Trump Administration Sued by Nonprofits Over US Grants Halt
(Bloomberg) -- The Trump administration is facing a lawsuit over a new plan to pause a wide range of payments of federal grants, loans and assistance, a move that could affect the flow of billions of dollars across the country.
Most Read from Bloomberg
Texas HOA Charged With Discrimination for Banning Section 8 Renters
NYC Subway’s Most Dangerous Stations Are on Lexington Ave. Line
Newsom Enlists Magic Johnson, Guggenheim CEO for LA Rebuilding
A coalition of nonprofits filed a case in federal court in Washington on Tuesday seeking to immediately block the US Office of Management and Budget from carrying out the directives issued on Monday by President Donald Trump’s acting budget director.
The challengers argue the memo not only fails to cite legal authority for the move, but also targets recipients of federal money based on their viewpoints in violation of the US Constitution. The freeze is set to take effect later on Tuesday, so the nonprofits, represented by Democracy Forward Foundation, are asking a judge to swiftly consider a temporary restraining order.
Enacting the freeze will “have a devastating impact on hundreds of thousands of grant recipients” who depend on grant money “to fulfill their missions, pay their employees, pay their rent — and, indeed, improve the day-to-day lives of the many people they work so hard to serve,” according to the complaint.
An OMB spokesperson did not immediately respond to a request for comment.
The memo was written by Trump’s acting budget director Matthew Vaeth and was reported by media outlets Monday.
It requires agencies to “temporarily pause 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.”
It won’t apply to federal assistance payments that are “received directly by individuals,” such as Medicare or Social Security benefits.
The memo directs agencies to give reports by Feb. 10 to the budget office on programs and projects that receive federal money affected by the pause. The nonprofits argue that even a short halt in the flow of money “could deprive people and communities of their life-saving services,” including medical and mental health care, food assistance and support for people escaping domestic violence.
More legal challenges are expected. Earlier on Monday, Connecticut’s Democratic Attorney General William Tong released a statement saying that he and his blue-state colleagues “are preparing imminent legal action to protect our states.”
(Updates with more from lawsuit.)
Most Read from Bloomberg Businessweek
What America's Tech Billionaires Really Bought When They Backed Donald Trump
The CDC Won’t Give the Public a Full Picture of Fertility Treatment Risks
©2025 Bloomberg L.P.