Updated on February 3, 2025 - On January 29th, the Office of Management and Budget (OMB) rescinded its memo that had previously called for a freeze on federal funding. It’s important to note that the executive orders prompting the freeze are still believed to be in effect, contributing to ongoing uncertainty. We are committed to monitoring the situation closely and providing support where needed.

January 28, 2025 - On January 27, 2025, the Office of Management and Budget (OMB) issued a Memorandum M25-13 mandating a temporary suspension of activities and a comprehensive review of all federally funded agencies and programs.

Key Impacts

The memo and related executive orders signal significant effects on organizations receiving federal funding, including nonprofits and local governments:

• The pause affects all forms of “federal financial assistance,” including grants and loans.
• Organizations may face delays or halts in expected federal grant payments, with all activities required to stop by 5 PM on January 28.
• Review processes for new federal grants have been paused.
• Federal agencies must review all grants and compile a listing of recipients, which is due to OMB by February 10, 2025, outlining those that may no longer qualify for funding based on recently signed executive orders.
• Medicare and Social Security benefits are exempt from these changes.

Note: The memo does indicate that the OMB may provide certain exceptions on an individual basis and as mandated by law.

Action Steps for Organizations

Organizations, particularly those reliant on federal reimbursements, should prioritize cash flow:

• Build a daily cash flow model to assess the impact of paused federal payments.
• Consult with bankers regarding cash flow options and credit terms.
• Engage in proactive discussions about necessary adjustments if federal funding is cut.

Legal actions may arise to challenge these changes, but timing and successful resolutions are uncertain. As such, it is prudent for all organizations to start assessments and discussions now.

How Can Citrin Cooperman Help

Citrin Cooperman’s not-for-profit professionals are continuing to monitor these federal developments closely and will share updates with our nonprofit clients and constituents as available. Please reach out to any of our not-for-profit professionals for further conversation as to how we can assist your organization navigate these changing regulations and times.