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It started with a memo from the White House’s Office of Management and Budget on Monday night, and by noon on Tuesday, many nonprofit agencies throughout the country and Montana were searching for answers, uncertain whether they should immediately shut their doors and halt programs.
The memo described U.S. President Donald Trump’s initiative to closely examine all federal spending and said that there would be a temporary freeze of funding, which could reach into the billions, even trillions, of dollars. While the Trump administration said there’d be exceptions for payments to individuals, like Medicaid and Social Security, healthcare and nonprofit officials said some of those funding streams were not working Tuesday.
The Trump administration said it will require all federal agencies to “identify and review all federal financial assistance programs and supporting activities consistent with the President’s policies and requirements,” even for contracts already started and signed. The memo said those programs would be reviewed and then lifted on a case-by-case review by political appointees, not career staffers.
By the end of the day, an emergency lawsuit filed in Washington D.C., had paused the funding freeze until 5 p.m., Monday.
Still, even as the courts froze the funding freeze, the day’s events left leaders rattled in search of more answers.
That’s because nonprofit organizations repeatedly told the Daily Montanan that when they reached out to federal government employees who had been their point-of-contact, they were told that all communication was coming from the White House’s OMB, nor could they assist answering questions.
By shortly after 1 p.m., Cindy Stergar of the Montana Primary Care Association, said some of the funding portals that community-based programs like Head Start use appeared to have reopened, at least temporarily.
“We just don’t have a lot of answers right now,” Stergar told the Daily Montanan, “because there just hasn’t been a lot of clarification and some mixed messages.”
“I have been working in this field for a long, long time and I have never see anything like this, where it’s just a blanket order,” she said.
Before the court order, the White House directive gave organizations approximately 24 hours to submit any current expenses. After that, the federal government would begin reviewing all spending. Organizations were instructed that they must submit plans, budgets and other documentation for review by Feb. 10. Others still were told that the funding would likely be delayed until the middle of March, some 45 days away.
It was not clear on Tuesday how the plan would roll out, who would be doing the review, and how the determination would be made.
Later in the day, the White House issued further clarification saying that it was only targeting programs that cover DEI — or diversity, equity and inclusion — immigration and foreign aid, but it appears that nearly any nonprofit organization that relies on federal funding was halted.
The Montana Nonprofit Association, which is part of the larger National Nonprofit Association, which immediately challenged the order in court, said that its active membership is upwards of 700, but there are nearly 3,000 nonprofit organizations registered in the state with at least one employee. Since the office opened Tuesday, MNA Executive Director Adam Jespersen said they were inundated with phone calls.
“It has been a day,” said Jespersen.
He said that the organization that supports the nonprofit organizations throughout the state had already sent out emails trying to articulate what was known and trying not to repeat rumor or misinformation.
“We’re trying to only share what we know. But it’s not clear what is happening,” Jespersen said. “And, we don’t know when the spigot is going to be turned back on.”
He said it’s important for Montana’s leaders to know that 11% of the state’s economy is tied up in the nonprofit sector, focusing on health, energy, education and housing — most providing human services.
He said that even organizations that aren’t funded mostly through federal grants may have programs and staff whose livelihoods could be impacted.
“It is complex with many, many impacted, especially in smaller community-based programs that may not have the budget to withstand (a pause or loss of) funding,” Jespersen said.
He said that the funding freeze is even different than other situations, like the COVID-19 emergency shutdown or the federal government shutdowns.
“This happened with zero warning,” he said. “Even the shutdowns happened with some warning, and they were planned and you could see them coming so you could triage. This was more like a light switch.”
Kelsen Young, the executive director of the Montana Coalition Against Domestic and Sexual Violence, said that the action could put public and individual safety at risk because the state’s Board of Crime Control works with the coalition to disperse funding that supports victims services, including those who are abused or face homelessness due to unstable living situations. Many shelters designed for victims of domestic violence cannot keep services continuing, which include operating shelters, without regular funding.
Meanwhile, other officials, like Montana Superintendent of Public Instruction Susie Hedalen, said that her office is working with the Trump administration, but it does not appear that the bulk of federal education funding has been affected, according to an email sent to public school officials in Montana.
“The funding pause applies to discretionary grants at the Department of Education, which are undergoing review to ensure alignment with the priorities of the Trump administration,” the guidance said. “The Department of Education is actively working with OMB to identify additional programs that may fall outside the scope of this memorandum.”
Hedalen’s office also said that federal Pell grants and direct loans for higher education are not going to be affected.
Other nonprofit leaders across the state worried that the funding portal that many nonprofits used would only be up temporarily, and even then, most nonprofit organizations are only funded in arrears, meaning for work that has already been completed. Few get any kind of payment in advance, meaning that if there is a pause or interruption, organizations will either have to find other funding or consider reducing services or staff, even for contracts that are already signed, active and in place.
“How long could that review take and all our federal agencies have been told not to communicate what to do,” Young said. “It appears that most of the funding will be frozen without an end date.”
The spreadsheet sent out to many organizations is more than 50 pages long and has the different grants and programs that were part of the freeze.
“There are thousands of programs,” Young said. “How long is that going to take?”
She said that many organizations that fund social services do not have cash reserves to support staff and operations during the long term.
The coalition works with more than 20 domestic violence shelters in Montana, and all are run by community-based nonprofits.
“The rural programs are the ones that could be most affected because they have the fewest sources of other funding, usually,” she said.
As many as 40 victims witness coordinators help those who have been abused move safely throughout the criminal and civil justice systems. Those will also likely be impacted, Young said, because they are grant funded.
“Some organizations will have to make decisions about keeping their doors open,” Young said. “These are not new awards. And they’re not taking applications for new funding.”
Most grant-funded programs and agencies use a system called “drawdown,” Stergar said, which allows them to submit expenses and programming costs throughout the year, often monthly or several times a month, to get money the organization already spent.
State leaders also said they were concerned because many residents may mistakenly believe that more money comes from the state, but really, the state is often a “pass through” agency from federal funding.
The Daily Montanan reached out to the Governor’s Office to receive more information about how it was advising organizations and leaders, but Gov. Greg Gianforte’s staff did not respond.
Leaders in the medical, education and nonprofit world said they were all stunned to learn of the freeze, and many couldn’t remember a situation that would be a good comparison.
“We just had no idea. I have contacts in (Washington) D.C., and no one seemed to know. That’s pretty surprising because I think nothing is a secret there,” Young said.
The funding freeze was causing problems and headaches for even Republican leaders who have been generally supportive of Trump’s policies. The Daily Montanan reached out to all four members of the Montana Congressional delegation, but only Rep. Troy Downing replied, saying he was supportive of Trump’s initiative, but monitoring the situation: