Federal Funding Pause: What Nonprofit Leaders Need to Know
On January 27, 2025, the Office of Management and Budget (OMB) issued a memo requiring federal agencies to pause financial assistance obligations and disbursements for a mandatory review of all funding. The memo required pause in disbursement of Federal funds under all open awards and the issuance of new awards. This decision caused uncertainty for nonprofit organizations receiving funding from the federal government - whether through grants, pass-through funding, or reimbursement programs.
Updates & TimelineThe situation surrounding the federal funding continues to evolve, and we anticipate further updates. Here are key developments so far:
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Who Is Affected?
Social Security, Medicare, and direct assistance to individuals are not included in the pause. However, grant recipients, businesses with federal contracts, and nonprofits relying on federal support are impacted.
Steps to Take Now
With the ongoing uncertainty with the Federal funding, organizations should take steps to prepare for any potential disruptions:
- Contact Your Funders – Federal agencies and pass-through funders may have specific guidance on how your funding may be affected.
- Review Cash Flow – Organizations that depend on federal dollars should assess available reserves and consider short-term adjustments and resources.
- Adjust Project Plans – If grant reimbursements or payments are delayed, determine which projects can continue as planned and which may need to be put on hold.
- Monitor Updates – Federal agencies will continue releasing information about the status of funding. Staying informed will help organizations adjust as needed.
What’s Next?
This situation remains fluid, and funding timelines will depend on further federal decisions. Herbein is tracking these developments and will share updates as more details become available. For official updates, visit the Office of Management and Budget (OMB) website.
For additional information on this topic, contact your Herbein representative.
Article contributed by Marybeth Olree.
