Federal Funding Pause and Its Implications

Update: Since this blog was published, the Trump administration issued a brief memo, M-25-14, which reads “OMB Memorandum M-25-13 is rescinded,” and directs questions about implementing the president’s executive order to agency general counsels. White House Press Secretary Leavitt said the previous executive orders related to funding reviews are still in effect and will continue to be implemented. 

Update: Since this blog was published, a federal judge has temporarily blocked part of the Trump administration’s pause on federal grants and loans as of January 28, 2025. This temporary block is slated to end on Monday, February 3, 2025. Hundreds of programs remain under review, according to the Office of Management and Budget. If our guidance changes, we will provide further updates.

Original Blog, Published January 28th, 2025:

AAFCPAs would like to make clients aware, on January 27^th President Trump’s Office of Management and Budget issued Executive Order M-25-13 mandating a “Temporary Pause of Agency Grant, Loan, and Other Financial Assistance.” This pause affects all organizations, nonprofit and commercial, who receive Federal funding grants regardless of their cause area.

What does this mean?

• The order pauses all new Federal grants/contracts and loans.
• The order pauses all drawdowns on active grants/contracts and loans.
• This order is effective January 28, 2025 at 5:00 PM.
• The PMS (payment management system) to draw Federal funds appears to be no longer active.

What we advise.

• Check Federal Funding. Clients are advised to verify their ability to draw down Federal grants, even on current and active contracts. 
• Identify Funding Streams That May Be Impacted. The funding pause may include other funding you receive, such as pass-through funding and other assistance.
• Understand the Pause. The funding pause is immediate but does not necessarily mean contracts are canceled. It is a temporary halt, and clients should be aware of this distinction. 
• Contact Your AAFCPAs Advisor. Clients should reach out to their AAFCPAs partner to discuss the implications of the funding pause, strategize on cash flow analysis, and plan for contingencies. 
• Launch Proactive Communication. Clients are advised to meet with their boards and management to discuss the implications of the Federal funding pause. 

The memorandum reads “this temporary pause will provide the Administration time to review agency programs and determine the best uses of the funding for those programs consistent with the law and the President’s priorities. The temporary pause will become effective on January 28, 2025, at 5:00 PM.”

In response to this unprecedented funding pause, AAFCPAs has formed a Task Force to assess its impact on our clients. We will monitor developments and provide updates as appropriate.

Clients are encouraged to contact Courtney McFarland, CPA, MSA,340B ACE, Partner, at 774.512.4051 or cmcfarland@aafcpa.com,  Matthew Hutt, CPA, CGMA, Partner at 774.512.4043 or mhutt@aafcpa.com—or your AAFCPAs Partner.