The Trump Administration on Aug. 7, 2025, issued a sweeping executive order titled "Improving Oversight of Federal Grantmaking" (the Order or EO), which is aimed at overhauling the federal grantmaking process. Framed as a response to concerns about the effectiveness, accountability and alignment of federal grants with national priorities, the EO introduces a series of reforms designed to tighten oversight, streamline processes and ensure that taxpayer dollars are directed toward projects that demonstrably advance American interests.
The Order instructs the director of the Office of Management and Budget (OMB) to revise the Uniform Grant Guidance (2 C.F.R. Part 200) and other relevant guidance to streamline application requirements and require all discretionary grants to permit termination for convenience, among other changes. For grant recipients, these changes represent a significant shift in both the expectations and risks associated with pursuing and managing federal funding. The new requirements touch every stage of the grant life cycle – from application and review to ongoing compliance and termination – making it essential for recipients to understand and adapt to the evolving regulatory environment.
Notably, the Order does not only impact future grants, but potentially existing awards as well. The Order directs agencies to "take steps to revise the terms and conditions of existing discretionary grants to permit immediate termination for convenience, or clarify that such termination is permitted." Such an amendment would have a significant impact on existing grants recipients.
Below, we break down the key provisions of the EO and explore the practical implications for organizations seeking or managing federal grants.
Key Takeaways from the Executive Order
Heightened Oversight and Accountability. The EO institutes a multilayered framework that is intended by the Trump Administration to strengthen oversight and accountability throughout the federal grantmaking process. This includes:
- Designation of Senior Appointees. Each agency head is required to promptly appoint a senior appointee who will be responsible for establishing and managing a formal process to review all new funding opportunity announcements and discretionary grant awards. This appointee acts as a gatekeeper, ensuring that every grant opportunity and award aligns with both agency priorities and the broader national interest.
- Rigorous Multistep Review Process. Before any new funding opportunity announcement (FOA) is issued, it must undergo review and approval by one or more senior appointees or their designees. The process also mandates input from subject-matter experts, as identified by the agency head, to ensure technical and substantive adequacy. Interagency coordination is required to identify and eliminate duplicative or overlapping grant opportunities, promoting consistency and reducing redundancy across federal programs.
- Plain Language and Accessibility. The Order directs agencies to ensure that funding opportunity announcements and related forms are "written in plain language," with the explicit goal of minimizing the need for legal or technical expertise in the application process. This is intended to broaden access and reduce barriers for applicants who may not have specialized grant-writing resources.
- Scientific Grant Review. For discretionary grants supporting scientific research, the Order requires that at least one subject-matter expert in the relevant field participate in the FOA review process. This expert may be a member of the grant review panel, program officer or an external specialist, ensuring that scientific merit and rigor are properly evaluated.
- Annual Reviews and Accountability Mechanisms. Agency heads must designate senior appointees to conduct annual reviews of discretionary awards, assessing whether funded projects remain consistent with agency priorities and are making substantial progress. These reviews are to include accountability mechanisms for officials responsible for selecting and granting awards, increasing transparency and responsibility in the decision-making process.
- Pre-Issuance Panel Discussions. Prior to issuing discretionary awards, grant review panels or program offices must engage in in-person or virtual discussions with the designated senior appointee or their designee. This step is designed to ensure that awards are not only legally compliant, but also strategically aligned with agency and national objectives.
- Temporary Restrictions Pending Process Implementation. Until the new review process is fully established, agencies are prohibited from issuing new funding opportunity announcements without prior approval from the designated senior appointee, except where required by law.
Stricter Criteria for Grant Awards. The EO establishes a set of substantive criteria that agencies must apply when reviewing and awarding discretionary grants:
- Direct Support for Presidential Policy Priorities. All discretionary grant awards must demonstrably advance the president's stated policy priorities. Senior appointees and their designees are required to exercise independent judgment in evaluating whether proposed projects or activities are consistent with these priorities, rather than simply deferring to recommendations from review panels or other officials.
- Prohibited Activities and Exclusions. The
Order explicitly prohibits the use of discretionary grant funds for
certain activities, including:
- funding, promoting, encouraging, subsidizing, or facilitating racial preferences or any form of racial discrimination by the grant recipient, including the use of race or proxies for race as selection criteria for employment or program participation
- supporting activities that deny the sex binary in humans or assert that sex is a chosen or mutable characteristic
- providing support for illegal immigration
- funding initiatives that compromise public safety or promote values deemed anti-American
These exclusions are to be applied in both the design of funding opportunity announcements and review and approval of individual grant applications.
- Preference for Lower Indirect Cost Rates and Diverse Recipients. When evaluating discretionary grant applications, agencies are directed to give preference to institutions with lower indirect cost rates. This is intended to maximize the proportion of grant funds directed to direct project costs rather than overhead or administrative expenses. Additionally, the Order encourages agencies to distribute grants across a broader range of recipients, rather than concentrating awards among a select group of repeat recipients.
- Scientific Research Grant Prioritization. For scientific research grants, the Order instructs agencies to prioritize institutions that have demonstrated a commitment to rigorous, reproducible scholarship – referred to as "Gold Standard Science" – over those with historical reputation or perceived prestige. The focus is on measurable research quality and integrity, rather than institutional legacy.
- Benchmarks and Compliance Commitments. Grant recipients are expected to commit to administration policies and guidance regarding scientific standards and to include clear benchmarks for measuring success and progress toward relevant goals. For research awards, this includes a commitment to reproducibility and transparency in scientific methods and results.
Changes to Application and Review Processes. The EO mandates that agencies overhaul their grant application processes to make them more accessible and less burdensome. FOAs and all related forms must be "written in plain language," with the explicit objective of minimizing the need for applicants to rely on legal or technical experts. This is intended to level the playing field for organizations of varying sizes and resources, reducing barriers for those who may not have in-house grant-writing or compliance teams. Agencies are instructed to include only those requirements in funding announcements that are strictly necessary for a thorough and fair evaluation of applications, eliminating extraneous or duplicative documentation.
- Focus on Clarity and Accessibility. By requiring plain language and the removal of unnecessary complexity, the Order seeks to ensure that applicants can clearly understand eligibility, evaluation criteria and submission requirements. This approach is designed to encourage a broader and more diverse applicant pool, including smaller organizations and first-time applicants who may have previously been deterred by the complexity of federal grant processes.
- Peer Review Remains Advisory, Not Determinative. Though peer review panels and subject-matter experts will continue to play a role in evaluating grant proposals – particularly for scientific and technical awards – the EO clarifies that their recommendations are advisory only. Senior appointees or their designees are required to exercise independent judgment in the review and approval of both FOAs and discretionary awards. They are expressly prohibited from ministerially ratifying or routinely deferring to the recommendations of peer reviewers or other officials. This ensures that final funding decisions are made with direct reference to agency priorities and the national interest, rather than being automatically determined by external or advisory input.
- Independent Judgment and Accountability. The EO places responsibility squarely on senior appointees to ensure that each discretionary award is consistent with the Trump Administration's policy and statutory requirements. These decisions must be based on a holistic assessment of the application, agency priorities and broader national interest and are instructed to not be based only on the recommendations of review panels.
New Termination and Drawdown Provisions
- Mandatory Termination for Convenience Clauses. The EO requires that all discretionary federal grants include explicit provisions allowing the awarding agency to terminate the grant "for convenience." This means agencies can end a grant at any time, not just for cause (such as noncompliance), but also if the award is determined to no longer advance agency priorities or the national interest. The rationale is to give agencies maximum flexibility to redirect federal funds in response to shifting policy objectives, political optics or emerging needs, even if the recipient is fully compliant and the project is on track.
- Revision of Existing and Future Grant Agreements. Agencies are directed to review and, where possible, amend the terms and conditions of both existing and future discretionary grant agreements to incorporate these broad termination rights. This includes ensuring that standard grant terms permit immediate termination for convenience and clarifying that such authority exists, even for awards already in progress. Agencies must also update their regulations and internal policies to require these provisions in all future discretionary grant awards and amendments.
- Reporting and Implementation Requirements. Within 30 days of the Order, each agency head must report to OMB on the status of its standard grant terms, specifically addressing whether current agreements already allow for termination for convenience and, if not, the steps being taken to bring it into compliance. Agencies must also identify the number of active discretionary awards and proportion that currently include such termination provisions.
- Restrictions on Drawdowns and Enhanced Documentation. The EO introduces new controls over the disbursement (drawdown) of grant funds. Future discretionary grant agreements must prohibit recipients from drawing down general grant funds for specific projects without the agency's affirmative authorization. In addition, grantees will be required to provide detailed, written justifications for each drawdown request, specifying the purpose and need for the funds. This is intended to prevent premature or inappropriate use of federal funds and ensure that disbursements are closely tied to project milestones and agency oversight.
- Limits on Facilities and Administrative Costs. The EO directs OMB to revise the Uniform Guidance and other relevant federal policies to further restrict the use of discretionary grant funds for facilities and administrative (F&A) expenses. These costs – often referred to as "indirect costs" – typically cover overhead items such as building maintenance, utilities, administrative salaries and general institutional support. Historically, a significant portion of federal research and project grants has been allocated to these expenses, sometimes at the expense of direct project activities.
Implications for Grant Recipients
The EO has significant implications for grant recipients. Grant recipients should expect more detailed reviews of both applications and ongoing projects, with greater emphasis on alignment with administration priorities.
Among other things, as discussed above, the EO directs OMB to revise the Uniform Guidance and include terminations for convenience in all federal grants moving forward. The ability of agencies to terminate grants for convenience introduces new uncertainty for long-term projects and multiyear funding. The termination provisions may have the effect of destabilizing future grant funding for programs that do not have bilateral political support, including research deemed "unscientific" by one of the political parties, funding benefiting institutions deemed unaligned with a current administration or social programs that benefit communities or people deemed unlikely to support the party of a current administration.
The Order also directs agencies to attempt to amend the terms of existing grants to establish the government's right to terminate for convenience. Such a change has significant effects, and grant recipients are advised to seek counsel before agreeing to any amendments to existing grants.
Additionally, institutions with higher indirect cost rates – such as large research universities – may see a reduction in the amount of overhead they can recover from federal grants. This could affect budgeting, resource allocation and the financial viability of certain projects, especially those with substantial infrastructure or administrative needs.
In short, the EO represents a significant tightening of federal grant oversight. Grant recipients should proactively review their practices, update compliance protocols, and prepare for increased scrutiny and potential changes to existing agreements. Staying informed and adaptable will be key to navigating the evolving federal grants landscape. Please contact the authors with questions or assistance for your specific agreement.
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.
