New Executive Orders FAQs

The Administration will have to find legally enforceable ways to prohibit DEI initiatives in the private sector. While the President can issue Executive Orders establishing rules and policies for the federal workforce and federal government contractors, Article I of the U.S. Constitution is pretty clear that making laws of general applicability (i.e., those covering private entities) is the job of Congress, not the President. Presumably that’s why the Executive Order encourages, rather than requires, private sector entities to end DEI practices that the Administration deems are “illegal discrimination.”

Once federal agencies come up with their lists of large nonprofits, foundations, and corporations to target, it can be imagined that the way that a private sector DEI limitation would be enforced would be through things like:

1. Prohibiting federal employees from using airlines or hotels that publish DEI statements on their websites for work-related travel;
2. Withholding federal research funding from private colleges and universities with DEI statements or policies; and
3. Taking legal action against large nonprofit or corporate entities that have contracts with racial preferences, using the line of reasoning in last year’s Fearless Fund litigation that racial preferences in contracts violate the Civil Rights Act of 1866.

Presumably any of these types of enforcement activities would be challenged in court.

Based on the memo (linked above), the freeze impacts nonprofits, higher education institutions, state and local governments, health care entities, and more that receive federal funding.

Information is moving rapidly, but OMB offered this clarifying memo. 

Internal OMB memo clarifying latest Executive Action

The memo has been rescinded as of January 29.

Internal OMB memo rescinded

Politico posted Instructions for Federal Financial Assistance Program Analysis in Support of M-25-13 of the programs to be halted. Here is a list

The White House has stated that Medicare and Social Security benefits will be unaffected by the pause. The memo does state that the OMB may grant exceptions on a case-by-case basis, and to the extent required by law, agencies my continue certain actions.

Grants that have been awarded but not spent were halted temporarily by the order but after a judge’s injunction, should be flowing now. Pending payments to organizations may experience delays or still be stopped.

If your federal funding is still halted, reach out to your contact at that agency (or pass-through entity) and alert them to the continued freeze. If there is no one answering your question there, contact your Congressional representative.

Yes. The pause was designed to give agencies time to review programs that do not fit the President’s agenda and cancel them. With the rescission memo, while funds should be now flowing, the agencies are still reviewing programs for those that are not consistent with the President’s agenda. They have until March 15th. At that time, it is expected that a number of programs will be ended formally. 

Your organization should take the following steps to begin to understand potential risk to your projects:

Identify At-Risk Projects
Identify all projects in the pipeline for federal funding, including those that:

• Have received funds
• Are under contract or awaiting agreements
• Are approved but still in early federal acquisition stages

Understanding these factors is crucial to identifying which projects may be impacted by a potential rescission or claw-back.

Engage with Federal Agencies
If your organization can still communicate with federal agencies, ask about steps to expedite obligation and disbursement.

Agencies should be willing to make advance payments to nonprofits. If your nonprofit has a federal grant and is expecting a disbursement in the next few weeks, you may want to reach out to your grant administrator to find out whether you may be able to get your next disbursement. Let us know if you cannot by filling in this survey.

The National Council of Nonprofits along with the American Public Health Association are part of a coalition of organizations that have filed a temporary restraining order in the US District Court for the District of Columbia to block the White House OMB from pausing all agency grants and loans. A federal judge temporarily blocked the Trump administration freeze, pausing the freeze until Monday, February 3. Since then, a second federal judge has extended the pause, keeping the freeze on hold for now.

The National Council of Nonprofits (NCN), along with small business and public health advocates, filed a lawsuit on January 28 asking the U.S. District Court for the District of Columbia to stop the implementation of the OMB memo. The lawsuit alleges that OMB’s memo is not allowed under the Administrative Procedures Act because it is: (a) arbitrary and capricious; (b) in violation of the First Amendment to the U.S. Constitution; and (c) beyond OMB’s statutory authority. The NCN lawsuit seeks a temporary restraining order and preliminary injunction that would immediately stop the implementation of the memo, along with a permanent injunction that would invalidate the memo. Shortly before the pause was set to take effect on January 28, the court issued an administrative stay delaying the implementation of parts of the memo until Monday, February 3 at 5 p.m. (ET). As the court explained in its ruling, “[a]n administrative stay ‘buys the court time to deliberate’ when issues are not ‘easy to evaluate in haste.’”

Another Temporary Restraining Order has since been issued. By February 7, NCN and the coalition’s attorneys must work with DOJ attorneys and jointly propose a briefing schedule for the court to consider a preliminary injunction.

Potentially, the pause applies to all (or at least most) federal grants to nonprofits and to state and local governments. The memo directs agencies to “pause all activities related to obligation or disbursement of all Federal financial assistance, and other relevant agency activities that may be implicated by the executive orders, including, but not limited to, financial assistance for foreign aid, nongovernmental organizations, DEI, woke gender ideology, and the green new deal.” Because several of these terms are not clearly defined, it is possible that some or all federal agencies may interpret the memo to require a pause in virtually all of their grants to nonprofits. The memo does not apply to federal aid to individuals, including Social Security, Medicare, Medicaid, Supplemental Nutrition Assistance Program (SNAP), Pell grants, and rental assistance, so these payments should continue. OMB has the authority to grant exceptions to allow agencies to grant new awards or make payments on a case-by-case basis. Politico published a second memo from OMB that gave instructions on how to implement the first memo and lists all the programs that were set to be paused. You can click and see the full list here.

The memo was unclear on how long the pause in grants will be in effect. At a press conference, the White House press Secretary stated the pause would only be in effect for 30-60 days while agencies review programs that do not align with the President’s agenda.

No, all EOs remain in effect at this time.

From a legal standpoint, the original OMB memo established the federal grants pause, so the memo revoking the original memo rescinded the funding freeze. However, it appears the White House is reminding the public that the underlying EOs, including the EO that directs federal agencies and OMB to remove DEI practices from federal grant processes and agreements, still stands. That same EO does not, however, establish a funding freeze for federal grants and loans. As this is a constantly changing situation, we will continue to keep you updated as we learn more.

To help understand the impact of the pause on federal grants, NAO is asking nonprofits in Oregon with federal funding to respond to this quick survey. Our colleagues at NCN are going to be leading the response and working with us to help us best advocate for solutions to provide for continuity of federal funding. Please also reach out to our Oregon Congressional Delegation to let them know how this situation is impacting your nonprofit and community. You can find details to connect with their offices here.

We have heard from some organizations that they have had successes in drawing down funds from programs like Continuum of Care Funds. Others have found that their portal for drawing funding is frozen. Each organization may experience something different based on the internal situation at their government agency funder.

Yes, some nonprofits with federal funding have reported receiving email or portal alerts similar to the message below:

Dear Payment Management System User,

This is an official email from the U.S. Department of Health and Human Services Payment Management System (PMS).
HHS has been experiencing periodic network outages making PMS appear offline.
Our network teams are working on the issue and we will send another email once the network outages have been resolved.

If you have any questions, please contact the PMS Help Desk at (877) 614-5533 or [email protected].

Payment Management Help Desk Team
Program Support Center
U.S. Department of Health and Human Services

Funds that have already been distributed are unlikely to be clawed back. Title X of the Impoundment Control Act of 1974 specifies that the president may request that Congress rescind appropriated funds. If both the Senate and the House of Representatives have not approved a rescission proposal (by passing legislation) within forty-five days of continuous session, any funds being withheld must be made available for obligation. Congress is not required to vote on the request and has ignored most presidential requests. That said, section 19(e) of the EO states: “Initiate clawback or recoupment procedures, if appropriate, for any agreements described in subsection (c) of this section.”

Pending funding is more at risk, but if it’s a grant that requires a renewal or not all funds have been obligated then there’s more possibility to revisit.

If you have funds from the federal government for DEIA programming you will likely get a letter similar to this from the agency in government that issues the funding:

“…all recipients of federal financial assistance to cease all activities related to “diversity, equity, and inclusion” (DEI) or “diversity, equity, inclusion, and accessibility” (DEIA) under their federal awards, consistent with the requirements of the Executive Orders. Any cost incurred on such activities, after the issuance of this notice, will not be considered allowable, and if incurred will be disallowed.”

Many nonprofits have already received these letters and funding has been frozen, even with court orders to release the freezes.

Yes, sub-awardees should assume that the same requirements for their federal funding would apply.

It is highly unlikely that the federal government can claw back these funds from the states or counties that received them. In most case, once those funds are obligated and sent, they cannot be clawed back. If the State (or a county) has ARPA funding that was not allocated or spent, there could be the possibility of those funds being returned, but even that is highly unlikely.

The US Census Bureau reported in their 2023 report that the federal government contributed $15.4 billion dollars in 2021 to the Oregon state budget (which is disbursed through state agencies) and counties. No more recent numbers are readily available.

It is unclear how or if the federal government can claw back these funds from the states or counties that received them. Going forward the federal government funding will contain these restrictions and that will impact state and county government programs funded by them.

A single dollar of privately funded DEIA work does not “poison the pot” for an organization to continue doing that work. Federal funds cannot be used for DEIA programming. Organizations that rely heavily on federal funding that have those programs (even paid for by other sources) may have a harder time accessing funding from the federal government in the future.  It is unclear still how application processes of the federal government might change to “weed out” organizations that engage in DEI.

Yes, at this time, as long as they are run with non-federal funding (even if it passes through the State or a county), there is nothing in the EOs that should pause these programs and affinity groups. That said, this could change as new EOs are released.

No. NAO is not recommending at this time that nonprofits stop using the term DEI. This is being played out in courts. The only organizations that should prudently review how DEI-related programs are impacted by the EOs would be nonprofits that receive federal government contracts and grants. They will likely be contacted by the agency they work with to clarify what they can or cannot use or do.

At this time, nonprofits that have DEI programs, statements, affinity groups or policies in place do not need to adjust them, BUT as the court cases play out and new actions are taken by the administration, that may change.

It appears that regardless of the program being cash or in-kind, if the “contribution” is from the federal government, it would be expected that the same rules would apply. NAO strongly recommends connecting with the entity that passes down the federally funded in-kind items and request clarification.

The EOs state that federal funding cannot be used for “illegal” DEIA activities. To be prudent, NAO would advise nonprofits that have equity staff funded under federal programs to immediately look for ways to shift these staff over to other funding sources.

Each organization will need to make their own decisions on how they react to these EOs and EAs. Our interpretation of the EOs thus far indicate these EOs govern or restrict funding of “illegal” DEIA activities directly funded by federal government. One could conclude that DEI activities not directly funded by government do not need to be ended or scrubbed from websites. BUT several administration officials have made comments that all DEIA initiatives in the private sector will be targeted to end.

DEIA activities have been carried out by the Federal government in varying forms for decades. Some are the product of EOs (under previous administrations) or successive years of legislation. Some of the just-released EOs would challenge standing legislation like the Civil Rights Acts and certain funding and policy packages passed by Congress.

The EOs state that federal funding cannot be used for “illegal DEIA” activities. NAO would advise nonprofits that wish to continue DEIA training or programs for their staff immediately look for ways to shift these projects or staff over to other funding sources. The challenge will be for staff that are 100% funded under a federal program. Organizations will want to clarify with the federal funding source if the federally-funded staff member can be funded at slightly less than 1.0 FTE. If so, the staff member would then mark the hours appropriately on their time sheet and the DEI-related hours would be easy to identify and charged to other funding sources.

The EOs and general federal government employee terminations will likely lengthen the time for approvals for federal indirect rates substantially. It may be assumed that such approvals will be held up and that future EOs may require agencies to ensure those grantees/contractors do not have any DEIA programming regardless of funding source.

It is unclear how the EOs impact recruiting/interviewing questions. Oregon nonprofits have always been legally bound to check a new employee’s I-9 which includes proof of citizenship or work status and fill in the accompanying paperwork for records.

Many Federal government employees did refuse to comply with these EOs and were summarily terminated. There is currently a federal hiring freeze, so if a federal employee is fired, they may not be replaced. One of the Executive Actions taken was to make it far easier to terminate federal government employees. That action has been challenged in court.

It is unclear. At this time none of the EOs address how organizations found to be “out of compliance” would be addressed or what opportunities they would be given to remedy the situation. In one of the more recent injunctions (Feb 24th), the judge ruled that the policies and term “diversity, equity, and inclusion” as used in the EOs were potentially vague, discriminating, and unconstitutional by penalizing private organizations, including charitable nonprofits. However, agencies are permitted to proceed with reviewing various programs related to these EOs and to issue any reports as required under the EOs. That ruling applies nationwide.

Ensure that they are in place as required already by federal law. Currently, language would include that “the organization and programs are prohibited from discriminating based on race, color, national origin, religion, sex, gender identity (including gender expression), sexual orientation, disability, age, marital status, family/parental status, income derived from a public assistance program, political beliefs, veterans status, or reprisal or retaliation for prior civil rights activity, in any program or activity conducted or funded by the organization.”

You do not have to list each protected class out. You could also have a more generic statement like: “In the delivery of its services to the public, this organization does not discriminate for or against any person or protected class of persons.”

Yes, this is of concern. Depending on the Executive Orders, your nonprofit may be asked to comply with activities like Immigrations and Customs Enforcement, but we know that may not apply to all nonprofits. The EO around jurisdictional authority of immigration policy will likely go to the courts through litigation brought by State AGs and rights groups.

Each foundation is unique. Some have stated publicly they have no intention of backing away from their DEIA commitments. Other foundations have made providing your DEIA statements or policies as optional on their portals. Each foundation will of course be making their own decisions. Look for more on exactly how foundations are handling this in upcoming webinars and on their individual websites.

Yes. NAO believes that as federal funds are cancelled for particular programs, the funding needs will shift to local sources (State funding; foundations, private donors). Some Oregon foundations have already made public statements they are increasing giving, working on defense funds and supporting their grantees. It is still unclear what State government plans are for mitigating losses. The breadth and magnitude of federal funding in Oregon is significant. There is no way that State and private funding can mitigate all losses of federal funding. That is why nonprofits engaging in policy and advocacy activities will be essential to prioritize the most urgent issues and needs.

This is a good time to have your development and marketing team engaging your donors in the work that you do and ask for their assistance in providing resources for your DEIA programs (or other programs that may be impacted by the EOs). Being candid and direct with donors is always best practice, however the political climate can impact these conversations, especially if you are unsure where your donor stands regarding the current administration.  

Check with insurers to confirm that they are continuing coverage unchecked by any of these EOs or EAs. Some private companies are changing their positions in regard to DEIA and therefore may be less inclined to provide insurance for organizations that continue, regardless of the legal aspects. As one would expect, there will be uncertainty until the EO is tested legally.  We are already seeing class action lawsuits, State vs. Federal considerations, judicial injunctions, etc.

How AND who the D&O policy verbiage ‘names’ the directors and officers of your org is most critical to review (and potentially request the carrier revise).

This is because D&O covers personal liability (and personal assets) of directors & officers in the event their sued for wrongful acts – including claims related to employment practices & compliance with immigration laws.

Depending on your carrier’s expertise in yours & general nonprofit operations, they may offer legal counsel as part of their “duty to defend.” That verbiage is contained in most insurance policies. Give them or your broker a call and inquire on more specifics.

Directors & Officers example claim – Grant funding could be cut for some organizations who are unable to demonstrate compliance with the new order(s), which could lead to regulatory claims and/or additional financial distress (increasing D&O liability exposure).

Employment Practices example claim – Claims that involve prospective applicants who were not chosen for a job and claim to be more qualified than the individual that did get the job.