Trump Administration’s Federal Funding Freeze: Implications and Uncertainty Ahead
Published on by Patrick Frambes in Not-for-Profit

Updated: Wednesday, January 29 1:35 PM ET – The White House Office of Management and Budget has rescinded a Trump administration directive pausing federal loans, grants and other financial assistance. We will continue to provide updates as they become available.
Updated: Wednesday, January 29 7:30 AM ET – A federal judge temporarily halted President Trump’s attempt to suspend federal funding while his administration reviews the programs. U.S. District Judge Loren L. AliKhan issued the ruling just before the freeze was set to begin, granting a temporary stay until Monday afternoon. The pause resulted from a lawsuit filed by nonprofit groups receiving federal aid, with another court hearing scheduled for Monday morning to further address the matter.
In a move that has sent shockwaves through various industries and non-profit sectors, the Trump administration has ordered a comprehensive freeze on all federal public loans, grants, and aid. The directive, which was issued by the White House Office of Management and Budget (OMB), demands an immediate halt in all funding-related activities and a mandatory review of all funded programs and agencies.
The spending freeze, which was scheduled to take effect at 5 p.m. ET on Tuesday, January 28, 2025, would have likely disrupted a wide swath of organizations and initiatives that depend on federal dollars. These include education, healthcare, poverty programs, housing assistance, disaster relief, and numerous other initiatives. The OMB memo also indicated a pause on funding for “nongovernmental organizations” and “foreign aid.”
The memo’s directive was expected to have far-reaching implications, notably for non-profits, higher education institutions, state and local governments, and healthcare entities that rely on federal funding. The temporary pause applies to all forms of “federal financial assistance,” encompassing grants, loans, loan guarantees, non-cash contributions, direct appropriations, and more.
Pending payments related to federal grants are likely to be delayed or stopped. Furthermore, processes for reviewing new federal grants have been put on hold. Federal agencies have until February 10 to submit detailed information on any programs subject to the suspension. The memo has, however, assured that the pause will not impact Social Security or Medicare payments or “assistance provided directly to individuals.”
The spending freeze is part of a broader campaign by the Trump administration to reshape the federal government in line with the president’s priorities. However, the execution of these directives has raised several questions, particularly regarding the interpretation of the executive orders, the distinction between prime and sub-recipients of federal funding, and the potential community impact if funding is cut.
Four groups representing non-profits, public health professionals, and small businesses filed a lawsuit on Tuesday, arguing that the directive would have a devastating impact on hundreds of thousands of grant recipients.
Despite the criticism, the Trump administration maintains that the freeze aligns with the president’s campaign promises. The administration’s stance is that the freeze is a necessary step to ensure that federal resources are not wasted on policies inconsistent with the president’s priorities.
Precautionary planning is advised
As organizations process the announcement of this funding pause and the subsequent rescindment, it is recommended that you take steps to solidify your operations. The most urgent need is cash flow management. Organizations are advised to build daily cash flow models, explore cash flow options with their bankers, engage with other non-federal funding sources, and plan for potential funding cuts.
While announcement of the freeze caused considerable uncertainty, organizations are encouraged to prepare for possible scenarios and stay informed about any new developments. You can also subscribe to our blog to receive relevant and up-to-date news for non-profits.
If you have any questions about your organization’s cash flow management, operational recourse, or other questions about this developing situation, contact a member of our non-profit team.