New week, new list of horribles
Summary of Risks to Nonprofits Stemming from Federal Changes - Week Ending March 7, 2025
Here is my list of news about what I'm watching at the federal level with some minor editorializing to provide context to busy nonprofit leaders. You can find the first in this series here.
In an unsigned order, the Supreme Court rejected an attempt by the Trump Administration to continue freezing billions of dollars in foreign aid. The case will continue in district court, then inevitably the Court of Appeals for the DC Circuit, before again making its way back to the Supreme Court. This is not done – not by a long shot.
The case is one aspect of an orchestrated attempt by the Trump Administration to force a showdown about presidential power at the Supreme Court. It has many facets. In this case, however, Justice Sam Alito penned a frothing-at-the-mouth dissent that was joined by three other Justices. The question of presidential power will come down to Chief Justice John Roberts and Justice Amy Coney Barrett, both quite conservative. I don’t like those odds.
Just to be clear, there was a time when "conservative" meant disinclined to change the rules. That word has a very different meaning in contemporary Supreme Court jurisprudence.
To avoid a government shutdown, Republicans in Congress have proposed a “continuing resolution” that would keep most funding that was set last year by President Joe Biden. It is unclear whether hardline Republicans will agree with the proposal, and since Republicans control both houses of Congress, it remains to be seen whether there will be a shutdown in less than a week. I have heard some say that the Republicans have the votes for the CR, but I would not put money on that assertion. As a result, my earlier posts about preparing for a government shutdown are relevant again. Focus on this one.
It is said that economists can confidently predict five of the next three recessions. As someone with a mere undergraduate degree in economics, I won’t even venture a prediction. Just the facts here.
While on the campaign trail, Donald Trump claimed that he would wield his power to impose tariffs to strengthen the economy. He said the same thing about cutting federal workers: this would save billions of taxpayer dollars.
Now, however, Trump officials are beginning to concede that there will be economic dislocation from these directives. News outlets like the New York Times are beginning to write of policies having “shaken a once-solid economic outlook.” To quote the Times, “Measures of business and consumer confidence have plunged. The stock market has been on a roller-coaster ride. Layoffs are picking up, according to some data. And forecasters are cutting their estimates for economic growth this year, with some even predicting that the U.S. gross domestic product could shrink in the first quarter.”
Nonprofits should reflect on at least two issues concerning this news. Look back at the recent U.S. recessions, including the Great Recession of 2007-09 and the COVID-19 recession of 2020. Consider these points:
Keep in mind, as well, that during the Great Recession, the federal government injected $700 billion into the financial sector and $787 billion into the consumer sector as fiscal stimulus. During COVID-19 there was a massive amount of federal stimulus. In this case, the Trump Administration intends to reduce federal spending, especially in many areas impacting nonprofits.
Like I said, I'm not making any predictions. I do say, however, that we're likely in for some nasty weather.
President Trump signed an executive order altering the Public Service Loan Forgiveness program, disqualifying nonprofit workers involved in activities deemed "improper," such as those related to illegal immigration, foreign terrorist groups, “illegal discrimination,” “child abuse” relating to gender affirmation, and sundry other issues. This change might affect some of over 2 million Americans employed in eligible public service roles, potentially limiting access to loan forgiveness. But the critical question is who this will actually apply to. It seems to focus broadly on organizations that may support those who are undocumented, those who work on DEI, transgender advocacy and protection groups, and community organizers. The Secretaries of Education and Treasury are supposed to provide guidance. For now, it seems to be an attempt to discourage people from entering nonprofit fields.
Eight nonprofit organizations are facing an imminent financial crisis due to a freeze on their $20 billion in climate grants from Biden's Greenhouse Gas Reduction Fund, held in Citibank accounts, initiated by the Trump administration. Since February 18, these groups have been unable to access their funds for basic needs like payroll and rent, with no clear explanation from Citibank or the Trump administration. This action threatens the viability of environmental nonprofits and their initiatives.
The Trump administration has suspended approximately $60 million intended for affordable housing projects nationwide. The Department of Housing and Urban Development canceled contracts with two nonprofits responsible for distributing these funds, citing non-compliance with an executive order targeting diversity, equity, and inclusion initiatives. This action disrupts numerous community development projects, potentially exacerbating housing shortages and affecting nonprofits focused on affordable housing.
Leaders of tribal nations across the U.S. are concerned about the Trump administration's directive to close over a quarter of Bureau of Indian Affairs (BIA) offices. These offices provide essential services, such as road project approvals and law enforcement funding, crucial for fulfilling the U.S.'s trust responsibilities towards Indigenous communities. Tribal leaders fear that the resulting closures, layoffs, and funding freezes could violate treaties and legal obligations, impacting nonprofits serving these communities.
Lawyers always hate when lawyers are targeted. It’s just in our blood, I guess. But this issue is different because it signals a new species of attempted lawlessness on the part of the President. On March 6, President Trump issued an executive order targeting all of the lawyers at the liberal law firm of Perkins Coie for having engaged in “dishonest and dangerous activity.” The firm’s lawless activity included opposing voter identification laws, working for Hillary Clinton (and attempting to “steal an election”), and implementing DEI programs within the firm. The executive order raises a host of constitutional concerns, including First Amendment and Due Process concerns. If Trump can do this to a prominent, well-heeled law firm, we are all in jeopardy.