#050: Federal Funding Freezes Pt. 1: How Supreme Court Decisions and Congressional Actions are Reshaping Nonprofit Funding

Between the federal funding freeze initiated by the Trump administration in January, the Supreme Court’s ruling in the CASA case in June, and the 119th Congress passing the Rescissions Act in July, 2025 has been a chaotic year for nonprofits—especially those who depend largely on federal funding. 

Today’s episode is the first in a two-part conversation with Atrómitos president, founder, and CEO Michealle Gady and legal intern Devon Cavaliere. Together with Communications Director Monette Goodrich, they talk through these legal challenges, and how they have fundamentally altered the landscape for nonprofit funding, requiring organizations to adapt their strategies for financial sustainability and advocacy in a politically charged environment.

Key Takeaways

Executive: The Office of Management and Budget (OMB) memo in January caused confusion and chaos among federal agencies, revealing significant vulnerabilities in nonprofit funding. Swift legal actions were taken against the funding freeze, and the memo was rescinded less than 48 hours later—yet even eight months later, some organizations are still waiting for funding decisions.

Judicial: The Supreme Court's ruling in the Trump v. CASA case restricts the ability of courts to issue universal nationwide injunctions. This decision fundamentally alters the legal landscape by restricting the ability of lower federal courts to issue sweeping orders that protect non-parties. 

Legislative: In passing the Rescissions Act, the 119th Congress has shown a willingness to use every procedural tool available to advance ideological priorities. Even if nonprofits successfully challenge executive actions in court, they could still lose their funding through congressional action.

Nonprofits now face threats from all three branches of government, and must fundamentally rethink their legal advocacy, political engagement, and financial sustainability strategies.

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