May 13, 2025

Information Sharing on Federal Funding: Update May 13, 2025

Federal funding cuts continue to unfold across sectors, and the cumulative impact is starting to reshape how communities, schools, and research institutions operate. Below, we share the latest developments, summarize the administration’s proposed federal budget’s implications, and offer resources to help you stay informed and advocate for the programs that matter.

Recent Cuts Include Cuts to Mental Health and Arts Funding

As a grant consulting firm, we’re closely tracking funding shifts that affect program viability and community well-being. Recent cuts have real implications for the clients we serve and the federal grant programs to which we have historically supported our clients’ applications and program development. These include:

Education Department: Funding for school-based mental health—passed as part of the bipartisan 2022 Safer Communities Act—has been halted by the U.S. Department of Education. This means schools will lose access to the funds that enabled them to hire counselors and mental health professionals. See NPR coverage.

While the full effects are difficult to quantify, evidence shows prevention works. As grant consultants, we regularly conduct this type of research when preparing proposals—most successful applications are grounded in evidence-based theory, demonstrating both the effectiveness and return on investment of the proposed approach. For example, studies by RAND, RTI, and others find significant return on investment for school-based mental health interventions. As just one example, RTI states, “We found that for every $1 investment made in the full set of interventions in our global investment case, we anticipate $24 in benefits over 80 years. This result means that the interventions effectively pay for themselves 24 times over the course of 80 years. These benefits include improved quality of life, increased likelihood of completing education, reduced absenteeism from work, and lower rates of premature mortality among young people now and in later life.”

National Endowment for the Arts (NEA): Arts organizations across the U.S. are reporting widespread cancellations of NEA grants. These grants were lifelines for theaters, museums, and cultural nonprofits and their audiences. This article from artnet.com on NEA cuts details some of the programs affected. For rural and under-resourced communities in particular, these grants often fund the only arts programs available, from youth music classes and local theater to public murals and Indigenous storytelling projects. Without this support, the arts become less accessible, cultural equity suffers, and opportunities for education and civic engagement are diminished.

In New Mexico, NEA funding has historically supported not only artistic expression but also intergenerational cultural preservation, youth development, and local tourism in a state where many organizations operate on lean budgets and limited philanthropic infrastructure.

Indirect Cost Recovery Cuts

The National Science Foundation (NSF) has adopted a new policy capping indirect cost rates at 15% for all new awards to Institutions of Higher Education. This shift mirrors a similar NIH directive and has broad implications for the sustainability of federally funded research. It is important to note that (historically) indirect cost rates are not arbitrary—they are the result of detailed, multi-year negotiations between institutions and federal agencies, grounded in audited financial data and rigorous cost allocation standards. Indirect costs are the backbone of research institutions. They cover essential operations like:

  • Grant management and fiscal oversight
  • HR, payroll, and legal services
  • Facilities and utilities for labs
  • IT infrastructure and cybersecurity

Without adequate recovery, research institutions—especially public colleges—may struggle to maintain compliance, staff, and technology to conduct research.

Budget Proposal

The President’s proposed budget (link opens PDF) proposes sweeping cuts to domestic programs while increasing funding for defense and border security. However, while the President’s budget outlines priorities, Congress ultimately determines what gets passed—and many proposals may face political resistance given the impacts that will be felt in home communities.

Proposed cuts include:

  • Education: Rolls some reduced funding into block grants to the states, while making cuts to TRIO (education outreach programs), Federal Work Study, English Language programs, Adult Education, Migrant Education, and Child Care, among others.
  • Health: Also restructures funding to states, while making cuts to several programs, including LIHEAP (home energy assistance for low-income families), Maternal and Child Health programs, Substance Abuse and Mental Health Services Administration, among others. Major reductions to the CDC include targeting infectious disease preparedness and health equity programs.
  • NIH: Billions in cuts, scaling back major initiatives including cutting or defunding programs such as the National Institute on Minority Health Disparities.
  • Housing: Replaces rental assistance programs with capped, state-controlled formula grants funded at much lower levels while adding restrictions. There is a reference to building affordable housing related to efforts to “opening up” Federal lands.
  • Environmental Protection: Cuts climate and environmental justice programs.
  • Arts & Media: Eliminates the National Endowment for the Arts, National Endowment for the Humanities, Institute for Museum and Library Services, and the Corporation for Public Broadcasting among other agencies.

While much of the cuts direct remaining funding to the states, this funding is reduced and states will be asked to do more with less.

Despite the cuts, defense and homeland security funding would rise significantly, including $113 billion “topline funding” for DOD and $44 billion more for border security operations.

Funders Stepping in to Fill Some Gaps

Some philanthropic organizations are launching bridge funding or emergency support to mitigate the impact of these changes:

If you know of additional funding opportunities, let us know—we’ll share them with clients and partners and highlight them in our blog.

What You Can Do

Continue to stay up to date on your federal grant communications. If you have a grant terminated or feel it might be, several organizations have provided guidance on what to do. Some examples:

Please consult with your attorney prior to accepting a grant cancellation notice.

Advocate for federal funding that matters to you. Find your representatives and senators here, and contact their offices. You can also find templated messaging from various associations, so look for an association in your interest area. For example: Protect the NEA is a timely resource.

Prepare your organization. As Congress debates the President’s budget, the uncertainty around federal funding will continue—especially for programs that serve children, marginalized communities, the arts, research institutions, and environmental protection. TGP is ready to assist organizations in navigating this evolving landscape by:

  • Helping nonprofits develop robust documentation and compliance processes to ensure federal funds are not pulled for an avoidable reason.
  • Assessing risk to existing federal grants based on recent executive orders and develop recommendations.
  • Identifying alternative funding opportunities and preparing proposals.
  • Training organizations in federal grant seeking and management for an environment in which competition and scrutiny is more pronounced.
  • Offering guidance on advocacy strategies and public communications.

We will also continue sharing updates and resources every two weeks to keep you informed and prepared to act.

If you have questions, stories, or funding opportunities to share, please reach out. If you need help with current federal grants, join our weekly office hours. If you want to talk about how we can support your organization through grant seeking and management, please book a discovery call. While this is a difficult time for everyone who works in programs supported by federal grants, we are here to help get through it together.

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