Nonprofits face payment delays, lack of communication since federal funding freeze

Michigan Public | By Rachel Mintz

Published March 10, 2025

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 Although the memo was rescinded two days later, the OMB noted that the administration would continue to review federal spending.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Kuhn said that once the payment systems were functioning after the Trump administration memo was rescinded, nonprofits still saw delays in payments.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.

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