- The White House ordered a pause on all federal grants and loans starting at 5 p.m. Tuesday.
- The memo sparked confusion as organizations worked to figure out which programs would be impacted.
- Experts told BI that programs like Head Start and housing vouchers could be immediately impacted.
Meals on Wheels for seniors in poverty, Head Start childcare, and Section 8 housing vouchers are among the programs that could face funding delays after President Donald Trump suspended federal grants and loans.
The Office of Management and Budget’s internal memo sent Monday night and obtained by Business Insider said agencies must pause any payments to programs that include “financial assistance for foreign aid, nongovernmental organizations, DEI, woke gender ideology, and the green new deal,” suggesting the administration is looking to pause programs that are not in line with Trump’s agenda.
It carved out exceptions for “assistance provided directly to individuals” and would not impact Medicare or Social Security benefits. Still, the order’s lack of clarity has some groups that receive federal aid struggling to determine how they will be impacted.
As of Tuesday afternoon, BI reporters had contacted more than 60 federal, state, and nonprofit agencies. Those who responded overwhelmingly said they had no idea how the federal funding freeze would affect their work and were actively trying to figure it out.
A senior administration official told BI that the pause on federal grants is in accordance with the law and will not impact benefits provided directly to Americans.
Still, Meals on Wheels, which receives federal grants to provide meals to seniors, told BI in a statement that “the lack of clarity and uncertainty right now is creating chaos for local Meals on Wheels providers not knowing whether they’re going to be reimbursed for meals served today, tomorrow, who knows how long this could go on.”
Senator Chris Murphy of Connecticut wrote on X Tuesday afternoon that his state’s Head Start reimbursement system was shut down. “Preschools cannot pay staff and will need to start laying off staff very soon and sending little kids home,” he wrote. Head Start’s office did not respond to BI’s request for comment.
The pause is set to begin on Tuesday at 5 p.m. ET, leaving some organizations that receive federal aid scrambling to determine how to account for this order.
Which programs could be most at risk
While the order seems to clearly target funding for programs that could fall under a broad DEI or renewable energy umbrella, implications for other groups are much less clear.
Depending on how long the freeze on federal grants and loans last, some programs could be impacted in a matter of days. Bobby Kogan, senior director of federal budget policy at the left-leaning think-tank Center for American Progress, highlighted two programs: Head Start, which receives federal funding to help low-income children and families receive aid for early childhood education, and Section 8, which provides housing vouchers for low-income individuals and families.
Head Start receives its funding through annual contracts on a rolling basis, so the grant freeze would delay payments for facilities that were expected to get funding on February 1. Additionally, Section 8 vouchers are distributed to housing authorities, and those who do not have cash reserves may be unable to help voucher recipients with their rent on February 1.
“Some impacts are immediate, and some are not immediate, but the longer that it goes on, the more things are impacted,” Kogan told BI.
BI obtained a memo OMB sent to federal agencies requesting they complete a spreadsheet detailing the objectives and funding schedules of federal programs they oversee. Those programs included SNAP, WIC, and aid for homeless veterans, among other things. It’s unclear how OMB will use that information, especially because a senior administration official said SNAP would be exempt from the freeze. But the items on the list could signal programs Trump’s administration is looking to target.
Sharron Parrott, president of the left-leaning Center on Budget and Policy Priorities, compared the grants pause to a government shutdown — but she said that the preparation that typically goes into a shutdown is missing here.
“It is a terrible thing when the government shuts down, and lots of people are hurt in a whole variety of ways, but that careful preparation, that figuring out what needs to continue to preserve life and safety, is incredibly important,” she said. “That’s completely absent from this chaotic process.”
Some Democratic lawmakers have also highlighted potential programs at risk under a hiring freeze. Sen. Bernie Sanders said in a statement that the memo has sparked confusion over the fate of Head Start, nutritional assistance for pregnant mothers through the WIC program, and heating for low-income Americans.
“The Trump Administration’s action last night to suspend all federal grants and loans will have a devastating impact on the health and well-being of millions of children, seniors on fixed incomes, and the most vulnerable people in our country,” Sanders said.
The freeze on grants and loans is already facing legal challenges, as well — a group of state attorneys general said they would sue to stop the freeze, and a group of nonprofits filed a lawsuit on Tuesday to prevent it from going into effect.
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