Recent Trump Administration Actions Potentially Constraining Nonprofit Activities

The Trump administration continues to put its policy stamp on executive branch actions, many of which affect numerous nonprofits. Two notable recent developments:

• On August 7th, President Trump issued Executive Order 14332 titled “Improving Oversight of Federal Grantmaking.” The order requires that “[e]ach agency head shall promptly designate a senior appointee who shall be responsible for creating a process to review new funding opportunity announcements and to review discretionary grants to ensure that they are consistent with agency priorities and the national interest.” It also prohibits discretionary awards for certain disfavored activities, including relating to racial discrimination, trans issues, illegal immigration, and “anti-American values.” An analysis by JD Supra concludes the likely impacts of the Executive Order are new grant terms, slower application reviews and potential resubmissions, and court challenges generating uncertainty.

• On July 29, 2025, Attorney General Pam Bondi issued a “MEMORANDUM FOR ALL FEDERAL AGENCIES” on the subject of “GUIDANCE FOR RECIPIENTS OF FEDERAL FUNDING REGARDING UONLAWFUL DISCRIMINATION.” From the Executive Summary (footnote omitted):

• • Statutory nondiscrimination requirements: Federal law prohibits discrimination based on protected characteristics like race, sex, color, national origin, or religion.
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  • Legal pitfalls of DEI Programs: The use of terms such as *DEI,” “Equity,” or other euphemistic terms does not excuse unlawful discrimination or absolve parties from scrutiny regarding potential violations.
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  • Prohibition on Protected Characteristics as Criteria: Using race, sex, or other protected characteristics for employment, program participation, resource allocation, or other similar activities, opportunities, or benefits, is unlawful, except in rare cases where such discrimination satisfies the relevant level of judicial scrutiny.
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  • Importance of Sex-separated Intimate Spaces and Athletic Competitions: Compelling employees to share intimate spaces with the opposite sex or allowing men to compete in women’s athletic competitions would typically be unlawful.
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  • Unlawful Proxy Discrimination: Facially neutral criteria (e.g., “cultural competence,” “lived experience,” geographic targeting) that function as proxies for protected characteristics violate federal law if designed or applied with the intention of advantaging or disadvantaging individuals based on protected characteristics.
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  • Scrutiny of Third-Party Funding: Recipients of federal ñrnds should ensure federal funds do not support third-party programs that discriminate.
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  • Protection Against Retaliation: Individuals who object to or refuse to participate in discriminatory programs, trainings, or policies are protected from adverse actions like termination or exclusion based on that individual’s opposition to those practices.

Lloyd Mayer