Why Should Delaware Care?
A recent executive order made by the Trump administration has given federal agencies 24 hours to pause federal grants, loans and aid, which would affect numerous state nonprofit organizations and the essential services they provide.
President Donald Trump’s budget office ordered a pause on federal grants and loans Monday night, setting off a day of panic and uncertainty for nonprofits as they sought clarity on its practical effects before a judge intervened.
In a memo sent late Monday by Matthew Vaeth, acting director of the White House Office of Management and Budget, he wrote that all federal grants and loans will be halted so that the administration can review agency programs and ensure funding is consistent with the law and Trump’s priorities.
On Tuesday evening, a federal judge in Washington, D.C., blocked the pause from going into effect at its scheduled 5 p.m. start after a group of nonprofits sued the federal government.
The freeze is expected to have a significant impact on different programs, staffing and service delivery, as the OMB noted $3 trillion was spent on federal aid in Fiscal Year 2024.
“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,” Veath wrote.
The president recently signed off on a chain of executive orders aimed at undoing progressive steps on diversity, equity and inclusion (DEI) initiatives, transgender rights and environmental justice.
Essential aid affected
Although the OMB memo stated that the pause would not affect Social Security or Medicaid benefits, Delaware’s Medicaid payment portal was unavailable Tuesday evening, according to Timothy Mastro, deputy director of communications for the Delaware Department of Health and Social Services.
Medicaid is the federally subsidized health care program for low-income individuals, and is run jointly by states and the federal government. It insures more than one in five Americans.
That outage was occurring nationwide, despite the Trump administration’s assertions that federal assistance programs that directly benefited individuals, like Social Security, Medicaid, Temporary Assistance for Needy Families (TANF), the Special Supplemental Nutrition Program for Women, Infants, and Children (SNAP/WIC) and Head Start would not be impacted.
It was unclear Tuesday whether those other programs were affected like Medicaid, but any pause would disrupt nonprofits across Delaware and the access they provide to essential services like housing, food aid, education and health care.
Nonprofits, higher ed face hits
The Delaware Alliance For Nonprofit Advancement, which represents the interests of hundreds of nonprofit organizations around the state, has expressed significant concern about the implications of the freeze, noting that thousands of Delawareans rely on nonprofits for essential services and that providers depend on timely federal funding to cover the costs of those programs.
“The funding delay exacerbates financial pressures on nonprofits, many of which already operate on tight budgets with limited reserves. Without immediate intervention or clarity regarding when disbursements will resume, the long-term sustainability of these essential organizations is at risk,” DANA officials stated in a Tuesday press release.
In addition to the local nonprofits that could be affected are the state’s hospital systems and universities that rely upon large amounts of federal aid.
In 2022, federal award expenditures exceeded $121 million at ChristianaCare, the state’s largest healthcare system, while institutions like the University of Delaware receive federal grants from the National Institutes of Health and other offices for research work.
“Today’s news that the federal government will stop grants and loans is deeply concerning to everyone who has an obligation to care for people,” ChristianaCare President & CEO Dr. Janice Nevin wrote on LinkedIn on Tuesday. “We are reviewing the impacts of this decision and are working closely with the congressional delegations in the states we serve. Our No. 1 priority is to ensure that the patients and communities we serve continue to have equitable access to high-quality care.”
In a statement, University of Delaware President Dennis Assanis also said that he was “closely monitoring this developing situation and actively collaborating with other higher education leaders to interpret the guidance issued from federal and state agencies.”
The Delaware Association for the Education of Young Children has also gone public with its concerns over the executive order, stating that the funding hold could cause more than 18,000 Delawareans to lose child care, meals for their children and employment.
Over $23 million was allocated to Delaware through the federal Head Start program, which assisted almost 2,000 low-income families through free early childhood education, meals, healthcare and special support for pregnant women and children with disabilities.
With the federal pause in place, the operations of these programs could be in jeopardy.
“Hundreds of millions of dollars of federal money flow in to support the services that Delaware nonprofits provide,” Sheila Bravo, president and CEO of DANA, told Spotlight Delaware.
According to the memo, the OMB may grant exceptions for aid on a case-by-case basis, but all agencies have been ordered to review current and pending funding announcements, withdraw published ones and cancel any awarded aid that conflicts with the administration’s priorities.
Delaware leaders get involved
U.S. District Court of D.C. Judge Loren AliKhan stayed the enforcement of the order Tuesday, but said that she would rule more comprehensively on the arguments made by a coalition of nonprofits, public health leaders and small businesses at a Feb. 3 hearing.
“The actions taken yesterday are a callous disregard for the rule of law and a drastic abuse of power that will harm millions of Americans across the country,” said Skye Perryman, president and CEO of Democracy Forward, a liberal legal services organization that filed the suit on behalf of the National Council of Nonprofits, the American Public Health Association, Main Street Alliance, and SAGE.
Meanwhile, Delaware Attorney General Kathy Jennings also joined a separate lawsuit filed in Rhode Island with a coalition of 22 other attorneys general on Tuesday evening to sue the federal government over the order.
“This order was callous, craven, and careless,” Jennings said in a statement. “The White House is toying with people’s lives and livelihoods — including millions of Americans who voted for Donald Trump. We’re not going to stand by and wait to see what kind of havoc the President wants to wreak. We’re suing. See you in court.”
Late Tuesday, Gov. Matt Meyer also criticized the president’s actions and launched an online portal at de.gov/federalfunding to track the proposal’s impact on Delaware.
“By President Trump cutting off funding to critical programs, his administration jeopardized the livelihoods of thousands of Delawareans, making it even more difficult to access food, housing, health care, and child care assistance. While I am heartened by the actions of U.S. District Judge AliKhan for pausing this unprecedented freeze of federal funds, we still must be vigilant,” he said in a statement. “We know that Trump’s goal is to take tax dollars from working people so that he can eventually cut taxes for billionaires. This is unacceptable, and my administration will do everything in its power to protect the rights and livelihoods of the people of Delaware.”
The White House memo does not state when the freeze will be lifted but asserts that federal agencies must turn in detailed reports of all related projects, programs and activities on Feb. 10, which means the freeze would last for at least a week.
Both DANA and Deaeyc have called on federal agencies and policymakers to resolve the issue and urged state and local leaders, philanthropic organizations, and community members to explore interim measures to help nonprofits maintain their essential services.
“Loss of funding translates into lost jobs and access to the help that our communities rely on,” Bravo said.
