September 23, 2025

Information Sharing on Federal Funding: Update September 24, 2025

Federal funding priorities continue to shift rapidly under the current administration, with effects being felt across sectors. This blog is part of The Grant Plant’s continuing bi-monthly series to analyze changes to federal funding and share resources and potential impacts on nonprofit organizations, local and state governments, and other federal grant recipients.

Discretionary Funding Ended for MSIs

The U.S. Department of Education recently announced that it will end discretionary grant funding for Minority-Serving Institutions (MSIs). This change will eliminate approximately $350 million in expected discretionary funds that supported capacity-building at institutions serving large numbers of diverse students.

For context, MSIs are designated based on the student populations they serve. A Hispanic-Serving Institution (HSI), for example, must enroll at least 25% Latino students. Tribal Colleges and Universities (TCUs) and Native American-Serving Nontribal Institutions (NASNTIs) also serve high concentrations of Native students. MSIs do not have race-based admissions criteria, but instead, the designation is meant to reflect the student population it uniquely serves. As such, MSI status is about who institutions serve, not who they admit. This funding is also used to serve the broader student body, so all students benefit from it.

As a Congressional In Focus report noted in 2018, MSIs tend to have relatively low expenditures and high proportions of financially needy students. The MSI designation and related federal funding were designed to address inequities at the institutional level, helping colleges and universities build the capacity to serve students who may otherwise lack access to the benefits of well-resourced higher education.

The Department’s decision affects several long-standing federal programs, including:

  • Strengthening Alaska Native and Native Hawaiian-Serving Institutions (Title III Part A)
  • Strengthening Predominantly Black Institutions (Title III Part A)
  • Strengthening Asian American- and Native American Pacific Islander-Serving Institutions (Title III Part A)
  • Strengthening Native American-Serving Nontribal Institutions (NASNIs) (Title III Part A)
  • Minority Science and Engineering Improvement (Title III Part E)
  • Developing Hispanic-Serving Institutions (HSIs) (Title V Part A)
  • Promoting Postbaccalaureate Opportunities for Hispanic Americans (Title V Part B)

While these programs will lose discretionary funding, the Department notes that $132 million in mandatory funds (Title III and V, Part F) remain intact. These cannot be reprogrammed by law and will continue to flow to select MSI categories.

The cut to discretionary MSI funding raises the following concerns:

Nationally, it weakens institutional supports that help students traditionally underrepresented in higher education settings succeed—in areas such as advising, tutoring, faculty development, and research infrastructure.

In New Mexico, the impact will likely be particularly felt. Nearly every public college and university in the state is an MSI:

  • HSIs include Central New Mexico Community College, Clovis Community College, Eastern New Mexico University (ENMU), New Mexico Institute of Mining and Technology, New Mexico State University (NMSU), University of New Mexico (UNM), Northern NM College, Santa Fe Community College, Western New Mexico University, and others.
  • NASNTIs include ENMU–Ruidoso, NMSU–Grants, San Juan College, and UNM–Gallup.
  • TCUs include the Institute of American Indian Arts, Navajo Technical University, and Southwestern Indian Polytechnic Institute.

Changes to Funding Conditions & Priorities

The funding changes aren’t limited to education. Both the Housing & Urban Development Department (HUD) and the Department of Justice (DOJ) are embedding new gatekeeping mechanisms and policy conditions into their notices of funding opportunity (NOFOs), reshaping how nonprofits and local governments will interact with federal grants.

HUD’s reissued Continuum of Care (CoC) Builds NOFO[1] required applicants to pass a yes/no “merit review” before proposals would be scored. Applicants had to certify that they did not implement harm reduction strategies like safe consumption sites or syringe distribution, confirm that their jurisdiction enforces bans on public camping and drug use, document cooperation with federal immigration enforcement, and affirm they “do not deny the sex binary.”

In practice, this will likely mean that organizations working in evidence-based harm reduction or located in jurisdictions with policies at odds with federal immigration enforcement, could be barred from receiving federal grants to address critical issues such as homelessness.

Similarly, DOJ’s FY2025 solicitations emphasize funding priorities that align with the administration’s platform: directly supporting law enforcement operations (including immigration enforcement), combating violent crime, serving American citizens, protecting children, and supporting victims of trafficking and sexual assault. DOJ also codifies “out-of-scope” activities, including any program that might impede Department of Homeland Security (DHS) access. While peer review panels still score applications, the final award decisions rest with a political appointee, who can weigh those scores alongside “strategic priorities” and compliance with the administration’s priorities.

In practice, this will likely affect which organizations apply for funding from DOJ through programs that are meant to support victims of crime or to support community-level prevention and intervention strategies. If an organization is working with, for example, sexual assault survivors, the implications of the new DOJ requirements are that they may need to explicitly frame their services in terms of “supporting American victims,” while avoiding any implication that their work includes immigrant survivors or mixed-status families which may not be allowed if the organization accepts a federal grant award. Programs that intersect with immigrant communities must now weigh their mission to protect vulnerable survivors against a federal grant condition that expects cooperation with immigration enforcement and decide whether to apply.

Finally, the Substance Abuse and Mental Health Services Administration (SAMHSA)’s most recent revision of its strategic priorities, released on September 10th, deprioritizes harm reduction strategies and commitments to equity. This will affect the programs and organizations being funded by SAMHSA. Existing grantees have reported being required to revise awarded applications to strip out references to diversity, equity, and inclusion (DEI). This practice marks a sharp break from prior grants, when DEI commitments were often encouraged as evidence of culturally responsive care (not just as a grant condition in the Biden administration, but as a best practice in mental and behavioral health care).

Local Impact of Federal Administration Priority Changes

In addition to the impact on MSIs in New Mexico discussed above, the Department of Transportation recently moved to cancel an $11.5 million RAISE grant that had been awarded for the City of Albuquerque’s Rail Trail project, citing a pivot toward “car-based projects” over people- and bike-centered infrastructure. The City has stated that it will fight back in court[2] while continuing construction with state and local funds. For Albuquerque, losing this grant would not only slow progress on a transformative 7-mile trail loop through the city’s core, it would also undercut projected economic benefits and the opportunity to connect neighborhoods through safe and accessible infrastructure that benefits the entire community.

This most recent cancellation highlights what we have been seeing all year in terms of the uncertainty that organizations and communities now face even after securing competitive federal awards.

Resources

As we all continue to navigate the widespread changes to federal grants together, here are some resources that may be helpful:

National Council on Nonprofits Webinar: What Nonprofits Need to Know about the Current Federal Grant Landscape. October 6; register here.

The Grant Plant:

  • Reframing Federal Grant Narratives for the New Administration. October 8; register here.
  • Blog series on the changing federal funding landscape.
  • Federal Grants Management Training – compliance is more important than ever right now, and this 3-day workshop will empower your organization to manage grants confidently and avoid missteps in financial management, procurement, internal controls, etc. that could trigger a termination. October 21-23; register here.

Candid’s Ask Me Anything: Navigating the Federal Grant Landscape. October 28; register here.

New Mexico Thrives: Updates on Federal Actions.

Conclusion

Even in the midst of all the changes in 2025, as grant professionals, it helps to remember that small victories count. A proposal submitted on time. A client who is better positioned to navigate federal funding. A community member who benefits from a program you helped bring to life. These moments are worth celebrating, because they remind us why the work matters.

As grant professionals, we are often asked to carry the weight of working at the intersection of money and deadlines. While this year has added more than our fair share of heavy systems change and shifting priorities, we can also choose to find joy in the knowledge of knowing we are making a difference. Notice those small wins, both in your professional and personal life. Like Mr. Rogers said, look to the helpers and those trying to make this a more fair and equitable world. It helps!

Let us know if you need help navigating the current landscape, or if you have a resource to share that you would like us to include in our blog. Hang in there, and stay informed – but remember to balance that need with things we can control and that bring joy and lightness to heavier days.

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[1] This was issued three times, as the NOFO was pulled twice. The last time, it was open for only seven days, constraining who could put together a complete and competitive application on an extremely tight timeframe.

[2] As we noted in our last Federal Funding Update article, jurisdictions that have challenged the legality of the current administration clawing back funding have largely been successful.

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