The Elephant in the Room: Are Federal Grants Really Coming Back?
Federal grants are coming back—but not with the floodgates open. After years of pandemic-era abundance, we’re down to a slow drip. Yes, new opportunities are being released. Yes, there’s an approved federal budget for 2025 that needs to be spent. But the landscape has changed, and it’s not just about how much money is available—it’s about what strings are attached.
The truth: the faucet isn’t broken, but the plumbing has changed. Compliance language is tighter. Oversight is sharper. For community-rooted and underresourced organizations—especially those serving Black, Brown, and rural communities—this is both a window of possibility and a maze of new risks.
The Funds Are There, But So Are the Strings
Congress passed a full-year continuing resolution in March 2025, extending the 2024 funding levels through September 30, 2025, with adjustments that favored defense and immigration enforcement. This means billions in federal grants are on the table. However, accessing these funds now requires navigating a more complex compliance environment.
Compliance: The New Gatekeeper
In 2025, compliance isn't just a box to check. Agencies are enforcing stricter and new compliance measures, including:
False Claims Act Provisions: Non-compliance with federal anti-discrimination laws can now trigger False Claims Act liabilities.
DEI Program Restrictions: Executive orders have directed agencies to remove Diversity, Equity, and Inclusion (DEI) criteria from grant considerations.
Increased Oversight: The 2025 Compliance Supplement emphasizes performance accountability and stricter audits.
For organizations, this means investing in robust compliance systems and staying updated on regulatory changes.
Here are two times to pay extra attention to compliance requirements:
When applying, be sure to read all sections of the instructions package to ensure you are willing and able to comply with any requirements.
Before you sign your grant agreement, be sure you read all sections to ensure you are willing and able to comply with any requirements.
It's worth noting that "willing to comply" is a relatively new perspective on compliance for most of my clients. We regularly assess "ability to comply," but many of the latest compliance requirements raise ethical concerns for nonprofits, and many clients have walked away from opportunities because they are unwilling to comply with new compliance requirements. Before 2025, I had only had ONE conversation in a decade of work about willingness to comply. This now needs to become a regular conversation topic when making go/no-go decisions.
Looking Ahead: The 2026 Budget and Political Shifts
President Trump's proposed 2026 budget suggests significant cuts to non-defense spending, including social programs and diversity, equity, and inclusion (DEI) initiatives. With the 2026 midterm elections approaching, potential shifts in congressional control could alter funding priorities and compliance requirements.
Action Steps for Organizations
Strengthen Compliance Infrastructure: Ensure your organization has the systems and expertise to meet new compliance standards.
Stay Informed: Regularly monitor updates from federal agencies and professional organizations.
Advocate and Collaborate: Engage with coalitions to advocate for equitable funding and share best practices.
Plan for Political Changes: Develop strategies to adapt to potential shifts in funding priorities following the 2026 elections.
Federal grants are returning, but the path to accessing them has changed. With careful planning and a commitment to compliance, organizations can navigate this new landscape and continue to serve their communities effectively.