Last Thursday, August 7th, President Trump signed an executive order (EO) that makes significant changes to how federal grants are reviewed and awarded. The order introduces new oversight, review procedures, and funding restrictions. While we are still working to understand impacts, we expect these changes to slow down grantmaking to nonprofits, create new scrutiny of activities and costs, and make it easier for federal agencies to terminate already awarded contracts.
Key provisions of the executive order include:
Changes to grant processes:
- Requires political appointee review and approval of grants
- Changes to grant terms and conditions, including allowing “termination for convenience” when a grant is determined to not advance agency priorities or national interests
- Requires written requests and explanations for each draw down of grant funds and affirmative authorization by the agency
Prohibits grants from being used to “fund, promote, encourage, subsidize, or facilitate”:
- “Racial preferences”, or other forms of racial discrimination
- Denial of the “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”
Prioritizes Lower Indirect Costs Rates:
- Gives priority to nonprofits with lower indirect cost rates in competitive grant processes
- Requires OMB to “limit the use of discretionary grant funds for costs related to facilities and administration”
- This could mean that OMB may make changes to last year’s major improvement to the Uniform Guidance that raised the de minimis rate for indirect costs from 10% to 15%
We will share further analysis as we learn more. You can find this EO and others impacting nonprofits in NCN’s executive order tracking chart.