budget (OMB) to implement EOs related to spending for a slew of purposes. THESE EXECUTIVE ORDERS ARE STILL IN PLACE
- OMB issued memo (M-25-13) “Temporary Pause of Agency, Grant, Loan, and Other Financial Assistance Programs.” This is the federal funding freeze. It related to ALL federal financial assistance AND relevant agency activities. THIS WAS RESCINDED
- A federal judge issued a “brief administrative stay” on implementation of the OBM memo until 5pm on Monday, February 3. This was responding to a suit filed by nonprofits. THIS NO LONGER MATTERS BECAUSE THE OMB MEMO WAS RESCINDED.
- OMB rescinded memo M-25-13. In the interim, there were some leaked FAQs and other OBM documents which attempted to clarify. But instead of issuing the clarification, OBM just cancelled the whole thing, with the one-line notice released Wednesday afternoon.
- The EOs still direct OMB to “identify and review all federal financial assistance programs and supporting activities consistent with the President’s policies and requirements.”
We will almost certainly see new OBM guidance. Probably very soon. I suspect it may include a more targeted funding freeze.
The rapid outcry forced this change. Advocacy works. So does litigation.
What’s next?
M-25-13 stopped all federal spending until the programs passed the White House’s tests. The memo even said the purpose was to “provide the Administration time to review agency programs…” It turned off the tap and stopped the flow until they decided to turn some back on. Now the flow is back on, but there can still be substantial disruption, and individual federal agencies could opt to pause disbursements until there is clarity.
The only thing cancelled is the universal requirement to immediately halt all federal payments.
At the very least, OMB will have to collect the info required by the EOs. There’s a spreadsheet floating around which went to federal agencies to collect info on federal programs. It was directly tied to M-25-13, so is currently in limbo. But it asked questions like:
- Does this program provide Federal funding to nongovernmental organizations supporting or providing services, either directly or indirectly, to removable or illegal aliens?
- Does this program provide funding that is implicated by the directive to end discriminatory programs, including illegal DEI and “diversity, equity, inclusion, and accessibility” (DEIA) mandates, policies, programs, preferences, and activities, under whatever name they appear, or other directives in the same EO, including those related to “environmental justice” programs or “equity-related” grants?
- If not covered in the preceding columns, does this program support any activities that must not be supported based on Executive Orders issued on or after January 20, 2025 (including executive orders released following the dissemination of this spreadsheet)?
