Your Part-Time Controller, LLC (YPTC) is the largest national accounting firm specializing in nonprofit accounting. As such, YPTC is actively monitoring the ongoing turmoil around federal funding. 

 WHAT NONPROFITS SHOULD KNOW:  

• Federal funding remains a developing situation. YPTC’s February 3, 2025 blog post covered a series of Executive Orders (EOs) and Office of Management & Budget (OMB) directives affecting nonprofits. Several legal challenges have been filed since then, some resulting in judicial stays or injunctions, but new EOs continue to be issued. The National Council of Nonprofits has a convenient tracking summary that updates it frequently. 

• A still-frozen freeze? OMB issued a memorandum freezing all federal funding, then rescinded it after a federal judge granted an injunction. However, a lawsuit filed by 22 state attorneys general asserts, among other things, that many agencies have not “unfrozen” funds despite the court order. Additional lawsuits have also been filed. 

• Payments are uneven. YPTC knows of numerous cases where nonprofits were able to receive payments on existing federal grants, though sometimes only after multiple attempts and delays. YPTC is aware of other cases where payment requests were accepted but funds were not immediately disbursed. In still other cases, it has not even been possible to submit a payment request. Some requests for advance payments have also been denied. 

• Agencies are affected differently. There is a wide range of impacts to federal grantmaking agencies. USAID has been completely dismantled, its grants subjected to stop-work orders, and its staff largely placed on leave despite a US District Court order temporarily halting those plans. Other agencies are announcing plans to slash indirect cost rates, cancel upcoming funding initiatives or even terminate existing grants. The list goes on, and lawsuits continue to be filed challenging the various plans of action. 

WHAT NONPROFITS SHOULD DO: 

• Communicate with program officers at your federal funding agencies. Agency staff cannot override Executive Orders or OMB directives but may have information and tips.  

• Determine whether federal funds are the ultimate source for any state or local grants you may receive, or for grants paid through other nonprofits. This may help you estimate how much of your funding is at risk. 

• If you are entitled to request any drawdowns on current federal grants, file the request as soon as possible, and be patient—but persistent. Many organizations report having had to make multiple attempts to get payment requests accepted, and most of those have since been able to verify deposits. 

• Prepare updated cashflow forecasts for your organization. If it appears you may need to bridge a gap, speak with your bank now about a line of credit. Engage your board in scenario planning and consider revenue diversification opportunities. 

• If you have received a stop-work order, a suspension notice or a cancellation letter, you may want to seek legal counsel before responding. You may also benefit from legal advice when seeking reimbursement for costs already incurred. Retain all notices in any case and consider alerting your auditors.  

• Keep yourself informed of developments affecting the state(s) in which your organization operates. The National Council of Nonprofits has a directory of state nonprofit organizations and lists many other resources. Reach out to organizations in your region or sector as well. 

• Consider sharing your story, including the specific impact of the Executive Orders on your organization, with the National Council of Nonprofits. NCN will use the aggregated data in their ongoing advocacy efforts. You can also encourage staff and board members and other stakeholders to contact their elected congressional representatives in the House and Senate to express opinions. 

 The YPTC Federal Awards Team offers wraparound services in government funding and welcomes your thoughts, you can reach us directly at federalawards@yptc.com.