Executive Authority and the Future of Federal Funding

In the nine months of his second administration, President Trump has signed 191 Executive Orders to carry out his policy priorities. Many of these orders have impacted federal funding policy, resulting in massive program funding cuts.  

Due to the funding cuts, recipients of federal assistance who have had their funding rescinded have begun lawsuits to challenge those orders. The outcomes of these lawsuits will provide important insight into the future of federal funding and executive authority over it. This insight examines two key legal challenges, their consequences, and impacts on the federal funding landscape.  

National Council of Nonprofits v. OMB 

In January of 2025, the Office of Management and Budget (OMB) issued a memo that called for a pause on all federal programs, both awarded and upcoming funding opportunities, including grants and loans. The OMB argued that it needed to review all programs to determine if they met the presidential priorities of this administration.  

The National Council of Nonprofits sued the OMB, arguing that the office exceeded its authority by pausing or rescinding already appropriated funds. The judge overseeing the case sided with the National Council of Nonprofits and issued a temporary restraining order and preliminary injunction that blocked the freeze. The OMB has appealed this injunction, and the final judgment is to be determined.  

Sustainability Institute v. Trump 

Further, the Trump Administration issued an executive order to pause or terminate congressionally appropriated funding for programs created by the Inflation Reduction Act and Infrastructure Investment and Jobs Act in January 2025. These bills funded essential programs such as rural development programs, energy tax credits, and grant initiative programs for highways and roads. As a result of the executive order, federal agencies began terminating entire grant programs. 

The Sustainability Institute sued, claiming the agencies’ actions are unconstitutional and represent an overreach of executive authority. On May 20th, the judge overseeing the case issued a ruling requiring the Trump administration to restore frozen and terminated federal grants. On June 5th, the Court of Appeals paused the injunction and argued the District Court lacked jurisdiction to issue the orders. The case is still being decided.  

Why do they have different outcomes? 

These two cases are incredibly similar regarding presidential action and the lawsuits against them, yet two different outcomes have been reached. A potential reason is that National Council of Nonprofits v. OMB has not yet reached the Court of Appeals. The Appellate Court may lean more favorably toward the administration compared to the District Courts. However, the outcome remains uncertain, and it is unclear whether the Supreme Court will choose to hear any of these cases.  

What does this mean for the future of funding? 

Both lawsuits and executive orders are fundamental to understanding the future of federal funding. While final judgments are still pending, the authority over federal funding remains uncertain. It appears that the Executive Branch will have more jurisdiction in how funding programs are shaped; however, it is ultimately up to the courts to determine if rescinded funds based on current policy are constitutional. The Supreme Court will likely adjudicate several lawsuits, substantially influencing the dynamics between the Executive Branch and federal funding. 

Actions you can take:

It is critical to maintain compliance with existing rules while funding decisions are being made. As an applicant or grantee, it is also important to stay informed on changing executive and agency actions. This knowledge will help you prepare grant applications and ensure compliance once you receive funding. Additionally, understanding administration policy priorities can prove advantageous when seeking funding opportunities. In a previous article, CFS writer Taylor Paiz explores the evolving priorities of the administration and offers insights on how to remain proactive in anticipating these changes.   

While final decisions are still being determined, maintaining awareness and tailoring applications to align with agency goals is vital to ensuring the success of your program.