What's Going On With Federal Funding

By Maddy Bynes-DeVaney, MPP

Despite funding battles, Washington D.C. is beautiful in the Spring time!

I've built my adult life and career around how the government works. I have two degrees in politics and public policy, and even I have caught myself scratching my head over the past few months trying to remind myself of how government processes work and what we need to pay attention to. Read on for more information about federal funding for both FY 2025 and 2026 to learn more about what might be impacting your nonprofit or the communities that you serve.

Let's start with an overview of the process. The Constitution states that Congress holds the power of the purse, and therefore funding is determined by Congress and signed by the President. To clarify, the President cannot unilaterally control funding from the federal government. The President's job is to execute the will of Congress, and subsequently, funding decisions must be made by Congress. Each year, Congress is supposed to pass 12 funding bills. These bills correlate with subcommittees in Congress that have oversight of certain appropriations matters.

The process, however, is usually kicked off by the President when the President releases his "Presidential Budget." This is a budget blueprint that is usually dead on arrival to Congress, outlining the President's budget priorities for the year. The President works with his Office of Management and Budget (OMB) to analyze the economy, project revenue for the government, and project expenses. This budget blueprint usually kicks off a conversation about how the federal government might spend its taxpayer dollars in the year to come. The Presidential Budget is usually released in late February or early March.

In the spring and throughout the summer, Congress takes up the debate, passing budget resolutions—which set annual caps for how much each committee can appropriate—and then negotiating in committee and behind closed doors to come to a bicameral deal that can get passed out of both the House and the Senate. The process is supposed to include 12 separate funding bills from each specific appropriations subcommittee. However, in many years, these bills are combined into omnibus legislation that is easier to move out of either chamber. If the President signs this agreed-upon budget before September 30, then funding is appropriated for the new year.

Often, as with all things government, there are snags in the process. Congress often can't agree on how funding should be appropriated for the year to come, which delays the passage of these appropriations bills. If the September 30th deadline is approaching, there are two options that Congress can take: 1) do nothing, in which case the government shuts down; or 2) pass a stop-gap measure called a Continuing Resolution (you'll often hear this referred to as a CR) that basically keeps the government running at the same funding levels as the previous fiscal year.

FY 2025

But Maddy, aren't we almost done with FY 2025? Well, yes, but it is still important that we monitor how funds are being disbursed. FY 2025 is the year of the Continuing Resolution. All year, Congress struggled to agree on a bicameral budget (a budget that can pass out of both the House and the Senate), instead opting to pass Continuing Resolution after Continuing Resolution to avoid a government shutdown. The last Continuing Resolution was passed on March 14th and gave the Trump Administration some authority to move funds around, but also funded the government at levels relatively close to what we've previously seen.

We know, however, that this isn't a normal year. I've heard from clients all across the country that federal layoffs have impacted or could impact the funding that they receive and when. Why? Well, with so many employees gone from the federal workforce, people who were once there to process payments, maintain standards on grants and contracts, and so much more are often no longer at their agencies. Though some people have been asked to come back on a temporary basis to process payments, there could be potential delays in payments for federal contractors and grants, which could lead to temporary nonprofit cash flow issues.

If you get federal funding in FY 2025, what should you do?

1. Reach out to your contact at whatever federal agency you work with to ensure that payments are being made on time.

2. Reach out to your Member of Congress' office to explain any delays.

3. Work with your Executive Team to develop contingency plans for cash flow.

FY 2026

Though we are in the middle of FY 2025, we continue to need to work on FY 2026 priorities. FY 2026 is proving to be a difficult year. Congress has passed budget resolutions (basically a Congressional blueprint for spending for FY 2026) calling for cuts to certain appropriations subcommittees. Notably, the House called for an $880 billion cut to the subcommittee that oversees Medicaid, which would deeply impact Medicaid and other health services programming.

The President has not released his budget blueprint for the year, but we did get a small taste of what we believe will be in the budget in late April. A leak from the US Department of Health and Human Services (64-page document explaining eliminated programs and restructuring) shows deep cuts to health and social care services across the country—particularly impacting rural and tribal communities, but also having a deep impact on childhood mental and behavioral health, older adult aging services, disability services, federally qualified health centers, LGBTQIA+ suicide response services, and so much more. Though the leaked document is not official policy or an official policy proposal, it has put us all on edge about what is to come in the next year.

We also know that there are a lot of eliminations that would leave state governments in a lurch for money, having to prioritize programs at the state level and potentially deepening the impact of federal funding cuts.

Meanwhile, Congress continues to move forward on developing appropriations bills to be debated over the summer. Republicans in Congress continue to look to the Administration for guidance on their priorities, while Democrats continue to debate how to best push back against looming funding cuts. What is clear in all of this is that your voice on behalf of your constituency matters, especially now! We need you to engage your Members of Congress now and continue to keep engaging throughout the summer so that they understand what the nonprofit community needs in order to effectively carry out the work that you all do on a regular basis.

Bynes Consulting Group is here to assist you in exploring what these impacts could mean for your community, your nonprofit, your mission, and beyond! We're here to help you craft a plan, connect with government officials, develop compelling talking points for both sides of the aisle, gather impactful stories, and discover the best ways to engage your elected officials in your work. Reach out to us today!