On January 27th, the Trump administration issued a memorandum directing all federal agencies to temporarily pause the obligation or disbursement of federal financial assistance, effective January 28, 2025, at 5 p.m. ET. This pause was intended to allow the administration to conduct a political review to assess whether federal financial assistance aligns with its priorities. Immediately, chaos ensued as agencies and organizations receiving federal funding could not draw down their funds.
With an impending deadline of February 1st for the next payroll, many agencies were propelled into an immediate crisis. Although the Trump administration issued another memorandum shortly after the first that exempted various programs, the reality remained the same for agencies because the systems for dispersing funds were taken offline. Even when back online, the payment system was modified to have different operating hours and funds were still not deposited in the bank accounts of some agencies, even more than 48 hours later. While the entire memorandum was ultimately reversed on January 28th, what we can glean from this experience is that many programs were left without options for covering their operating expenses, even with only a short delay of funding. As we begin to navigate the storm we will encounter over the next four years, here are a few things that agencies can do to create additional financial stability:
1. Diversify your revenue streams. Relying on a single funding source is risky. Stable organizations have a mix of funding paths that include grants, donations, and fee for service contracts. It is even more important to have program revenue. One step you can take in the next six months is to examine your agency assets and determine how you can make changes to increase your fiscal solvency. For example, do you have empty buildings owned by your agency that are no longer serving Head Start children, these can become privately operated child care programs that provide your agency with un-restricted revenue so you can build a reserve.
2. Reliable Grant and Fundraising Strategies. It is important to develop a fund raising approach and strategy. Do you know what grants are coming out in the next three months and do you have a plan to write them? What events are you holding to raise funds or what donor campaigns are on your agenda?
3. Reviewing your Program to Sustain Changes. It is also important to look at funding flexibilities to support program changes and sustainability. For example, you may have completed on Change In Scope for your program, but is it time for another? What about expansion opportunities, blending funds to change how your program is delivered, and pursuing additional funds through state programs?
Each agency and situation is unique, but Heartland can help. Get in touch with us today ans we are happy to talk with you about your needs.
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