On January 27, 2025, the Office of Management and Budget (OMB), led by Acting Director Matthew J. Vaeth, issued a memorandum (M-25-13) announcing a temporary pause on all federal financial assistance programs. The order, set to take effect on January 28 at 5 p.m. ET, has far-reaching implications for billions of dollars allocated to state and local governments, research projects, and other initiatives. You can read the full memo here.
Why It Matters
Federal grants and loans are critical to funding essential programs across the nation, from housing subsidies to educational initiatives. With the temporary suspension, programs under review may see delays or funding cuts, impacting local governments, nonprofit organizations, and other recipients.
Context Behind the Pause
The Trump administration’s decision aligns with its broader priorities, as outlined in a series of executive orders signed upon the president’s inauguration. These orders target the reevaluation of federal spending on initiatives such as domestic infrastructure, energy, diversity, and foreign aid. According to the memo, the administration aims to redirect funding to advance its agenda, including “unleashing American energy,” combating inflation, and eliminating policies associated with “Marxist equity” and the “green new deal.”
The memo frames these steps as a commitment to better aligning taxpayer dollars with the administration’s priorities, describing certain programs as a “waste of taxpayer dollars that does not improve the day-to-day lives of those we serve.”
Exclusions and Protections
The memo explicitly states that Medicare and Social Security benefits will not be affected by the pause, ensuring critical safety-net programs remain untouched.
Next Steps for Agencies
Federal agencies have until February 10, 2025, to submit detailed information about the programs and projects affected by the suspension. Until further guidance is issued, agencies are instructed to:
- Halt the issuance of new awards.
- Suspend disbursement of funds under open awards.
- Review existing programs for alignment with administration priorities.
Exceptions may be granted on a case-by-case basis, and agencies are tasked with ensuring that all financial assistance aligns with the administration’s priorities.
Implications for Stakeholders
This pause creates uncertainty for thousands of programs dependent on federal funding. Delays in disbursement or cancellations could affect public services, research initiatives, and nonprofit organizations reliant on federal grants. Critics argue that the broad language in the memo—targeting “woke gender ideology” and “green new deal” policies—may result in political rather than pragmatic funding decisions. If your nonprofit is reliant on federal funding, make sure you’re apprised of how the memorandum is evolving, speak with your elected representatives and funding sources, and appeal for the continued federal support of your organization.
Matthew Burke, CPA
Partner
Matt specializes in providing Cerini and Associates’ diverse array of midsized business clientele and nonprofit organizations with valuable consulting and assurance services. He prides himself on value-added, responsive, and innovative service to his clients; with a focus on forward-thinking and creative solutions. Matt joined the firm in 2002 and has years of experience with many types of complex accounting, auditing, compliance, and general business matters that impact entrepreneurial, established, and nonprofit businesses.
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