Yesterday afternoon, President Trump signed a new executive order, Improving Oversight of Federal Grantmaking, which makes significant changes to the process that federal agencies use to award, oversee, and terminate federal grants, which will greatly slow down grantmaking to nonprofits. Below is the National Council of Nonprofits initial analysis of the Executive Order (EO).
Changes to Grantmaking Processes: The EO requires political appointee review and approval, increased discretion for political appointees, new processes, additional review, and changes to terms and conditions (including to permit “termination for convenience” or if the grant is determined to not advance agency priorities). Some of these provisions seem to apply to current awards. The final provision requires language in future grant agreements to prohibit recipients from drawing down general funds for projects without affirmative authorization by the agency and requires written specific explanations for each drawdown.
Restrictions to Grants: The EO prohibits grants from being used to fund, promote, encourage, subsidize or facilitate racial preferences. The EO also includes prohibiting grants to nonprofits that deny a “sex binary” or “the notion that sex is a chosen or mutable characteristic,” and nonprofits that serve undocumented immigrants or promote “any other initiatives that compromise public safety or promote anti-American values.”
OMB Uniform Guidance: The EO infers that there will be revisions to the federal Office of Management and Budget (OMB) Uniform Guidance. In particular, the EO gives priority to nonprofits with lower indirect cost rates in competitive grant application processes. It requires OMB to revise the Uniform Guidance to “appropriately limit the use of discretionary grant funds for costs related to facilities and administration.” Potentially, this could mean that OMB may soon make changes to last year’s major improvement of the Uniform Guidance that included a de minimis 15% indirect cost rate on federal grants.
Thanks to the National Council of Nonprofits for their quick analysis. NAO will share any further analysis of the EO as we learn of them. To see the Council’s chart on EO’s impacting nonprofits, click here.
NAO Webinar: An Update on Federal Impacts to Nonprofits
Get caught up on all the federal actions impacting nonprofits.
Join Sarah Saadian, Senior Vice President with the National Council of Nonprofits for an informative session on all the recent federal activities to date and what they mean to the nonprofit sector. Saadian will provide an overview of the recently passed tax and budget reconciliation bill, the rescissions bill that cut funding for public broadcasting, the repeal of the Johnson amendment, and an update on the legal injunctions related to executive orders. She will share the National Council of Nonprofits’ strategy to protect the sector. Bring your questions! Noon to 1 p.m. (PT) on Thursday August 21. This webinar is free to attend; registration is required.