Gov. Affairs | Issue 30 | June 18, 2026
Published June 18, 2026 - This content will be updated as developments unfold.
Latest Developments:
OMB proposal on federal grant guidelines and comment deadline
On May 29, 2026, the U.S. Office of Management and Budget (OMB) proposed sweeping changes to overhaul the set of rules, known as the Uniform Guidance, governing federal grants, cooperative agreements, and other monetary awards to nonprofits, state and local governments, and other grantees. If implemented, the proposal would create significant financial risk and instability for federal grantees, including nonprofits, making it more difficult to provide vital services to communities.
The proposal is wide-ranging and includes limitations directing agencies not to fund, promote, or facilitate “illegal DEI,” “gender ideology," or gender transition of a person under age 19.
Read: Proposed OMB Rules Would Have Wide-Ranging Effects on Federal Grantmaking - National Association of Independent Colleges & Universities
White House Seeks to Impose Political Test on Billions in Federal Grants - NY Times (unlocked)
Call to Action:
The public may submit comments on the proposal by July 13, 2026. We have included links here to helpful resources developed by the National Council of Nonprofits:
Good News:
Another Federal Court Rebukes Trump Administration Over Illegally Withheld Funds - Center for Economic and Policy Research
Just days ago in mid-June 2026, a federal judge in South Carolina issued a crucial order in a lawsuit brought by a coalition of cities and environmental nonprofits (led by the Southern Environmental Law Center and the Public Rights Project). Following executive orders aimed at rolling back renewable energy and diversity initiatives, the EPA (Environmental Protection Agency) had abruptly dismantled and terminated the $2.8 billion Environmental and Climate Justice Block Grant Program, which was fully authorized and funded by Congress under the 2022 Inflation Reduction Act. The cancellation immediately stripped major commitments away from regional nonprofits and tribal communities. District Judge Richard Mark Gergel ruled that the EPA's termination of the program was "arbitrary, capricious, and unlawful." The ruling established a powerful precedent: the executive branch has no unilateral authority to refuse to spend congressionally mandated funds simply because it disagrees with the policy. While the court noted that ordering the immediate rehiring of agency staff to run the program was "impractical," it explicitly opened a clear legal path for affected nonprofits to sue for monetary recovery of their withheld funds in the Court of Federal Claims.
Resources:
Webinar, 6/23/26 1pm CST
President's Proposed FY 2027 Budget and Impact to Grants - Grant Professionals Association
Webinar, 6/26/26 12pm ET
Using the Nonprofit Legal Compendium - Urban Institute and the Lilly Family School of Philanthropy
Keep Watching:
Challenging the Trump-Vance Administration’s Weaponization of Public Service Loan Forgiveness to Target Critics - Democracy Forward
Nonprofits are currently awaiting a crucial summary judgment ruling in National Council of Nonprofits et al. v. McMahon (U.S. District Court of Massachusetts). A broad coalition of cities and sector advocates sued to block a new rule that would allow the Department of Education to disqualify employees of certain government and 501(c)(3) organizations from the PSLF program if the organization’s advocacy or mission doesn't align with the administration's agenda. Nonprofits are arguing this is an unconstitutional assault on the First Amendment and a violation of the Higher Education Act.
