Charting the Course: Legal Updates, Testimonials, and Risk Assessment for Nonprofits Amid Trump Executive Orders

In our previous blog, we covered President Trump's recently signed Executive Orders and issued Memorandums. We highlighted how specific EOs target charitable nonprofits by attacking, and in some cases, criminalizing funding, initiatives, or language that support DEI initiatives and Environmental Justice efforts. Since uploading that blog, even as soon as the next day, legal battles have sprung up across the country challenging the EOs and restrictive Federal Agency actions. News coming out of Washington has fragmented nonprofit operations, planning processes and increased financial uncertainty amongst nonprofit leaders because federal funding comprises a significant portion of annual nonprofit budgets. 

In light of the continuing pressure and challenges against basic freedoms, this installment in our blog series will cover active legal cases, key statistics on the impact of these EOs, and how to conduct risk and response strategies for nonprofits.  

The Legal Landscape

The key players involved in legal battles over federal funding are the Department of Governmental Efficiency or DOGE (currently run by Elon Musk, which is projected to change), every single head of each Federal Agency, US Attorney General Pam Bondi, and the Supreme Court. However, as legal challenges to EOs arise in and out of Federal and State Judicial circuits, it's important to note that the web of legal entities involved with halting, reversing, or slowing down this Administration's constitutionally questionable executive actions is vast. As for current updates of legal issues, on March 31, the Institute of Museum and Library Services (IMLS)—an independent federal agency that granted $266 million in funding for research and other initiatives in 2024—placed its entire staff on administrative leave for up to 90 days. This drastic decision came after a meeting involving the agency's leadership and DOGE.

On March 6, U.S. District Judge John J. McConnell Jr. issued a preliminary injunction in response to a lawsuit filed by attorneys general from 22 states and the District of Columbia. The injunction halted the Trump administration's freeze on federal funding, including critical grants from the Federal Emergency Management Agency (FEMA). However, on April 4, following reports that FEMA had continued to withhold millions of dollars in grant funding since early February, Judge McConnell determined that the administration had violated his earlier injunction. He ordered FEMA and the U.S. Department of Homeland Security (DHS) to stop their reviews and comply with the court's ruling.

A previous memo we mentioned in our first blog (M-25-13) aimed to put a total freeze on the distribution and administration of all federal aid. Immediately, part of the memo specifically targeting “open grants” was temporarily struck down by a federal judge, but due to extreme backlash, the Trump Administration released M-25-14, which rescinded its predecessor and resumed all federal funding. M-25-14 and the Continuing Resolution that President Trump recently signed on March 15th to avert a government shutdown allows open and already awarded grants to be funded till the end of the 2025 Fiscal Year (September 30, 2025). (NOTE: It is typically customary for the House and Senate to continue to pass CR (Continuing Resolutions) in order to keep the government funded and avoid a government shutdown. It’s highly likely a CR will be signed again in the days prior to September 30th to avoid a government shutdown), However, new grant opportunities or Notice of Funding Opportunities (NFOs) on a Federal Level are not guaranteed due to the Trump Administration’s recommendation for Federal Agencies, the OBM, and DOGE to reevaluate all avenues of Federal Funding in search of noncompliance with anti-DEI initiatives. 

Given the speed at which attacks on federal funding have been thrown at Agencies and Departments, the funding landscape may look unrecognizable in a year, by the 2026 Midterms, or by the end of Trump’s Presidential Term in 2028.

The Nitty Gritty: Key Stats and Testimonies on How EOs are Impacting Nonprofits  

On the whole, financial instability and the need for rapid response funding seem like the most certain aspects of this nonprofit funding landscape. Shedding light on this landscape, however, is the University of San Diego and their Nonprofit Institute’s recent survey of 411 nonprofit CEOs in the San Diego metropolitan area on the organizational impacts of recent federal policies. Key takeaways regarding nonprofit operations are as follows: 41% of nonprofit leaders reported being directly impacted by EOs, Memos, or policy changes, ⅓ of nonprofits have already had to modify organizational services in response to Federal Actions, more than 50% of organizations reported that executive actions targeting Diversity, Equity, and Inclusion and Immigration and Citizenship issues directly affect the people their organizations serve, and, as expected, the number one consequence of federal executive action to organizations is widespread funding cuts and financial instability. Even beyond direct programming, nonprofits face internal organization challenges brought about by federal executive action. In the USD survey, 15 nonprofit organizations reported having to lay-off or furlough ~500 employees, with the majority of organizations specializing in immigration and refugee services.  

A sector of high priority is health and human services. Everything from R&D to supporting local health centers serving unsupported or marginalized communities, to health education nonprofits, and health sector employment training programs are threatened by ious, widespread funding cuts and impacted operations. As of this writing, a 51-page list of Health and Human Services Grants terminated by the Trump Administration and the DOGE Commission has been released to the public. An anonymous head of a health Research Organization shared that “If the cuts at NIH stand as written it will put us out of business. It is that serious and will be the same for most independent research organizations.” The long-term impacts of cuts specifically impacting the health sector cannot be overstated. Another leader from the Health nonprofit sector commented that “[Federally Qualified Health Centers] (FQHCs) are the cornerstone of America's primary care/prevention system, and disrupting them could easily create a public health disaster or pandemic.” Unfortunately, the nature of understanding the specific impacts on the public as a result of budgetary cuts to health and human services organizations is extremely unpredictable, with millions of lives on the line. 

Other at risk organizations are those who  directly serve populations facing political threats from the Trump Administration, namely immigrants and refugees, the LGBTQ+ community, and people of color. The Administration’s enactment of the Alien Enemies Act of 1798 and enablement of ICE and immigration custody agencies to hastily and oftentimes mistakenly deport permanent residents, green-card holders, and visa holders without due process or oversight, jeopardizes the civil liberties and rights of non-citizens and consequently, the civil liberties and funding of organizations working to support these communities. Of 115 Human Services organizations surveyed in the San Diego area, 70% reported receiving federal funding, and that Immigration and Citizenship policies are the main Federal Action with the greatest impact on their operations. While changes in funding and budgeting may feel removed from day-to-day challenges that immigrant and marginalized communities face, the impact is generational. A human services leader explained that these sweeping executive-level cuts “will have a big impact on our ability to reunify families and to find relatives who are willing to step forward to care for children…” Within the next four years, the number of families and children to be impacted by these policies and funding changes will be hard to measure and fully comprehend. 

With over half of the respondent organizations receiving federal funding, and 40% reporting to have experienced issues accessing funds, strategic financial planning and risk assessment are going to become increasingly prioritized in internal operations. We previously covered strategic planning for grant-seekers on our blog, but the fundamentals can be reduced to a 5-step approach: Identification, Outlining, Action, Consistent Measurement, and Revision. Evaluate where your organization stands in relation to your mission, using it as a guide to define success. Reflect on what resources you currently have, what additional resources you need, what steps you’ve already completed, and what actions remain. Next, develop your strategy by identifying the tasks that lie ahead and organizing them strategically, prioritizing those that will yield the most significant impact. Consider which types of impact are most critical at the moment, how these initiatives align with your mission and vision, what resources and individuals are necessary to achieve your goals, and how you will measure success.

Once your strategic tasks are prioritized, it’s time to implement your plan. Assign responsibilities to your team members with clear objectives, instructions, and timelines to ensure accountability and progress. As you execute your plan, keep track of outcomes by documenting results. This   provides valuable insights for your organization and demonstrates accountability to grantmakers. Regularly review your strategic plan based on these outcomes, asking whether it is effective in achieving your goals and whether it still aligns with your mission and vision. A strategic plan is not static; it often requires tweaking and refining, and understanding what doesn’t work is just as important as recognizing what does. Like a compass, your strategic plan is only useful if you’re willing to adjust your course as circumstances change.

Staying informed about the Administration’s Executive Orders is crucial for nonprofits navigating the shifting funding landscape. While it’s difficult and not exactly a science to measure how each Federal Executive Action will impact different charitable nonprofits, in what ways, and the timeline for this uncertain period, it’s clear through current surveying of nonprofit leaders that financial uncertainty has already slowed operations, making crucial work more difficult. Understanding these legal changes allows organizations to anticipate challenges and adapt their strategies effectively. We encourage nonprofits to share their experiences and strategies as they respond to these developments, fostering a collaborative dialogue within the sector. In our next blog post, we'll explore how to implement effective Diversity, Equity, and Inclusion (DEI) practices amidst these funding changes.