June 2, 2025

Information Sharing on Federal Funding: Update June 2, 2025

Federal funding has long been a cornerstone of community services, education, healthcare, and economic development, among other important issue areas. But recent shifts in federal policy are creating a new and more complex environment for grant-funded work across the country. This is the latest in our series of updates on the Federal funding environment, which began January 31, 2025, and which we have released approximately every two weeks since that date.

Spotlight on New Mexico

Our recently released report, Understanding Federal Funding Shifts and Their Implications for New Mexico’s Philanthropic Sector, commissioned by Thornburg Foundation, Anchorum Health Foundation, and Santa Fe Community Foundation, offers a close look at how these changes are already affecting organizations in our state.

Key takeaways include:

  • New Mexico received over $17.3 billion in federal grant payments in FY2024, making it one of the highest per capita recipients nationwide.
  • 37% of NM nonprofits rely on government grants, placing us among the most grant-dependent states.
  • Nearly half of obligated federal funds remain unpaid as of early 2025, which puts many federal dollars at risk given the unprecedented funding cuts of active awards.

These figures reflect a broader national trend, where executive orders and administrative changes—such as defunding programs midstream or altering indirect cost rules—are reshaping how and where federal dollars flow.

Download the full report and explore Albuquerque Journal’s coverage here.
ABQ Journal article

The Albuquerque Journal also highlighted the experience of the Quivira Coalition, which had been implementing a USDA-funded program focused on turning livestock waste into compost. Thirteen producers were enrolled when the grant was frozen. Although some projects were offered re-enrollment options, the situation illustrates how administrative criteria are shifting, sometimes with little notice or public explanation. Organizations are finding themselves adjusting mid-project or reevaluating eligibility based on newly prioritized language and metrics.

The New Mexico Department of Justice recently launched a “Federal Disruptions” tracker, which highlights the impact of federal funding cuts in the state, as reported to the department. The webpage will be continuously updated. Those impacted by federal grant cuts can fill out a form at the same site to report the impacts.

Language and Compliance

One important trend that grant professionals across the country are discussing involves changes in grant application language guidance. For example, the U.S. Department of Justice recently updated rules for Office on Violence Against Women grants, advising against using terms like “trauma-informed care” or “systemic violence.” These terms—previously central to describing community-based, culturally-specific work—are now flagged as ideological.

The shift is not just semantic. It has real-world consequences for how organizations enact their work, what services they can describe, and whether they qualify for continued funding. As one housing provider noted, the more accurately they describe the context of violence survivors’ lives, the less competitive their grant application becomes.

A helpful guide on navigating “banned” and high-risk language in grant writing is available from grant writing educator, mentor, podcaster, and entrepreneur Holly Rustick:
Podcast + workbook

Resource for Navigating New Funding

For nonprofits concerned about potential grant loss or delays, planning is more important than ever. According to Candid, the average nonprofit without government funding can survive about 2.3 months on existing reserves—a stark reminder of the need for diversification and contingency planning.

Candid is currently offering a free month of Foundation Directory Professional for eligible organizations that:

  • Have under $10 million in annual revenue
  • Have lost government grant funding
  • Hold a 2025 Gold Seal of Transparency

Learn more about the offer and apply here.

Looking Ahead: What Funders and Nonprofits Can Do

The current moment invites coordinated action. Philanthropy has a unique opportunity to buffer short-term disruption and invest in long-term adaptability. While private philanthropy cannot replace federal dollars, recommended strategies include:

  • Increasing general operating support
  • Accelerating disbursement of multi-year grants
  • Offering technical assistance and compliance training
  • Supporting communications and advocacy to raise awareness about how policy changes affect local communities

As Allan Oliver of Thornburg Foundation noted in the Understanding Federal Funding Shifts report press release, “Federal funding isn’t just a line item—it’s a critical investment in our communities.” We appreciate the diligence of our local funders in supporting communities during this unprecedented time, when their work is literally on the line.

For nonprofits, advice includes:

  1. Review language and framing in applications: Examine current and upcoming federal grant proposals to ensure compliance with revised guidance and that your organization is comfortable with the grant requirements. When needed, work with consultants or legal counsel to strike the balance between mission integrity and funding viability.
  2. Strengthen compliance and financial systems: Awardees should be prepared for increased scrutiny. Now is the time to audit internal controls, documentation practices, and federal reporting systems. Let us know if we can help.
  3. Diversify funding sources: Seek funding partners that align with your values and work. Expand efforts to build new relationships, or develop earned income streams or other fundraising apart from federal grants.
  4. Evaluate cash flow and reserve policies. Tools like scenario planning or bridge financing (e.g., lines of credit) can help absorb delays in federal payments.

If you do apply for a new federal grant opportunity, be sure to assess it with eyes wide open: Understand not only the programmatic requirements, but also how recent Executive Orders may influence the terms, including new language restrictions, shifting funding priorities, immigration-related enforcement provisions, and certification clauses that could require affirming policies or positions that may not align with your organization’s values or community commitments.

Prepare Your Portfolio

In times of rapid change, the best strategy is preparedness. To help grant-funded organizations assess their current risks and plan for uncertainty, we’re launching a new two-part vulnerability assessment webinar series on June 4 and June 11, 2025. These sessions are designed for federal grant recipients and applicants who want to:

      • Understand how Executive Orders and administrative guidance are affecting grant programs
      • Identify compliance gaps, language risks, and budget vulnerabilities
      • Develop realistic contingency plans and strengthen funding resilience
      • Ask the right questions before applying or accepting new awards

If you’ve read this far, you are likely interested in the federal grant landscape. These trainings will give you tools to lead your organization with confidence and clarity. Register here.

Note – if you cannot make the live session, you will receive the recording if registered.

This post is part of our ongoing series tracking federal funding changes, their impacts, and resources for adaptation. Subscribe to stay informed, and please share with colleagues or partners who may benefit. If you have resources to include, please let us know via mail@thegrantplantnm.com.

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