What to do while Congress and the courts respond to the executive order to pause grants

Mark Schiefelbein/AP

Editor’s note: This article has been updated to reflect that the Office of Management and Budget has withdrawn its ordered grant funding freeze in a notice to agencies and departments.

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Key Takeaways

• Do not panic; focus on proactive planning and maintaining operational continuity.
• Prioritize understanding the source of funds to determine which grants may be affected.
• Communicate clearly and frequently with staff, stakeholders, and funding agencies.
• Leverage available resources, including the Lexipol Grants team, to stay informed and prepared.

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President Donald Trump’s administration directed the Office of Management and Budget to temporarily halt the disbursement of grants and loans by federal agencies, effective at 5 p.m. on Jan. 28. Minutes before the order was to go into effect, a federal judge blocked the order for taking effect. On January 29, two days after issuing the spending freeze, the Trump administration rescinded the order freezing federal grants.

We’ve been here before. We also know the best way to plan for grants is to be prepared. To help your department and municipality address the potential implications of recent executive orders related to federal grants the Lexipol Grants Team created this action plan. These steps are designed to assess financial, operational, and policy impacts while ensuring continuity of operations during this transition period. The Lexipol Grants Team recommends you share this plan with your finance office and leadership.

Action plan

Step 1: Assess the financial implications

1. Identify federally funded grants
   
   • Review all current grant awards to identify those funded directly by federal agencies or passed through state programs.
   • Use financial systems to track the sources of funds for all active projects.
2. Evaluate cash flow impact (next 60 days to 6 months)
   
   • Determine the financial reliance on federally funded grants.
   • Estimate cash flow projections if funds are suspended or delayed.
   • Consider how suspensions may affect immediate operational needs, including payroll, supplies, and service delivery.
3. Develop contingency budgets
   
   • Prioritize essential expenditures and reduce non-critical spending.
   • Explore alternative funding options or reserves to bridge potential gaps.

Step 2: Operational planning

1. Impact on staffing and projects
   
   • Evaluate if suspended grants will affect hiring plans, current staffing levels, or project timelines.
   • Develop a contingency staffing plan to minimize layoffs or disruptions.
2. Continuity of operations
   
   • Identify critical services that must continue regardless of funding changes.
   • Develop strategies to ensure these operations are maintained (e.g., reallocating resources).
3. Grant compliance reviews
   
   • Assess current compliance with federal mandates and identify areas requiring updates.
   • Consider adjustments to align with potential new requirements or restrictions.

Step 3: Policy and communication updates

1. Policy revisions
   
   • Review organizational policies and procedures, including DEI-related language and practices, for compliance with the executive order.
   • Adjust language on websites, grant applications, and internal documents as needed.
2. Internal communication
   
   • Inform leadership and key stakeholders about potential impacts.
   • Share this action plan with all departments involved in grant management.
3. Grant portal updates
   
   • Ensure all contact information in federal and state grant portals is current.
   • Assign a dedicated staff member to monitor portals for notifications related to funding changes.

Step 4: Monitor Developments and Seek Guidance

1. Stay informed
   
   • Monitor updates from Lexipol LLC and other trusted grant resources regarding the executive order and its implementation.
   • Regularly check the White House website and federal agency communications for changes.
2. Engage stakeholders
   
   • Collaborate with state and local grant administrators to determine how passthrough funds are affected.
   • Participate in webinars or forums addressing the executive order.
3. Advocate for clarity
   
   • Contact grant program officers for clarification about how the executive order impacts specific programs.
   • Work with elected officials and associations (e.g., NACO or municipal organizations) to seek timely updates and guidance.

Step 5: Explore alternative funding options

1. Identify new funding opportunities
   
   • Research private foundations or alternative grants to fill funding gaps.
   • Review programs that may provide bridge loans or emergency funding.
2. Prepare for future applications
   
   • Update grant application templates and required documents to reflect compliance with new federal priorities.

For further guidance, consult the full text of the executive order: White House Executive Order .

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Looking to navigate the complexities of grants funding? Lexipol is your go-to resource for state-specific, fully-developed grants services that can help fund your needs. Find out more about our grants services here.