Capitol Hill, Washington, DC, USA.
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Update: On Monday, February 3, US District Judge Loren AliKhan issued a new restraining order preventing the Trump administration “from implementing, giving effect to, or reinstating under a different name the directives” the original OMB memo freezing federal funds. As reported by NPR, the order “also directs the OMB—which is part of the executive branch—to provide the court with a status report on its compliance by Friday. The judge also noted that any open awards that were previously frozen must be released.”

A coalition of nonprofits suing the White House over an attempted freeze of federal grants and loans says that the administration’s subsequent “rescinding” of the freeze was in fact a “bait and switch” maneuver—meant to circumvent the court while still enforcing the funding freeze.

The group will argue for an extended restraining order on the proposed freeze in federal court on Monday.

The nonprofits’ argument, laid out in a federal court filing Friday, is the latest phase of a rapid response campaign launched by a group of nonprofit leaders. The coalition is raising alarms over the potential—and already real—impact the proposed funding freeze could have on hundreds of billions of dollars that flow to work undertaken, often on behalf of government, by nonprofits across the US.

The administration’s subsequent “rescinding” of the freeze was in fact a “bait and switch.”

The nonprofit coalition, led by the National Council on Nonprofits, Democracy Forward, the American Public Health Association, Main Street Alliance, and SAGE, will ask US District Judge Loren AliKhan on Monday to extend a restraining order preventing the Trump administration from freezing federal funds already allocated by Congress.

In legal pleadings filed late Friday, the nonprofit plaintiffs argued the consequences of the administration’s actions in issuing the initial memo were that likely thousands of nonprofits are already being denied funding, whatever the White House says is the case.

As the filings read:

Plaintiffs are not challenging a piece of paper. They are challenging the Memo’s freeze on federal funding. And the freeze that the Memo ordered—arbitrarily and capriciously, without statutory authority, and in violation of the First Amendment—remains at least partially in effect.

A Rapid Response

The saga began early last week, when the Trump administration’s Office of Management and Budget (OMB) issued a memo announcing the temporary freezing of all federal grants and loans—trillions of dollars annually, from federal science and health funding to education and social services—affecting the vast array of services performed by thousands of nonprofits that receive federal funding.

And the maneuver did little to hide the ideology behind it. As NPQ reported the next day, “The move was framed as a response to a who’s who of disfavored buzzwords associated with progressivism,” citing the original OMB memo:

The use of Federal resources to advance Marxist equity, transgenderism, and green new deal social engineering policies is a waste of taxpayer dollars that does not improve the day-to-day lives of those we serve.

The memo outlines that the programs affected include “all activities related to obligation or disbursement of all Federal financial assistance, and other relevant agency activities that may be implicated by the executive orders, including, but not limited to, financial assistance for foreign aid, nongovernmental organizations, DEI, woke gender ideology, and the green new deal.”

By Tuesday, the coalition of nonprofit groups had sued for a restraining order in federal court. “The response came together literally overnight,” said Rick Cohen, of the National Council of Nonprofits.

“Things had to happen quickly in order to get a case in front of a judge in time to get things paused before they went into place,” Cohen told NPQ.

“The response came together literally overnight.”

The order was granted by US District Judge AliKhan late Monday afternoon, but was set to expire one week later, on February 3.

The following day, the OMB issued a new memo, purported to rescind the previous missive. But then, just hours after that apparent retreat, White House Press Secretary Karoline Leavitt took to social media to say that the rescission of the memo was “NOT a rescission of the federal funding freeze.”

Amid seemingly contradictory statements from the White House, nonprofits across the country were already grappling with real-time impacts, financial and otherwise, of the freeze—meaning that for some, it is already underway.

The Damage Is Happening

Even with the restraining order in effect, Cohen said, many nonprofits remain locked out of their funding portals, with federal agencies failing to process grant payments.

“There’s still hundreds, if not thousands, of nonprofits that are stuck. They’re not able to access their funding portals. Submissions for things to get paid are still stuck. Even with the judge’s order,” Cohen told NPQ. “We’re not just a bunch of volunteers….Some of these organizations deliver services that help other people be able to work. They provide childcare. They provide elder care. They provide transportation for people to medical appointments so that their family members can go to work. The ripple effects of this would be tremendous.”

Likely thousands of nonprofits are already being denied funding, whatever the White House says is the case.

And that, Cohen emphasized, is why nonprofit leaders have taken the unprecedented step of bringing legal action against the administration.

“We filed the lawsuit. We’ve been raising the alarm through the media, just saying, ‘Hey, do you understand what you just did? Do you understand what a freeze means?’”

Since the nonprofits brought their initial suit, another group, comprised of state attorneys general, secured a separate restraining order.

Monday’s hearing of the nonprofits’ suit could determine whether the Trump administration can move forward with freezing federal funds in coming days.