A new executive order (EO) issued on August 7 by President Trump would significantly alter and politicize the process by which federal grants get approved, payments issued, and awards rescinded, all to the likely detriment of many nonprofits and state and local governments that rely on such grants.

Among other things, the EO, titled, “Improving Oversight of Federal Grantmaking,” would:

• Assign mandatory approval authority for federal grant opportunities and awards to senior level political appointees in each federal agency that is empowered to issue or manage federal awards. These senior level officials are charged with creating new processes to review new funding opportunities and discretionary grants to ensure “consistency with agency priorities and the national interest.” The order stipulates that, except as required by law, no new funding opportunity notices shall be issued without approval by such official until the new review policies are in place.
• Require discretionary awards to “demonstrably advance the President’s policy priorities.”
• Prohibit discretionary awards from promoting or funding programs that use race or “proxies” for race as selection criteria; programs or entities that deny a “sex binary” or “the notion that sex is a chosen or mutable characteristic;” “illegal immigration;” or “any other initiatives that compromise public safety or promote anti-American values.”
• Direct the Office of Management and Budget (OMB) to review and revise the OMB Uniform Guidance, a comprehensive set of rules covering government grants and contracting that establish minimum indirect cost levels and other important provisions. The order directs OMB to issue new rules to permit discretionary grants to be terminated “for convenience, including when the award no longer advances agency priorities or the national interest.”
• Require additional steps and approvals for draw-downs of funds by grant recipients of previously approved funds.

The EO also calls for grant opportunities to be written in plain language to facilitate broader access by potential applicants, and for greater inter-agency coordination to reduce potential duplication of announcements or awards.

Overall, the EO could create added challenges and roadblocks for government grant applicants or recipients. It will likely have the effect of delaying, withholding or rescinding funding from key programs for nonprofits and state and local governments. The extent of its impact will become clearer when the OMB issues its proposed regulatory and procedural changes as mandated by the order.

It’s unclear at this point whether, or what, legal action may be available or taken in response to this order. For now, nonprofits should expect and, if possible, try to plan for additional hurdles or funding delays at try to mitigate them now to the extent possible. Please keep us informed about the communications you are receiving or any problems you are encountering, so that we can continue to advocate forcefully on this issue.

Related resources:

• Chart of executive orders affecting charitable nonprofits (National Council of Nonprofits; updated regularly)