Navigating the Shifting Political Landscape as a Federal Grant Recipient

With the recent federal administration changes, there is a lot of uncertainty in the nonprofit and philanthropy sectors. Federal grant recipients, subrecipients, and contractors face shifting priorities, new executive orders, and evolving funding practices.

As the current administration rolls out new policies and executive orders, nonprofit organizations, social enterprises, and other grant recipients must adapt or risk losing essential funding opportunities. Whether you’re dealing with executive orders that redefine priorities or grappling with changing funding mechanisms, navigating these changes effectively is crucial for sustainability.

In this post, we’ll explore how organizations can respond to these shifts, focusing on the impact of executive orders, the difference between grants and contracts, and how to realign organizational strategies to stay relevant in an evolving environment.

The Impact of Executive Orders on Federal Grant Recipients

Executive orders issued under the current administration are significantly reshaping the funding landscape. These executive actions set new expectations for federal grant recipients, often influencing the types of programs eligible for funding, compliance requirements, and grantmakers’ overarching priorities. Understanding these shifts and how to respond is essential to maintaining eligibility for federal funding.

Key Executive Orders Affecting Grants

For example, the Department of Transportation (DOT) has been ordered to deprioritize programs that support energy innovation, combat climate change, and promote diversity and gender equity. Similarly, the National Science Foundation (NSF) has issued a directive that requires all grantees to pause any activities related to Diversity, Equity, Inclusion, and Accessibility (DEIA) that do not fully comply with the new administration’s updated requirements.

The General Services Administration (GSA) has also been ordered to emphasize merit-based opportunities for contracting officers, aiming to eliminate equity-based preferences.

Some of the executive orders have been paused and are being litigated in court, but as legal challenges unfold, organizations may face uncertainty regarding compliance requirements, timelines, and future opportunities. For federal grantees and contractors, these shifts could impact eligibility and funding decisions, making it vital to stay updated on these policies.

Navigating Uncertainty

To successfully navigate the shifting landscape of federal funding, it is important to stay informed about emerging funding priorities. Organizations that seek federal funding must conduct an internal calculus to determine if they can or need to adjust their programs to align with changing federal expectations. Proactively responding to policy updates can help organizations avoid disruptions and ensure continued support. A critical part of this adaptability is understanding the different types of federal funding available—specifically, the distinctions between grants and contracts.

Grants vs. Contracts: Understanding the Rules and Risk Factors

As federal funding evolves, it is important to understand the key distinctions between grants and contracts. Both funding mechanisms come with their own sets of rules and obligations, but the risks and rewards differ significantly.

• Grants: Typically, grants offer more flexibility but may come with stringent reporting and compliance requirements. They are usually awarded for a specific purpose, but the recipient has more leeway in how funds are used within that framework.
• Contracts: In contrast, contracts often involve more rigid expectations, milestones, and deliverables. Contractors may face stricter terms, including termination clauses that can jeopardize an organization’s ability to meet expectations.

Understanding these differences and the risks associated with each type of funding is crucial to ensuring that your organization’s legal and operational frameworks are equipped to handle the mechanism that applies. Organizations can mitigate risk by clearly understanding the terms and conditions of administering the funding before entering into agreements.

Adjusting Your Mission to Align with the New Funding Landscape

In the face of shifting priorities and new funding conditions, how can organizations stay true to their mission while adapting to these changes? It’s possible to pivot without losing sight of your core values, but it requires thoughtful reflection and strategic realignment.

Consider the recent orders removing the emphasis on DEIA principles in grantmaking. Organizations must ensure their actions align with these expectations while focusing on their original goals. The key is being flexible and willing to adapt your approach to meet new funding requirements without straying from your core mission.

To do this, explore how your organization can continue to operate its programs in a way that aligns with your organization’s principles, the broader political climate, and your stakeholders’ specific needs.

Filling Organizational Gaps: Leveraging Non-Typical Partnerships

As federal funding becomes more competitive, nonprofits and social enterprises must rethink how they fill gaps in their programs and services. Unconventional partnerships can be a prime strategy to help organizations remain strong during times of uncertainty.

Building partnerships with for-profit entities, community organizations, or even local government agencies can help fill resource gaps. For example, an organization working on climate change might team up with a local business focused on sustainable products to develop joint initiatives. These cross-sector collaborations bring unique benefits, including shared expertise, expanded networks, and access to alternative funding sources.

Additionally, working with member associations allows organizations to strengthen their advocacy efforts, because these associations often offer access to wider networks and the collective power of multiple voices, making initiatives more impactful.

Case studies show that unexpected partnerships can lead to innovative solutions and open new funding streams. When entering such collaborations, assess mutual goals and align values to create a partnership that’s beneficial to all parties.

Creative Funding Vehicles: Exploring New Paths for Support

In an environment where traditional federal grants may become increasingly competitive or subject to shifting priorities, organizations must look beyond the conventional to ensure sustainable funding. While philanthropy and government funding remain essential, diversifying your funding sources can help mitigate risk and provide more flexibility.

Philanthropic organizations—foundations, corporate social responsibility (CSR) programs, and individual donors—continue to be a vital source of support for nonprofits. In fact, many philanthropic entities align their grantmaking strategies with current social, environmental, and policy priorities, creating new opportunities for organizations that can demonstrate impact in these areas.

Depending on the amount of government funding your organization receives, new funding vehicles may not resolve all your funding uncertainty. But diversifying your funding sources can help insulate your organization from federal funding fluctuations. Creative funding options might also open the door to new types of partnerships and stakeholders that could help advance your mission.

Pivoting Your Strategy: Flexibility and Adaptability in the Face of Change

Flexibility is key when it comes to both funding and programmatic strategies.

Here are a few tips to stay agile during uncertain times:

• Diversify: Explore various funding options and strategies to protect against the risks of depending solely on federal grants. Collaborate with member associations to open new funding sources, because they often have access to unique opportunities and partnerships.
• Innovate: Don’t be afraid to experiment with new approaches, even if it means moving away from traditional models. This may include innovating advocacy tactics by aligning with other organizations and associations to amplify collective action and elevate your cause.
• Evaluate: Continuously assess how your organization responds to the shifting landscape and adjust accordingly to stay aligned with your mission. Sharing your organization’s case statement and story during this evaluation period helps clarify evolving needs. It highlights the organization’s impact, making it easier to adjust while staying grounded in your purpose.

The key is to adapt without losing focus on what matters most. Organizations can innovate and evolve, but their core mission should remain central.

Weather the Storm of Uncertainty

As the political landscape evolves, so must the strategies of federal grant recipients. Organizations can weather the storm of uncertainty by staying informed about executive orders, understanding the differences between grants and contracts, and being willing to pivot in the face of change.

Flexibility is essential, but staying true to your mission should always be your guiding principle. By aligning your strategies with new funding requirements while maintaining a strong focus on your values, you’ll position your organization for success in the ever-changing world of federal grants.

To learn more about what your organization can do to navigate the shifts in federal funding, check out the webinar Navigating Federal Funding: Essential Risk Mitigation and Success Strategies for Financial Leaders.

James Spencer, RBW Strategy Consultant, co-authored this blog post.