In a dramatic reversal, the Trump administration on Wednesday rescinded a sweeping directive that had temporarily frozen federal funding across agencies, just one day after its announcement.
The move came hours after a federal district judge granted an administrative stay, blocking the freeze in response to a lawsuit filed by the National Council of Nonprofits.
The original directive, issued Tuesday by the Office of Management and Budget (OMB), mandated a temporary pause on all federal financial assistance disbursements, including grants and loans, while agencies reviewed their programs for alignment with the Trump administration’s priorities. The order required agencies to halt new funding programs, stop disbursements under existing programs, and pause activities related to open funding opportunities, with limited exceptions for legally mandated actions approved by the OMB.
The freeze sparked immediate backlash, with critics warning of catastrophic consequences for nonprofit organizations and the vulnerable populations they serve.
“This reckless action by the administration would be catastrophic for nonprofit organizations and the people and communities they serve,” the National Council of Nonprofits said in a statement. “From pausing research on cures for childhood cancer to halting housing and food assistance, shuttering domestic violence and homeless shelters, and closing suicide hotlines, the impact of even a short pause in funding could be devastating and cost lives.”
Confusion and Legal Challenges
The directive lacked specificity, leaving agencies and beneficiaries scrambling to determine its scope and impact. Concerns mounted that critical programs, such as those providing food and resources to low-income families, could be disrupted.
On Tuesday evening, a federal district judge granted an administrative stay, temporarily blocking the freeze pending further arguments scheduled for next week. The stay was issued in response to the lawsuit filed by the National Council of Nonprofits, which argued that the freeze violated procedural requirements and threatened irreparable harm.
During a White House press briefing on Wednesday, press secretary Karoline Leavitt sought to clarify the administration’s position, insisting that the freeze would not affect direct beneficiaries of federal programs. However, she was less clear about indirect beneficiaries, such as seniors relying on federally funded nutrition programs administered by third parties.
Rescission and Ongoing Uncertainty
Hours after the press briefing, the OMB released a brief memo rescinding the directive. Leavitt confirmed the move on X (formerly Twitter), attributing it to the court order. However, she emphasized that the Trump administration’s broader executive orders on federal funding “remain in full force and effect, and will be rigorously implemented.”
These executive orders include:
- Protecting the American People Against Invasion (Jan. 20, 2025): Revokes Biden-era immigration policies, prioritizes deportations, and reviews funding to NGOs assisting undocumented immigrants.
- Reevaluating and Realigning United States Foreign Aid (Jan. 20, 2025): Imposes a 90-day pause on foreign aid disbursements pending review.
- Putting America First in International Environmental Agreements (Jan. 20, 2025): Withdraws the U.S. from the Paris Agreement and revokes climate-related policies.
- Unleashing American Energy (Jan. 20, 2025): Rolls back climate policies and prioritizes domestic energy production.
- Ending Radical and Wasteful Government DEI Programs and Preferencing (Jan. 20, 2025): Terminates federal Diversity, Equity, and Inclusion (DEI) programs.
- Defending Women from Gender Ideology Extremism (Jan. 20, 2025): Defines sex as binary and restricts federal funding related to gender identity.
- Enforcing the Hyde Amendment (Jan. 24, 2025): Restricts federal funding for elective abortions.
Legal and Policy Implications
The rescission of the funding freeze highlights the ongoing tension between the Trump administration’s policy agenda and legal challenges from advocacy groups.
The case also underscores the critical role of judicial oversight in curbing executive overreach.
