$3 trillion in federal assistance put on hold

On Tuesday, a federal judge issued a temporary stay against the recent Office of Management and Budget (OMB) directive, pausing it until Monday at 5 p.m.

On Wednesday, the media reported the Trump administration had rescinded the directive, but the White House then clarified that the freeze still stands, as they only rescinded the memo, not the order.

What OMB’s temporary pause on federal financial assistance programs means to you

The Office of Management and Budget (OMB) issued a significant memorandum Monday night directing federal agencies to temporarily pause activities related to federal financial assistance programs.

This directive affects a broad spectrum of federal funding mechanisms, including grants, loans and other forms of financial assistance that collectively represent more than $3 trillion in federal spending.

The pause impacts organizations receiving federal funds both directly and through pass-through arrangements, affecting a wide range of sectors including healthcare providers, educational institutions, research organizations, state and local governments, and nonprofit organizations.

While Medicare, Social Security benefits and assistance provided directly to individuals are explicitly exempt, the breadth of the directive has created uncertainty across multiple sectors.

Scope of impact

The OMB's memorandum has a wide-ranging impact, pausing federal financial assistance programs across sectors, including infrastructure, public health, education and social services, pending a 90-day policy review.

Areas impacted include:

• Federal grant programs across all agencies
• Loan programs and loan guarantees
• Cooperative agreements
• Non-cash assistance programs
• Pass-through funding administered by state and local governments
• Merit review panels and open Notices of Funding Opportunity (NOFOs)

Organizations potentially affected include:

• Healthcare organizations receiving federal grants
• Research institutions and universities
• State and local government agencies
• Nonprofit organizations receiving federal funding
• Public-private partnerships utilizing federal assistance
• Community development organizations
• Environmental and conservation programs
• Educational institutions beyond direct student aid
• Cultural organizations receiving federal support

Key provisions & implementation requirements

The memorandum outlines specific actions required by federal agencies and establishes a structured review process.

Immediate agency requirements include:

• Completing comprehensive analysis of all federal financial assistance programs
• Identifying programs affected by recent executive orders
• Reporting legally mandated deadlines and actions to OMB
• Pausing merit review panels and other evaluation activities
• Assigning senior political appointees to oversee program review
• Evaluating current awards for alignment with new priorities

OMB’s funding pause implementation specifics:

• Affects both new and existing awards
• Includes review of unpublished funding announcements
• May result in withdrawal of published announcements
• Allows for case-by-case exceptions through OMB
• Permits continued administrative closeout actions
• Requires review of current disbursement schedules

Industry-specific impact analysis

Healthcare: Critical impact

The impact level on healthcare providers is significant, but there are key exemptions — most notably Medicare and direct patient benefits. Those are expected to continue without interruption.

The most critical elements affected are:

• Research grant disbursements
• Public health program funding
• Healthcare workforce development grants
• Community health center funding
• Rural healthcare initiatives

Additional areas where the funding hold will have an impact:

• Healthcare innovation projects
• Prevention and wellness programs
• Health information technology initiatives

Nonprofit organizations: Substantial impact

The OMB's funding hold poses significant challenges for nonprofit organizations, particularly those reliant on federal grants and contracts.

The top areas to focus on:

• Cash flow implications for grant-dependent operations
• Impact on program delivery commitments
• Staff positions funded by federal grants
• Multi-year project continuity

The specific program types affected are:

• Community development initiatives
• Social service delivery programs
• Cultural and arts programs
• Environmental conservation efforts
• Education and workforce development

Higher education: Moderate to significant impact

The potential impact on higher education varies by program. Those reliant on federal funding for research, student aid and infrastructure will be the most affected, but there are some notable exemptions, which include:

• Direct student financial aid
• Individual scholarship programs
• Veterans' education benefits

The top areas impacted are:

• Research grants across all disciplines
• Facility and infrastructure funding
• Program development grants
• International education programs

State & local government: Significant impact

The OMB's directive has significant implications for state and local governments, since many rely heavily on federal grants and loans to fund various programs and services.

The areas most impacted are:

• Infrastructure project funding
• Economic development programs
• Environmental protection grants
• Public safety initiatives
• Community development block grants

Administrative considerations for governments to focus on include:

• Pass-through funding responsibilities
• Reporting requirements
• Subrecipient management
• Compliance obligations

While the full extent of the OMB's funding hold is still unfolding, proactive assessment and planning are essential for state and local governments to navigate this period of fiscal uncertainty.

Tribal organizations: Significant impact

Tribal organizations, which often rely on federal funding for essential services, infrastructure, and economic development, are significantly impacted by the OMB’s funding hold. This directive creates uncertainty and potential disruptions for programs supporting tribal communities.

Key areas affected include:

• Healthcare services
• Indian Health Service (IHS) programs reliant on federal grants and funding.
• Tribal health clinics and public health initiatives, including prevention and wellness programs.
• Workforce development programs aimed at increasing healthcare access in tribal communities.
• Education and youth programs
• Federal grants supporting tribal schools and higher education institutions.
• Programs aimed at preserving tribal languages and cultures.
• Economic development and infrastructure:
• Housing grants and community development block grants for tribal housing projects.
• Funding for transportation, utilities, and broadband expansion in tribal areas.
• Environmental and conservation efforts:
• Federal programs supporting natural resource management, conservation, and climate resilience on tribal lands.

Administrative considerations for tribal organizations include:

• Managing pass-through funding distributed to tribal governments and organizations.
• Ensuring compliance with federal reporting and audit requirements.
• Maintaining communication with federal agencies to clarify the scope and timing of funding delays or reviews.

Tribal organizations should assess the potential impacts on critical programs, engage proactively with federal agencies for guidance, and develop contingency plans to address funding uncertainties during this period. Maintaining focus on compliance and strategic planning will be essential to navigate the challenges posed by the funding hold.

Government contractors: Impact varies

The OMB funding hold also has significant implications for government contractors who provide goods and services under federally funded programs.

Here's an overview of the potential impacts:

• Grant-funded contracts
• Cooperative agreements
• Technical assistance programs

Indirect impact:

• Mixed-funding projects
• Subcontractor arrangements
• Technical evaluation panels

Contractors should anticipate the potential for revised priorities, which may impact existing contracts and bidding opportunities. Engaging proactively with federal agencies and industry associations can help contractors stay informed and adapt to policy changes.

Other industries

Several other industries Wipfli serves are likely to feel the effects of the OMB funding hold.

• Manufacturing and distribution businesses may face delays in federal programs supporting advanced manufacturing, workforce development, and export assistance.
• Financial services organizations, particularly community banks and credit unions participating in SBA or similar loan programs, could encounter disruptions in loan approvals and compliance requirements.
• Agribusinesses relying on federal grants, subsidies, or disaster relief might see interruptions in vital support.
• Construction and real estate projects tied to federal infrastructure or affordable housing grants may be postponed.
• Technology companies likely will see federal research grants for technology innovation, cybersecurity, and broadband expansion could face delays.

Potential benefits of OMB funding hold

While the OMB’s funding hold presents challenges, it also offers potential benefits, particularly for aligning federal financial assistance with new policy priorities and improving program effectiveness. These include:

• Policy alignment: The funding hold allows for a comprehensive review of federal programs to ensure alignment with the administration’s policy goals, prioritizing initiatives that address current national priorities and challenges.
• Increased accountability: The review process emphasizes compliance, transparency and effectiveness, reducing the risk of mismanagement or waste in federal financial assistance programs.
• Opportunity for modernization: The pause creates an opportunity to update or restructure programs, streamline processes, and adopt modern approaches that enhance efficiency and program delivery.
• Resource optimization: By reviewing program goals and performance, agencies can reallocate resources to the most impactful programs, ensuring better use of taxpayer funds.
• Improved oversight: Assigning senior political appointees and requiring detailed reporting enhances oversight of federal programs, potentially reducing duplication and inefficiencies.
• Case-by-case flexibility: The memorandum allows exceptions to be granted on a case-by-case basis, ensuring that critical or time-sensitive programs can continue during the review period.
• Strategic focus: Agencies and organizations can take this time to align their operations and funding requests with federal priorities, potentially strengthening future funding opportunities.

While the immediate effects of the funding hold may create uncertainty, these benefits underscore the administration's intent to enhance the efficiency, accountability and strategic focus of federal financial assistance programs.

What you should do

To effectively navigate the OMB’s funding hold, organizations should take both immediate and strategic steps to mitigate risks, ensure compliance, and maintain operational continuity.

Immediate steps in the next 48 hours

Begin with a rapid assessment of your funding, risks, and communication needs:

• Conduct a federal funding assessment:
  • Document all federal funding streams.
  • Identify critical deadlines and review disbursement schedules.
  • Map program dependencies to understand potential vulnerabilities.
• Risk management:
  • Assess cash flow implications and identify critical program impacts.
  • Review staffing needs and evaluate contractual obligations to prepare for delays or adjustments.
• Communication planning:
  • Brief key stakeholders on potential impacts and next steps.
  • Prepare transparent communications for clients and constituents.
  • Establish protocols for contacting federal agencies and document all interactions for accountability.

Strategic planning (next two weeks)

As the situation evolves, focus on adapting your programs and processes to align with the changing landscape:

• Program review:
  • Evaluate program alignment with emerging federal priorities.
  • Identify alternative funding sources to fill potential gaps.
  • Develop contingency plans to ensure critical services continue.
  • Reassess strategic initiatives to align with long-term goals.
• Compliance and documentation:
  • Update compliance protocols to meet new requirements.
  • Enhance documentation procedures for reporting and audits.
  • Review current reporting requirements and prepare for potential federal reviews.

Taking these proactive steps will help your organization navigate this period of uncertainty and prepare for the resumption or adjustment of funding streams while maintaining stakeholder confidence and operational integrity.

How Wipfli can help

Our firm has established a dedicated response team to support organizations through this transition period. We will provide regular updates through client briefings, industry-specific alerts, technical guidance and regulatory updates, which we will capture on our dedicated regulatory, policy and tax changes for 2025 page.

And our team is standing by to help you navigate the challenges of the OMB funding hold requires experience, strategic planning and proactive solutions. Wipfli is here to support your organization every step of the way. Our team offers tailored services — including financial impact analysis, compliance support, strategic advisory and technical assistance — to help you maintain operations, ensure compliance, and adapt to this evolving landscape.