Last week, President Trump issued Executive Order 14332, Improving Oversight of Federal Grantmaking. The order imposes a new review process to realign discretionary grant awards and ensure that any future grants issued under this Administration align with the President’s policies. Here’s an overview of what grant applicants and potential recipients should be aware of before pursuing your next award.
Overview of the E.O.
First, the order only applies to discretionary awards, as defined in 2 C.F.R. § 200.1, where the agency exercises judgment in selecting recipients, typically via competitive process. Block for formula grants, which specify those entitled to benefit in the authorizing legislation, are not affected.
Second, the E.O. imposes a new review process for discretionary awards. Traditionally, agencies have relied on peer review or grant review panels comprised of subject matter experts (e.g., often career members of the agencies or other experts in the relevant field) to assess the technical merit of grant applications. Under this E.O., that process is not going away, but each agency head must promptly appoint a “senior appointee” who will review new funding opportunity announcements and discretionary grant awards to ensure that they are consistent with “agency priorities and the national interest.” The senior appointee must be someone appointed by the President, “a non-career member of the Senior Executive Service,” or a “Senior Level, Scientific and Professional, or Grade 15 position in Schedule C of the excepted service” (i.e., confidential or policy-determining positions).
Under the order, review by subject matter experts will be as identified by agency heads “to the extent appropriate,” but at least one subject matter expert will be included in review of scientific research discretionary grants. The order also requires that funding opportunity announcements be written in “plain language with a goal of minimizing the need for legal or technical expertise in drafting an application.” The senior appointee must also consider whether other agencies are already funding similar research and withdraw a funding announcement, if necessary, “to promote consistency and eliminate redundancy.”
Third, the order prohibits senior appointees from merely rubber-stamping award recommendations from agency personnel. Instead, they must exercise their independent judgment based on the following principles:
- The discretionary award must “demonstrably advance the President’s policy priorities”;
- Preference should be given to institutions with lower indirect cost rates;
- Awards should be given to a broad range of recipients, rather than a select few; and
- The award cannot be used to fund, encourage, subsidize, or facilitate:
- Racial preferences, including using race as a selection criteria for program participation;
- Denial by the recipient of the “sex binary or the notion that sex is a chosen or mutable characteristic”;
- Illegal immigration; or
- Any other initiative that compromises public safety or “promotes anti-American values.”
These principles, and the senior appointee’s review, do not “discourage or prevent” agency from using peer review methods to evaluate grant applications, as long as those recommendations are advisory only and are not “ministerially ratified, routinely deferred to, or otherwise treated as de facto binding.”
Fourth, the order requires that discretionary awards show a commitment to the “Gold Standard Science” principles outlined in Executive Order 14303, Restoring Gold Standard Science (May 23, 2025). That order required the Director of the Office of Science and Technology Policy to issue guidance to agencies on ensuring that scientific results are, among other things, reproducible and transparent.
Finally, the E.O. requires OMB to revise the Uniform Guidance (2 C.F.R. Part 200) to permit agencies to terminate grants for convenience if the grant “no longer advances agency priorities or the national interest.” Agencies must also report on whether their current grant terms permit such terminations and, if not, “take steps to revise the terms and conditions of existing discretionary grants to permit immediate termination for convenience.”
Many grant recipients received termination notices earlier this year in which the Administration purported to terminate their grants pursuant to 2 C.F.R. 200.340(a)(4). That provision permits termination by an agency “to the extent authorized by law, if an award no longer effectuates the program goals or agency priorities.” But many of those terminations have been challenged because the Uniform Guidance provision, on its own, is not binding. It has to be adopted by the relevant agencies and included in the grant terms and conditions issued to recipients (which at least some agencies had not done). Indeed, historically, grant awards could not be terminated for convenience because the fear was that awards would be terminated arbitrarily with each change in administration. This latest E.O appears intended to deviate from that historical practice.
Likely Impacts of the E.O.
The immediate impacts of the E.O. are already being felt in the form of new grant terms and policies. As many grant applicants know, agency officials have already been reaching out to encourage or require applicants to rewrite their submissions to avoid certain language that is disfavored by the current administration (e.g., DE&I). NIH, for example, previously issued Notice NOT-OD-25-090 in April 2025, imposing a new grant term stating that acceptance of the award was a certification by recipients that they do not promote DEI, DEIA, or “discriminatory equity ideology,” as outlined in Executive Order 14190, Ending Racial Indoctrination in K-12 Schooling. NIH later rescinded its new grant term in June 2025 because it was “awaiting further Federal-wide guidance.” See NOT-OD-25-124. This latest E.O. appears to be that guidance. Going forward, applicants should not be surprised to see new grant terms that are similar to the prior NIH policy and/or that permit terminations for convenience if the agency determines that the award is not consistent with President Trump’s policies.
- Slower application reviews and potential resubmissions.
The other immediate impact of the grantmaking E.O. is that grant application review process and issuance of new awards likely will be much slower for the near future. The E.O. directs agencies to not issue any new funding announcements without prior approval of the senior appointee designated to review that agency’s discretionary grants. Those who submitted prior grant applications may also be asked to revise and resubmit those applications, to the extent that they have language deemed to be inconsistent with the President’s priorities.
- Court challenges and uncertainty.
Grant applicants and recipients should also expect the grantmaking E.O. to generate numerous lawsuits challenging the E.O., which may lead to further uncertainty and confusion on when and whether applications may be funded. Numerous grant recipients have brought suits challenging agency actions to enforce the Trump Administration’s prior executive orders imposing a federal funding pause and seeking to eradicate DEI under Executive Orders 14151, 14168, and 14173. Courts have found that agency actions terminating grants in response to those E.O.s was arbitrary and capricious under the Administrative Procedure Act. See, e.g., APHA et al. v. NIH et al., Case No. 1:25-cv-10814, ECF No. 163 (D. Mass. July 2, 2025).
The grantmaking E.O. will likely also give rise to challenges under the First Amendment. The U.S. Supreme Court has considered similar challenges in the context of statutory restrictions on grant funding in the past and outlined some relevant considerations.
In National Endowment for the Arts v. Finley, 524 U.S. 569 (1998), the Court considered a statutory amendment to the NEA’s reauthorization bill that directed the NEA to ensure that grants were awarded based on “excellence and artistic merit . . . taking into consideration general standards of decency and respect for the diverse beliefs of the American public.” The amendment was a response to public controversy over two provocative works in 1989 displaying homoerotic photographs and a crucifix immersed in urine. The Court acknowledged that the Government cannot use grant funding as means of suppressing or censoring speech, but it ultimately upheld the statutory amendment because it did not, as written, automatically discriminate against any particular viewpoint. It merely requires the NEA to consider “decency and respect” in its grant awards.
More recently, in 2013, the Court considered a statutory funding limitation relating to programs combating the spread of HIV/AIDS. See Agency for Intern. Develop., et al. v. Alliance for Open Society, et al., 570 U.S. 205 (2013). The statute in that case prohibited funds from (i) being used to promote or advocate the legalization of prostitution; or (ii) being awarded to an organization that did not have a policy explicitly opposing prostitution and sex trafficking. The Court struck down the limitation and reaffirmed the principle that “a funding condition can result in an unconstitutional burden on First Amendment rights.” The “relevant distinction,” according to the Court, is whether the funding conditions “define the limits of the government spending program” or whether they “seek to leverage funding to regulate speech outside the contours of the program itself.” The former is permissible; the latter is not.
Here, the grantmaking E.O. could fall into the latter category. One of the restrictions announced in the E.O. appears to be geared towards transgender and gender fluidity concepts. The restriction prohibits funds from being used to “fund, promote, encourage, subsidize, or facilitate . . . denial by the grant recipient of the sex binary in humans or the notion that sex is a chosen or mutable characteristic.” To the extent that this restriction prohibits funding to organizations with DEI policies that recognize or protect transgender individuals, the restriction may go beyond “the contours of the program itself” and infringe First Amendment rights. There are many more decisions in this area that would be considered, but First Amendment challenges to the grantmaking E.O. are certainly possible.
[View source.]
