Michigan nonprofit, health, and food service organizations have been feeling a lasting impact from the Trump administration’s temporary freeze on federal payments for grants and other congressional-approved government programs.
Nonprofit leaders have said they have faced payment delays, uncertainty on what will be reimbursed in the future, and fear of necessary budget cuts since the federal payment freeze.
The Trump administration’s Office of Management and Budget issued a memo that temporarily paused agency grants, loans, and other financial assistance programs on January 27. Although the memo was rescinded two days later, the OMB noted that the administration would continue to review federal spending.
Since then, federal agencies and programs have placed thousands of employees on leave or laid them off and cut their budgets.
A federal judge in Rhode Island ruled Thursday that the attempt to freeze payments was unconstitutional and ordered the Trump administration to give appropriated funds to programs in the District of Columbia and the 22 states, including Michigan, which collectively filed the lawsuit. The decision only applies to the states that brought the lawsuit.
The decision follows a previous ruling in February that blocked the funding freeze, which potentially impacts trillions of dollars in government expenditures.
The Michigan impact
When the federal funding freeze first went into effect, it had an immediate effect on the nonprofit and federally funded government programs that provide food and medical care.
Kelley Kuhn, president and CEO of the Michigan Nonprofit Association, said the freeze locked organizations out of payment systems. Those groups had to find alternative ways to pay their bills and meet payroll.
“We heard from Head Start programs, meal programs for seniors, services that support immigrants, veterans programs that were helping to assist with housing and accessing health care benefits, domestic violence shelters, farmland and farming projects, just to name a few,” Kuhn told Michigan Public.
Kuhn said that once the payment systems were functioning after the Trump administration memo was rescinded, nonprofits still saw delays in payments. They also cited challenges speaking to federal representatives at help desks due to the federal employee cuts.
“While dollars may be flowing, they may be taking longer for approvals,” Kuhn said. “They may be taking longer to get answers to questions due to lack of people being on the other side of the phones when they're making those calls.”
Nonprofit organizations have also indicated concerns about future payments and disbursements, according to Kuhn.
Robin J. Bozek, executive director of the Michigan Head Start Association, echoed these concerns. She said the association dealt with communication blackouts and payment delays.
“In Head Start, we rely on steady, predictable access to our operating funds,” Bozek said. “That's how we keep our doors open — so that working parents can leave their children to learn and grow while they work.”
Bozek also told Michigan Public that there is uncertainty and fear in the industry.
Nonprofit organization leaders spoke to the Michigan Senate Oversight Committee on Thursday during a hearing. Some of the leaders said that they were lucky to have reserve funding that they used during the freeze and afterward when payments and reimbursements were delayed, as not all nonprofits do.
While not all nonprofits have these reserves, those that have them said it’s been difficult to reach into those funds to cover rent and other necessary expenses when they’re unsure if and when they’re going to receive reimbursement.
The Food Bank Council of Michigan, which works with over 2,800 hunger relief agencies, private companies, farmers, and government officials, has advised all food banks in a March 6 press release to stop all spending under the Local Food Purchase Assistance Cooperative Agreement Program, which allocates U.S. Department of Agriculture funds to support local farmers and food distribution to underserved communities.
In the press release, the council states that reimbursements for purchases made after January 19 are unclear and that the Department of Agriculture confirmed that any such purchases are not eligible for reimbursement at this time.
“This recommended temporary halt is meant to prevent additional financial strain on food banks that may not be reimbursed for post-deadline purchases from local farms, ensuring that available funds are used efficiently and sustainably,” the statement reads.
The Michigan Department of Education also runs programs that are funded by the U.S. Department of Agriculture, such as the Emergency Food Assistance Program and Commodity Supplemental Food Program. Those funds also may face uncertainty moving forward.
“The Michigan Department of Education (MDE) administers USDA-funded programs that support families in need, including children, as well as farmers throughout our nation. MDE continues to stay apprised of recent federal government action and the subsequent court ruling as we determine our next steps," the department wrote in a statement to Michigan Public.
Kuhn spoke about the implications of cuts to federally funded nonprofit programs that address housing, food assistance, support to veterans, and other needs in Michigan.
“Charitable nonprofits in Michigan number more than 41,000, and of those 41,000, 93% of nonprofit organizations have revenues of less than $1 million,” Kuhn said. “These are really small businesses with a different tax structure. And they are vital to Michigan's economy.”
