What You Need to Know
Key takeaway #1
Discretionary grants and funding opportunity announcements
will face stricter content and eligibility requirements. Appointed
administration officials must review grants and funding opportunity
announcements, and funding is expressly prohibited for grants
deemed to relate to race, gender identity, undocumented immigrants,
or “initiatives that compromise public safety or promote
anti-American values.”
Key takeaway #2
Agencies must incorporate termination-for-convenience
clauses into all discretionary grant agreements, allowing for
immediate termination if awards no longer support agency priorities
or “the national interest.” The Administration
effectively concedes that it lacks authority to terminate grants
for these reasons based on the current terms in most
agreements.
On August 7, 2025, President Trump issued an Executive Order (EO) titled, “ Improving Oversight of Federal Grantmaking,” setting out the framework for sweeping changes to the grantmaking process. The order purports to address the Administration’s concerns about federal grants supporting controversial or ineffective programs and incurring excessive administrative costs. The EO implements three key changes to federal grant requirements.
First, federal agencies must now designate a senior appointee to review all new discretionary grant funding opportunities and awards “to ensure that they are consistent with agency priorities and the national interest.” This is likely to significantly delay new funding opportunity announcements and awards. The EO also mandates that agencies conduct annual reviews of grant awards, and these reviews must include mechanisms to hold officials accountable for their selection and oversight decisions.
Second, the EO sets new standards for approving discretionary grants, directing senior appointees to independently evaluate proposals to ensure they “demonstrably advance the President’s policy priorities” where applicable. Funding is explicitly barred for programs that are deemed to relate to race, gender identity, undocumented immigrants, or “initiatives that compromise public safety or promote anti-American values.” Grant applicants must also commit to “complying with administration policies, procedures, and guidance respecting Gold Standard Science.”
Third, all discretionary grants will now be required to include provisions for termination for convenience, allowing agencies to end awards if they no longer advance agency priorities or the national interest. The EO directs agencies to review their active awards and funding opportunity announcements for such a termination-for-convenience provision and revise existing and future grant agreements to clearly permit immediate termination for convenience. The EO directs the Office of Management and Budget to amend the Uniform Grant Guidance at 2 C.F.R. Part 200 to reflect these requirements. The requirement to ensure grants can be terminated in this manner conflicts with the Government’s litigation position that such terminations are already permissible under the existing regime.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
