Navigating Federal Grants Amid Uncertainty

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Grant-funded organizations face an increasingly complex landscape influenced by federal funding changes and legal challenges. Given the vast scope of federal funding—over 2,200 federal assistance programs, including grants, loans, and other forms of financial and non-financial support, according to SAM.gov­—these changes impact a wide range of organizations.

It's crucial for every organization whose funding may be affected to understand the implications of these changes and how to navigate these challenges.

Policy Shifts

While this is not an exhaustive list and new developments may arise, here are some key policy changes that may affect grant-funded organizations:

  • A requirement that educational institutions eliminate racial preferences in various areas or face the risk of losing federal funding. This requirement also affects private companies that serve as federal contractors or subcontractors, including higher education institutions, research organizations, and not-for-profit service providers.
  • Freezes on federal grants and loans that affect Tribal communities’ abilities to provide essential services, raising concerns about the 638 contracts held with the federal government.
  • Proposed Medicaid cuts over the next decade could severely impact individuals and families reliant on these services, as well as health care providers.
  • The introduction of a 15% standard indirect cost rate for educational and medical institutions may hinder advancements in critical research by limiting operational funding. It could negatively affect the quality and sustainability of research programs vital for innovation and public health.
  • Funding disbursements under the Inflation Reduction Act and the Infrastructure Investment and Jobs Act are currently on hold, affecting organizations in the clean energy sector. While some tax credits remain available, the pause on many programs creates uncertainty for future investments.

As these shifts occur, organizations must also navigate legal challenges and questions surrounding executive authority, which may complicate compliance and funding processes. Understanding these dynamics is essential for effectively adapting to the evolving landscape.

Strategies to Consider

To effectively navigate these challenges, your organization should consider the following strategies.

Know Your Portfolio

  • Maintain an updated inventory of all grants, including funding amounts, performance periods, and agency contacts.
  • Regularly assess the alignment of funding sources with the organization’s mission and federal priorities.
  • Utilize your current grant portfolio to forecast future funding requirements and identify potential gaps. This proactive approach will help facilitate smoother transitions as new administrative priorities emerge.

Understand Your Risk Exposures

  • Conduct focused internal audits and proactively monitor compliance to identify and correct potential noncompliance early. This approach can help mitigate the risk of revoked federal funding or loss of future opportunities. Additionally, internal audits can serve as a rehearsal for external audits.
  • Put in place robust policies and procedures to mitigate risks associated with staff turnover.
  • Assess and enhance your team's skills and capabilities through targeted training, ensuring readiness for new challenges.

Develop Flexible Budget Scenarios

  • Best Case Scenario. Assumes stable funding levels, allowing for the maintenance or slight expansion of services
  • Expected Case Scenario. Accounts for minor fluctuations in funding, necessitating slight operational adjustments
  • Worst Case Scenario. Prepares for significant reductions in federal funding, focusing on preserving core services by cutting non-essential programs and reducing operational costs.

Stay Informed

  • Stay ahead by subscribing to updates from key federal agencies and industry groups. This keeps you informed of any impending changes.
  • Actively work to understand how new information affects your operations and strategy. This proactive approach can mitigate risks associated with changes.
  • Engage with peers through forums and workshops, this can provide insights and collaborative opportunities.

Undertake Advocacy

  • Differentiate between advocacy and lobbying to maintain compliance, while effectively communicating organizational needs to policymakers.
    • Advocacy. Educates decision-makers and the public about issues, raising awareness without directly calling for legislative change.
    • Lobbying. Aims to influence specific legislation through direct contact with legislators or by mobilizing public engagement on particular bills.
  • Establish connections with local and federal lawmakers to effectively represent your organization’s interests.
  • Develop effective communication strategies so that your organization's needs and those of the communities you serve are clearly understood by policymakers.

Diversify Opportunities

  • Explore partnerships with private entities and foundations to reduce dependence on federal funding.
  • Develop compelling narratives that highlight your organization’s impact while aligning funding strategies with current governmental priorities. Utilize data and success stories to effectively showcase your community contributions and attract donors seeking a measurable investment return.
  • Establish transparency by maintaining detailed financial records and enhance credibility by obtaining certifications from reputable organizations such as GuideStar or Charity Navigator.

As you navigate the complexities of funding changes and legal challenges, adopting proactive strategies will be essential for ensuring sustainability and effectiveness. By understanding the current landscape and implementing these strategies, you can position your organization for success while continuing to serve your communities effectively.

We’re Here to Help

For help navigating your organization’s grant funding challenges, contact your firm professional.

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