OMB Freeze on Grants & Judge's Temporary Ruling

I wanted to pass along this message from Ashley Harris, Vice President of Public Policy & Advocacy with United Ways of Texas. Ashley helps lead the policy committee of Texas Nonprofit Strong, where I serve as a member.

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In partnership,
Colton C. Strawser, Ph.D., CFRE
Executive Director | North Texas Nonprofit Institute

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As many of you are aware, the OMB issued a memo yesterday freezing federal grants and loans, with the intention of also reviewing compliance with several executive orders. This news has caused significant uncertainty for nonprofits and communities that rely on federal funding to maintain vital programs.  Late yesterday, a federal judge ruled to temporarily pause the OMB freeze until Monday, February 3^rd, at 5:00 PM EST.  The judge will hold another hearing Monday on whether to grant a longer pause.  This provides some immediate relief for organizations, giving the sector a brief window to assess the situation further and prepare for potential outcomes. However, it is important to note that this ruling is temporary, and the long-term impact of the freeze remains uncertain.

What this Means? 

• While this pause offers a brief reprieve, nonprofits are still left grappling with the complexity of the OMB memo and its potential impact on existing grants, loans, and programmatic funding.  
• United Ways of Texas and One Star are still working to fully understand the scope of the freeze, compliance requirements, and the extent to which programs may be affected. 
• Separately from the nonprofits’ lawsuit, a number of state attorneys general, led by New York, also announced plans to sue over the federal funding freeze.

Next Steps and What We’re Doing 

• We will continue to monitor the situation closely and will keep you informed of any further developments or additional guidance from federal agencies. As the February 3^rd deadline approaches, we anticipate more clarity on the next steps.

What You Can Do

• Stay in touch with us for any new developments or guidance that may be issued in the coming days. 
• Continue to assess the impact on your programs and reach out to us if you have specific concerns about your funding or compliance. Review the Guidelines for Federal Agencies to see if your program is listed.  
• Drawdown federal funds if you are able: We’ve learned that each federal agency must submit funding details to OMB by February 7. Each agency is likely to handle this pause differently.  We recommend taking action today to drawdown any federal funding you are able. 
• Assess your financial situation: Check out this great advice from Barabara O’Reilly, CFRE. 
• Connect with your donors: Contact your private donors TODAY. Be transparent about what you know and don’t know, explain how you’re managing this uncertainty, and express gratitude for their support. Keep them informed on ways they can assist—whether through one-on-one conversations with key donors or a broader email update. 
• Reach out to your Members of Congress: Take a few minutes to contact your Senators and Representatives to share your story. Help them understand the specific impact a pause in federal funding would have on nonprofits in your community and the people they serve. 
• Communicate with your Board, along with those you serve, donors, and staff: SEE TEMPLATE EMAIL BELOW as a starting point. 

SAMPLE EMAIL TO BOARD

Subject: Update on Federal Funding Freeze and Potential Impact

Dear [Name], 

On Monday, January 27, a memo was issued directing federal agencies to temporarily suspend grants, loans, and assistance programs while they undergo a review for compliance with recently issued Executive Orders. Essentially, this means that agencies cannot disburse funds until they’ve completed this review.  

On January 28, a federal judge temporarily blocked the memo, pausing the funding freeze until Monday, February 3. Although funding is supposed to be flowing now, there’s still a chance that it could stop after Monday. The situation is fluid, and the full impact on services and programs remains uncertain. 

 In the meantime, we deeply appreciate your continued support. We encourage you to [Insert call to action for board members, staff, or other stakeholders], as your involvement will be crucial as we navigate this evolving situation. 

Thank you for standing by us. 

Best regards,
[Your Name]
[Your Organization]