Updated January 29, 12:45 p.m.
Update: It was announced today, Wednesday, January 29, that OMB Memoriam M-25-13 freezing all federal grants and loans, has been rescinded.
This is a victory for nonprofits and other organizations impacted by this catastrophic decision, and a direct result of immediate advocacy and action from people here in Minnesota and across the country.
While this is great news and calms our immediate fears, it will likely be short-lived as the Administration comes back with further action that may have a similar effect on nonprofit and the communities we serve.
More on this latest development.
Minnesota nonprofits, higher education institutions, state and local governments, health care entities, and many more organizations that receive federal funding are facing an immediate and severe freeze of federal grants and loans, due to a memo issued by the federal Office of Management and Budget (OMB) Monday, January 27.
Originally effective Tuesday, January 28 at 5pm ET, a federal judge has issued a one-week temporary stay until further arguments can be heard.
The freeze is temporary, although no end date has been declared, pending a review from federal agencies “to identify and review all Federal financial assistance programs and supporting activities consistent with the President’s policies and requirements.”
This is a rapidly evolving situation with currently unknown implications for Minnesota nonprofits and the communities we serve. MCN is actively engaging with elected officials, including Governor Walz, Minnesota’s Attorney General, our state and federal delegation, and the National Council of Nonprofits to gain clarity. This is what we know so far.
What we know:
- Who does that freeze impact: Based on the memo, the freeze impacts nonprofits, higher education institutions, state and local governments, health care entities, and more that receive federal funding.
- When does the freeze begin: Federal grants and loans will be paused starting Tuesday, January 28 at 5pm ET, 4pm CST.
- How long will the freeze last: The pause is temporary, but no end date has been declared. “Each agency must pause…until OMB has reviewed and provided guidance with respect to the information submitted.” Some news agencies are reporting February 10 as a freeze deadline, but the OMB memo names that as a deadline for federal agencies to identify programs, projects, and activities subject to the pause, not the resumption of funding.
- What is being reviewed during the freeze: Federal agencies must submit detailed information to the administration on programs, projects, or activities no longer eligible under the series of Executive Orders by Monday, February 10.
- Are any programs exempt from the freeze: 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 may continue certain administrative actions.
- Does this impact previously awarded grants: Even grants that have been awarded but not spent are supposed to be halted. Any pending payments organizations are waiting to receive on federal grants will likely be delayed or stopped. Activity must freeze by 5pm ET Tuesday, January 28, so there is a chance a pending payment already in process is paid out today.
- How does the freeze impact federal funding to Minnesota: The funding freeze could affect the billions of dollars Minnesota gets each year from the federal government, including funds directly to nonprofits and funds to the state of Minnesota, some of which are then used by nonprofits in furtherance of the state’s priorities. In 2024-25, Minnesota received $39 billion in federal grants according to the Minnesota Department of Management and Budget.
- Is this legal: There is likely to be legal action taken to attempt to pause or delay this process, which may delay or lessen the impact on the sector. As of this writing, a coalition of organizations (represented in the legal challenge by Democracy Forward, include the National Council of Nonprofits, the American Public Health Association, Main Street Alliance, and SAGE) filed a Motion for Temporary Restraining Order in the U.S. District Court for the District of Columbia to block the White House Office of Management and Budget from pausing all agency grants and loans.
- What is considered “federal financial assistance”: Defined by 2CFR 200.1, it is assistance that recipients or subrecipients receive or administer in the form of grants, cooperative agreements, non-cash contributions, direct appropriations, food commodities, loans, loan guarantees, interest subsidies, and insurance.
What we don’t know:
- How wide is the scope of the freeze and how will the Executive Orders be interpreted during this evaluation period?
- What access will nonprofits have to individuals at their funding agencies to ask questions and receive guidance during this evaluation period, particularly in light of staffing freezes and terminations?
- What are the ramifications in our communities if needs go unmet and if organizations are forced to downsize or close?
What nonprofits can do:
- Don’t panic, breathe, take care of yourselves (airplane rule).
- Communicate what you can with staff to reduce fear.
- Contact state and federal elected officials. You can also contact all Minnesota elected officials, not just representatives from your district . Questions to ask:
- What is the plan to protect the most vulnerable Minnesotans, and indirectly, the nonprofits that support them?
- How are you collecting information from constituents about the impact of this grants freeze?
- Fill out MCN’s Federal Grant Freeze Form to help us measure the impact. This information will help as we communicate with federal and state leadership about the negative impact of this freeze.
- An immediate impact on nonprofits, particularly those with tight balance sheets and reliance on timely grant reimbursements, is cash flow. Advice from CliftonLarsonAllen (CLA):
- Build a daily cash flow model and run scenarios for paused federal payments through the end of February, March, etc. to determine when you will be challenged to meet expense obligations.
- Connect with your bank(s) to refresh on your cash flow options and what may be available to your organization. What are the terms on your lines of credit? What ability do you have to pull funds from CDs or similar products?
- Consider engaging with other funding sources (individuals, foundations, and other non-federal sources) that are not impacted by the freeze to see if they can assist in temporary cashflow support.
- Run scenario plans and engage in discussions with your leadership and governance. If all your federal funds were cut, what changes would you need to make to program services, staffing, or other expenses to remain viable?
- Start documenting how you anticipate this impacting your organization.
- Ensure any communications you receive from federal agencies is legitimate.
How MCN is helping nonprofits navigate:
“The continuous attacks on the most vulnerable communities and the nonprofits that support them feel overwhelming and scary; and we need to remind ourselves that this tactic is intentional, says MCN executive director Nonoko Sato. “It is important to take care of yourselves, maintain calm and not spread fear, and focus on your values, your community, and what we can control. You are not alone.”
“With that said, we also recognize how lives of the most vulnerable Minnesotans and our nonprofit sector’s ability to meet their needs will be drastically impacted by this federal grants freeze. Your voice, your advocacy, and your stories matter. Flood Minnesota’s congressional offices with your concerns, stories of direct impact, and questions today.”
MCN is actively engaging with elected officials, including the Governor, Minnesota Attorney General, our state and federal delegation, and the National Council of Nonprofits to gain clarity. Our goal is to mitigate the impact on our state’s most vulnerable communities and the operations of Minnesota’s 8,641 nonprofits and their 376,328 employees.
MCN remains steadfast in our commitment to our shared values, to ensure that our most vulnerable and traditionally marginalized communities and nonprofits that serve them are protected. To that end, we are collecting stories, data, and any relevant information you think we should know as we communicate and collaborate with our national and local partners, elected officials, and other key decision makers.
We are vetting information as it becomes available and will be sharing updates and calls to action on our website and via MCN social media channels.
Related reading
- Judge Issues Temporary Restraining Order on OMB Freeze (February 3, 2025)
- MCN speaks at press conference on impact of federal funding freeze (January 31, 2025)
- Attorney General Ellison announces initial victory in lawsuit challenging President Trump’s illegal federal funding freeze (January 31, 2025)
- Nonprofits, public health leaders, small businesses file suit to block OMB attempt to halt essential services (January 28, 2025)