A coalition of nonprofits that have received millions in federal grants is opposing new White House rules aimed at curbing waste, fraud, and ideological spending in government grantmaking. The proposed reforms from the Office of Management and Budget (OMB) would give agencies more authority to suspend or terminate grants that do not align with agency priorities or the national interest.

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The dispute centers on whether the executive branch should have broader discretion to halt funding for programs it deems misaligned, with critics warning this could politicize the grant process and supporters arguing it would restore accountability to taxpayer spending.

The OMB's proposed changes to Uniform Guidance rules, announced in May, follow findings by the Department of Government Efficiency (DOGE) that highlighted spending on diversity, equity, and inclusion (DEI) initiatives, "anti-American ideologies," and "AI-powered social media censorship tools." While DOGE targeted such spending, some grant cancellations were blocked by courts under existing rules. Congress recently passed a funding bill delaying the new rules' implementation until December 11.

Nonprofits' Opposition and Funding Ties

At least five nonprofits that signed a coalition letter against the OMB proposal have received significant federal funding or previously challenged Trump administration policies in court. The American Public Health Association (APHA) was awarded $22.3 million from the Department of Health and Human Services between 2021 and 2024. SAGE, a New York nonprofit serving LGBTQ elders, received $1.9 million, including $1.2 million in 2024. The Northwest Immigrant Rights Project, which represents immigrants in court regardless of legal status, received over $2.6 million from the Justice Department during the same period, mainly for legal aid to trafficking victims and immigrant survivors.

The AIDS Vaccine Advocacy Coalition (AVAC) secured more than $16 million from the U.S. Agency for International Development for HIV prevention research. The Integrated Refugee and Immigrant Service (IRIS) in Connecticut received $30.3 million in federal grants from 2022 to 2024, according to Federal Audit Clearinghouse records. Several of these organizations have also participated in lawsuits against federal agencies over funding pauses or policy changes.

Some of the nonprofits, including the National Council of Nonprofits, APHA, and SAGE, sued the OMB in January 2025 to block a memo that temporarily paused funding for certain programs, including foreign aid and DEI initiatives. The case was declared moot after the administration rescinded the memo. The Northwest Immigrant Rights Project and the Amica Center for Immigrant Rights challenged a Justice Department pause on information programs for unauthorized immigrants; a district court upheld the DOJ policy, and the plaintiffs appealed. AVAC sued the State Department over a freeze on international aid, with the case remaining active after an initial restoration of funds was reversed on appeal.

Scott Walter, president of the Capital Research Center, argued that the federal grant system favors left-leaning nonprofits and called the opposition to the OMB rules "anti-democratic." He said, "What could be more anti-democratic than insisting that democratically elected officials, managing discretionary grants, may not use their discretion to control grant flows to these colluding groups?"

Arguments For and Against the Rules

Independent Sector President Akilah Watkins, whose group signed the coalition letter, said the OMB rules would "deeply disrupt the work of charitable organizations and eliminate essential services they provide to Americans in need." She warned the rules would introduce a "vague standard" that could politicize what should be a nonpartisan process and weaken congressional oversight by empowering the executive branch.

The American Public Health Association defended its stance, stating that "federal funding strengthens communities, leading to improved health outcomes, lifesaving research for cures, and families that are fed. Politicizing funding will only worsen the health of the nation."

Rep. Michael Cloud, R-Texas, praised the OMB proposal, arguing it would restore accountability to federal spending.

"This rule would bring common-sense accountability by aligning taxpayer-funded grants with the law. Americans deserve to know their money isn’t being used to advance a political agenda they never agreed to."

— Rep. Michael Cloud, R-Texas

The Daily Signal reported that the National Council of Nonprofits, SAGE, the Northwest Immigrant Rights Project, AVAC, and IRIS did not respond to requests for comment.

The debate over the OMB rules highlights ongoing tensions over who controls federal discretionary spending and whether taxpayer dollars should support programs tied to divisive political or ideological agendas. The rules' implementation is delayed until at least December 11 under the latest government funding bill.