Trump’s Proposed Grant Rules Spark Outcry, 100K Comments

A Trump administration plan to substantially change the way the federal government funds nonprofits and researchers has triggered a gusher of comments from the public, spurred by campaigns led by nonprofit and scientific organizations.

As of Thursday afternoon, the Office of Management and Budget’s website had recorded nearly 100,000 submissions, many of them harshly critical of the proposed rule. The public comment period is open through July 13. 

In May, the White House released a proposal that would allow federal agencies more power to terminate grants to nonprofits and prohibit funding of organizations that support work the administration disapproves of, including diversity, equity, and inclusion programs. It would also install a political appointee in each agency to ensure that grants are awarded only to groups that promote the “national interest.”

If finalized, the rule would set a dangerous precedent, said Sarah Saadian, senior vice president of public policy and campaigns at the National Council of Nonprofits.

“It would be very easy for political appointees to create a blacklist of grantees they don’t want to fund anymore,” she said. “The grantee wouldn’t know that they’ve been excluded through that political process, and they wouldn’t have a chance to appeal.”

Nonprofits that work to address racial or social inequities would be targeted by the changes, Saadian said. They would be forced to choose whether to stick with their missions and risk losing funding and potentially incurring legal risks, too, or jettisoning their values in order to receive a federal grant, she said.

The council has drafted a letter critical of the proposed changes, signed by members of several hundred organizations, it intends to file with the OMB on Monday. 

“The proposal would force grantees to operate in a shifting environment, increasing the difficulty of administering federal programs,” the letter said. It also argued that injecting politics into the grant making process would threaten nonprofit funding and could ultimately lead to havoc in the provision of  housing, food, health care, shelter, disaster recovery, and other needs across the country.

Nonprofits Push Back on the Proposal

In addition to the National Council of Nonprofits, umbrella nonprofit organizations, including the Council on Foundations, Independent Sector, and the United Philanthropy Forum, urged their  members to chime in. Scientific groups, including the American Association for the Advancement of Science and the Union of Concerned Scientists, did as well.

On Monday, Sen. Susan Collins, Republican chair of the Senate Appropriations Committee, weighed in. In a letter to Office of Management and Budget Director Russell Vought, she called for the comment period to be extended for 90 days. Among other things, she warned that if the rule were adopted it would conflict with Congress’ control over the federal funding process. 

Many of those whose comments criticized the proposal called out the increased authority it would give agencies to terminate grants, and the placement of political appointees in the decision-making process. 

Some commenters, like one named Curtis Scott, were succinct: “Stupid! No political commissars in America.”

Others attacked specific items in the 400-page proposal, such as a ban on grants to support voter registration drives and strict limits on any issue advocacy that used taxpayer funds.

In response, one commenter, Rose Evans, wrote: “The proposal risks silencing trusted community organizations that connect citizens with the democratic process and provide vital services every day.”

Philanthropy New York, a membership organization of about 250 grant makers in that state, shared a number of concerns in response to the call for comments.  

One section, related to pass-through organizations that regrant federal dollars to other nonprofits, is especially troubling, according to Marlon Williams, Philanthropy New York’s vice president of public policy and communications. 

The proposed rule states that if a grantee veers from the priorities of the administration, the pass-through organization that provided the grant must consult with the federal agency to determine whether the grant should be terminated.”  

“These new provisions deputize philanthropy to police their grantees,” Williams said. “That’s not helpful to the trusting relationships we want to build between grantees and philanthropy.” 

Both local and federal grant making practices could be improved, Williams said. Specifically, too many grants come in the form of a reimbursement for work that has already been done, forcing nonprofits or banks to provide up-front cash to get projects underway.

But rather than address pitfalls in the system, the proposed changes simply insert an “ideological screen” into the process. Particularly problematic, Williams said, is the requirement that grants fulfill a “national interest.”

“That is very vague,” he said. “We’re not sure what that actually means. There’s no technical definition for that.”

A Hope to Gum Up the Works

The crush of comments makes it impossible to gauge how many support the proposed change, according to Steven Balla, co-director of the George Washington University Regulatory Studies Center. But when there is a flood of comments, it usually means the response is critical, he said.

Normally rule changes don’t receive a lot of comments, according to Balla. The nearly 100,000- comments the federal grant making proposal has received so far indicate there is a high level of interest in the subject, he said.

The administration is incentivized to process all of the comments, Balla said, because agencies have been sued for allegedly not taking into account warnings or suggestions they contain. With such a pileup of responses, federal departments will use staff, consultants, and artificial intelligence programs to sort through them all. 

But Balla said it is unlikely that the deluge will change much. When a proposed rule change hews so closely to a presidential priority, rules tend to be finalized in much the same form in which they were proposed.

“Rulemaking is not a plebiscite,” he said. “It’s not an exercise in counting up votes.”

The National Council of Nonprofits urged members to provide the OMB with specific examples of how the proposal would impact their organizations. The goal, Saadian said, was to unleash a flood of unique comments that would slow down the whole process. 

Saadian noted that the White House would like to finalize the regulations by October 1. If it needs to process a vast number of comments, it can help gum up the works.

“It can help slow down that process,” she said. “It also can help build the case for potential litigation that could stop or block the regulation from being finalized altogether.”