How to think about the funding freeze (and unfreeze), and 4 immediate steps to take

In just a few days, nonprofits across the country faced whiplash—from an abrupt federal funding freeze to an equally sudden reversal. Additionally, while domestic funding appears to be flowing for now, global foreign aid remains paused. The confusion left organizations scrambling, questioning what’s next and how to prepare for more uncertainty in the months ahead.

While the full domestic funding freeze was short-lived, executive orders continue to shape federal priorities, meaning some programs and funding streams remain in flux. So, what does this all mean for nonprofits? And how can organizations stay ahead of rapid policy shifts?

Let’s break it down.

What just happened?

The first week of the new administration was packed with executive orders that signaled major shifts in federal policy. These orders impacted a wide range of issues, including:

• Diversity, Equity, and Inclusion (DEI) initiatives
• Climate change initiatives and environmental regulations
• Public health, especially reproductive health 
• International Aid (excluding weapons aid to Egypt & Israel) 
• Immigrant & refugee assistance  

Then, on January 27, the Office of Management and Budget (OMB) issued a federal funding freeze, pausing all activity for existing and new grants while requiring a full review of federal programs. This sent shockwaves through the nonprofit sector, halting payments, delaying projects, and creating mass uncertainty.Less than 48 hours later, after mounting legal challenges and political pressure, the freeze was reversed. However, many organizations are still dealing with disruptions and the lingering effects of shifting funding priorities.

How executive orders impact nonprofits

Even though the domestic funding freeze was lifted, nonprofits must still navigate ongoing changes driven by executive orders. These policy shifts can affect:

• Federal Grant Eligibility – Some programs may face new restrictions or altered requirements.
• Compliance & Reporting – Nonprofits may need to adjust how they frame initiatives to align with new federal priorities.
• Funding Availability – While some areas may see cuts, others—such as job training, small business support, and energy development—may see increases.

Understanding these executive orders is key to adapting grant strategies, securing funding, and ensuring compliance moving forward.

Four steps nonprofits should take now

Given the uncertainty ahead, preparation is key. Here’s how nonprofits can proactively navigate the evolving landscape:

1.) Expand your foundation strategy

With government funding becoming more unpredictable, private foundations are likely to step up and fill gaps. Now is the time to:

• Build new relationships with funders
• Research grant opportunities (especially in Q2 & Q3)
• Use "lookalike" strategies to identify funders that support similar organizations

💡 Tool Tip: FreeWill’s Grant Assistant is launching Discover, an AI-powered grant discovery tool that helps your organization find best-fit funding opportunities in seconds.

2.) Review & reframe federal & state funding

The new administration’s priorities differ sharply from the previous one, meaning nonprofits may need to adjust how they present their work.

Some organizations are already tweaking their language to align with federal framing:
‍
✅ “Disadvantaged groups” → “Lower-income groups in the community”
✅ “Climate change” → “Disaster response”
✅ “Financial inclusion” → “Increasing opportunity”

💡 New Resource Alert: FreeWill has launched a free Executive Order Analyzer to help nonprofits analyze program descriptions and flag areas that may need reframing.

3.) Check in on corporate grants

Many corporate funders are shifting their public stance on DEI initiatives due to political pressure. Some may rename grants or adjust public positioning while still funding similar work.

What to do:

• Proactively reach out to existing corporate funders
• Ask about changes to funding priorities and application criteria
• Stay flexible in how you present your initiatives–  if a corporate funder is moving away from politically sensitive terms, consider rewording your proposals while keeping the core mission intact.

4.) Advocate & stay engaged

The nonprofit sector played a major role in reversing the funding freeze—continued advocacy is essential to prevent similar disruptions in the future.

How to make an impact:

• Engage with local lawmakers—especially Republican representatives who may have more influence right now over funding decisions.
• Share real-world impact stories to highlight how policy changes affect communities.
• Join nonprofit coalitions that are actively advocating for federal funding protections.

Key takeaways for nonprofits

• Expect sudden policy changes – The new administration prioritizes fast, decisive action, often without clear guidance.
• Certain funding areas will face cuts – DEI initiatives, climate programs, public health, and international aid may be scaled back.
• Other funding areas may grow – Job training, small business support, and energy development could see more investment.
• Stay flexible & proactive – Adjusting messaging, diversifying funding sources, and strengthening donor relationships will be critical in this new environment.

Moving forward with confidence

The sudden funding freeze and policy shifts are a reminder that nonprofits must be nimble, strategic, and proactive in today’s evolving landscape. By expanding funding sources, adjusting strategies, and staying engaged, organizations can continue their critical work—even in uncertain times.

Resources for nonprofits

• Webinar: 5 steps to diversify your funding in uncertain times
• FunderMix Insights tool