Federal Funding Freeze 2025: What Nonprofits Need to Know and Do Now

Here’s what we know for certain, and where things stand.

Federal Funding Freeze 2025: What Happened So Far

On January 27th, the federal Office of Management and Budget (OMB) issued a memo directing federal agencies to pause “federal funding assistance.” The memo’s vague wording created immediate uncertainty for the tens of thousands of nonprofits that rely on federal funds to provide essential services. Even federal agencies themselves were unclear on which funding streams would be affected.

Recognizing the potential impact, the National Council of Nonprofits joined forces with the American Public Health Association, Main Street Alliance, SAGE, and Democracy Forward to file a lawsuit in U.S. District Court.

Just before the freeze was set to take effect, Judge Loren L. AliKhan issued an Administrative Stay, temporarily blocking the pause until Monday, February 3rd, at 5:00 PM.

Since then, confusion has reigned. The order was rescinded, and then unrescinded.

Where Things Stand Today

This temporary stay gives both sides time to present more information before a more lasting ruling is made. While this is a hopeful development, it is not a final resolution. The court could extend the block, lift it, or issue new guidance.

February 4, 2025 update — A federal judge granted a Temporary Restraining Order, blocking the administration’s directive to halt federal grants and loans, and denied the DOJ’s motion to dismiss the case. The Office of Management and Budget (OMB) is now required to notify agencies and release any paused funding, marking a significant legal setback for the administration’s efforts to restrict federal spending.

The case may still be appealed, potentially all the way to the Supreme Court.

Nonprofits should use these next days to seek clarity on their funding status and make contingency plans.

Additional Steps Nonprofits Should Take

Credit to the National Council of Nonprofits for this advice and their advocacy work:

• If your nonprofit receives federal funding — whether directly from a federal agency or through a pass-through entity like a state or local government — contact your grant or contract administrator immediately. Ask whether your funding would be impacted if the freeze moves forward.
• If you receive confirmation that your funding is at risk, please fill out [this form] to help The National Council of Nonprofits track the scope of affected programs and the potential impact on your mission and the people you serve.
• Contact Your Legislators. Remind them of the vital impact your programs and services have on your community. Highlight the number of good jobs you provide, the funds you invest locally, and the essential support you receive from federal and state funding.
• Keep your donors and stakeholders informed. They need to understand what’s happening and how they can support your work. Some may be willing to advocate for continued funding or provide critical financial support.
• Continue your fundraising and planning efforts. History has shown that organizations that push forward during uncertain times tend to be in a stronger position later. If you are planning a campaign or in the middle of one, now is NOT the time to pause. Your case for support may be stronger than ever.

How We’re Supporting You

To help nonprofits stay informed and respond effectively, we are launching a special series of emergency live Q&A sessions every Monday in February at 1:00 PM EST.

These sessions will provide the latest updates, expert insights, and practical guidance on what steps you can take to protect your funding.

We know this situation is frustrating and uncertain. Our team has helped organizations through recessions, presidential transitions, natural disasters, and the COVID-19 pandemic. We will get through this too.

If you need guidance or have concerns, reach out. We’re here to help.