Originally posted on the Detroit News by Max Reinhart
When President Donald Trump’s administration nearly two months ago ordered a pause of federal grants, it sent shockwaves through the tens of thousands of Michigan nonprofits that receive those dollars and ushered in an era of confusion.
The Jan. 27 memo by the Office of Management and Budget was blocked by a judge the following day and was rescinded by Trump a day later, but the ripple effects from this and other White House moves have drawn complaints from a range of organizations. Among them are child care providers canceling classes, food banks facing shortages and philanthropic outfits planning for scaled-back services that help Michigan’s most vulnerable populations.
“This isn’t just a funding issue, it’s a workforce issue, a public health issue and a future-of-Michigan issue,” said Chanda Hillman, CEO and executive director of Flowers Early Learning, which coordinates Head Start programs in southwest Michigan. Her early education programs are 94% funded by federal dollars.
Michigan’s nonprofit sector includes about 53,000 organizations that spend more than $90 billion in revenue each year and employ just over 1 in 10 Michigan residents, according to Internal Revenue Service figures.
The Trump administration has been cutting programs, including phasing out some COVID pandemic spending initiatives because the government faces an annual estimated deficit of $1.9 trillion and an accumulated debt of about $36 trillion, or about $107,000 for every U.S. citizen. The president has drafted technology entrepreneur Elon Musk to downsize the federal bureaucracy through the Department of Government Efficiency.
“While House Republicans are committed to reining in spending, we are adamant that those most vulnerable continue to get assistance,” U.S. Rep. Lisa McClain, R-Bruce Township, said in a statement. “That’s why we were disappointed when nearly every House Democrat voted against the recent government funding bill, which included $7.6 billion for the supplemental nutrition program for women, infants and children.”
The stopgap funding bill that Trump signed into law trims $13 billion in non-defense spending from the levels in the 2024 budget year and increases defense spending $6 billion in a budget with nearly $1.7 trillion in overall discretionary spending. The bill does not cover the majority of government spending, including Social Security and Medicare, which is automatically funded.
Democrats mostly opposed the funding bill because they said it gave the Trump administration too much discretion on spending decisions.
The actions have prompted Michigan nonprofit leaders to warn groups to plan for possible cuts, consult lawyers for advice and prepare to seek other sources of money.
Classes temporarily canceled
The initial OMB memo had an immediate effect on the state’s Head Start program, which provides early childhood education, health, nutrition and family support services to low-income families.
Like other Head Start officials across Michigan, Miguel Rodriguez found that immediately following the Jan. 27 memo he was locked out of the payment management system that ensures his staff get paid. Rodriguez is the executive director of Capital Area Community Services, which coordinates Head Start centers in Ingham, Shiawassee, Clinton and Eaton counties.
“The fact that we couldn’t even log into the system caused grave concern for our office,” he said.
After failing to get definitive answers from federal officials, Rodriguez decided to lay off all the staff for the Head Start programs, which provide learning and development services to children ages 3-5. The staff were back at work after a one-day layoff when the issue was resolved.
Flowers Early Learning’s Hillman recalled the “terror” she felt not knowing whether the 15 centers she oversees would be able to make any purchases.
Hillman said she received assurances from liaisons that the funds would be coming, “but you can’t pay staff with assurances,” she said during a March 5 Michigan Senate Oversight Committee hearing regarding the fallout from the funding freeze.
The White House later said the order was never supposed to include Head Start programs. Hillman said the money was deposited into Flowers Early Learning’s account “just in the nick of time” to avoid cancellations.
Even so, the order caused distress for Head Start staff members as well as the hundreds of families who had to rearrange work schedules or find other child care options at the last minute.
“It just adds fodder to people’s anxieties about what’s going to happen in the future,” Rodriguez said.
‘These are basic needs’
The Michigan Nonprofit Association said it’s difficult to know exactly how many Michigan nonprofits have been affected, but it’s significant.
About 30% of U.S. nonprofits, or more than 100,000, receive funding directly from the federal government or indirectly from pass-through entities. If that figure holds true for Michigan, it would mean about 16,000 nonprofits may be affected by the rescinded funding freeze and related White House measures.
The state group said the programs most at risk of losing federal dollars include those that support children, veterans, immigrants and victims of domestic violence, sexual assault and human trafficking.
“These are basic needs, services that people need now,” said MNA President and CEO Kelley Kuhn.
Ozone House, a Ypsilanti-based nonprofit that provides shelter and support services for homeless youths and their families in the area, gets about 63% of its $3.4 million in annual revenue from government funding, and 30% of its total budget from the federal level either directly or indirectly.
Executive Director Kellie Rutledge said a portion of those funds, from the Federal Emergency Management Agency, have not come through.
“We’re uncertain what will happen with current contracts” because of the continuing resolution signed by Trump on March 15,” Rutledge said in a statement. “Certainly looking into Fiscal Year 2026, we’re worried about the grants we receive aligning with the administration’s spending priorities.”
The Accounting Aid Society, a Detroit-based nonprofit that helps low- and moderate-income area residents with tax preparation services, relies on the federal government for about a third of its $3.8 million in revenue, said CEO Priscilla Perkins.
The agency last year helped more than 20,000 people complete their tax returns, adding up to more than $30 million in refunds and credits they may have otherwise missed out on, she said.
“There’s mothers literally counting on us so they can make rent for the next three months,” Perkins said.
She expected the society’s approved funding would eventually come through, but the delay meant the society was looking at reducing hours and possibly opening fewer locations this year. Perkins said it will mean less money in taxpayers’ pockets.
“I’m all for capitalism, but some of these for-profit tax (preparation) sites, while promising to give (customers) refunds if they having them coming, they charge them for the service,” Perkins said. “We don’t do that.”
Food programs targeted
Among those who are going to be affected are the estimated 1.1 million Michiganians who are considered food insecure, according to the Food Bank Council of Michigan. The statewide food resource network said on March 6 that food banks around the state “will likely be facing critical shortages” if some of the federal programs that keep the state’s food pantries stocked aren’t properly funded.
That’s disheartening news for Ali Al-Abbooda of Sterling Heights. His family, which immigrated to the United States from Iraq in 2011, relied on food banks, especially during the COVID pandemic, to help keep him and his siblings fed.
“We’d get fresh grapes, sometimes cucumbers, potatoes, apples,” Al-Abbooda said. “The milk is great,” he said, especially for families with children.
“The program was really impactful,” he said. “It made a difference.”
Now he volunteers with Gleaners, the Detroit-based nonprofit that provides food for nearly 350 pantries, soup kitchens and other programs in Wayne, Oakland, Macomb, Livingston and Monroe counties, spending three or four days a week helping make sure families like his have enough food to go around.
The Food Bank Council, which works with more than 2,800 hunger relief agencies, said issues with one program are keeping nearly $3.7 million worth of meat, eggs and cheese from making it to the outreach’s shelves.
About 118 orders, made through an arm of the USDA’s Emergency Food Assistance Program, have been labeled by the USDA as “return to AMS (Agricultural Marketing Service)” and are at high risk of being canceled due to “pricing issues” or “lack of vendor bids.”
The USDA is winding down a pair of programs that help food pantries, as well as schools and child care facilities, buy food from local producers. The Local Food Purchase Assistance (LFPA) and Local Food for Schools (LFS) programs were created under the Biden administration amid the COVID pandemic and “no longer effectuate the goals of the agency,” the USDA said in a statement. They will end with the fiscal year on Sept. 30.
“As a pandemic-era program, LFPA will now be sunsetted at the end of the performance period, marking a return to long-term, fiscally responsible initiatives,” a USDA spokesperson said in an email. “This isn’t an abrupt shift — just last week, USDA released over half a billion (dollars) in previously obligated funds for LFPA and LFS to fulfill existing commitments and support ongoing local food purchases.
“With 16 robust nutrition programs in place, USDA remains focused on its core mission: strengthening food security, supporting agricultural markets, and ensuring access to nutritious food. Unlike the Biden Administration, which funneled billions in CCC funds into short-term programs with no plan for longevity, USDA is prioritizing stable, proven solutions that deliver lasting impact. The COVID era is over — USDA’s approach to nutrition programs will reflect that reality moving forward.”
The Washington Post reported Friday the USDA is canceling $500 million in expected food deliveries, and the Department of Agriculture did not respond to a request for comment. The Food Bank Council of Michigan couldn’t be reached for further comment.
McClain, who chairs the House Republican Conference, said ending the USDA’s pandemic-era programs is an essential part of cutting down on budgetary bloat.
“The public health emergency has long been over. The spending and programs that came with it should be, too,” McClain said.
Communication breakdown
The White House’s moves affecting nonprofits may reach into the world of news and broadcasting. Detroit Public Media, the nonprofit that operates Detroit PBS TV and WRCJ-FM radio, gets about 21% of its $27.4 million total annual revenue through federal and state grants, including about 10% of its total budget from the federal Corporation for Public Broadcasting, for which Trump has threatened to eliminate funding.
Federal Communications Commission Chairman Brendan Carr said in late January he wants to end subsidies for public television and public radio stations.
“Congress is actively considering whether to stop requiring taxpayers to subsidize NPR and PBS programming,” Carr wrote in a letter to PBS and NPR. “For my own part, I do not see a reason why Congress should continue sending taxpayer dollars to NPR and PBS given the changes in the media marketplace since the passage of the Public Broadcasting Act of 1967.”
Rich Homberg, president and CEO of Detroit PBS and WRCJ, said the stations’ leadership is closely monitoring discussions in Washington.
“Federal funding provides a backbone of support for program distribution and essential technology infrastructure,” Homberg said in a statement. “Nationally, this funding sustains these critical services, particularly for stations serving rural and underserved areas.”
U.S. Rep. Claudia Tenney, R-Ohio, and U.S. Sen. Mike Lee, R-Utah, have introduced a bill called the Defund Government Sponsored Propaganda Act that would ban federal funding for NPR and PBS, which get 1% and 16% of their funding directly from the federal government, respectively. They argue NPR and PBS have a “partisan bias” that favors Democrats.
Fighting to survive
The Democratic-controlled Michigan Senate Oversight Committee heard from nonprofit leaders during a March 5 hearing. Among the speakers was Deb Brinson, director of the Honor Community Health, which helps offer primary, mental and dental health care throughout Oakland County.
Her agency is awaiting approval of a $600,000 carryover in funding that it’s relying on for next year’s budget, she said. With the money in limbo, she also can’t get an answer about whether to expect it.
” … We’ve not heard any indication from the help desk because there’s no help desk,” Brinson said.
Brinson said she has no choice but to explore closing some of the 21 community health centers Honor Community Health operates.
“I am seriously looking at consolidating sites,” she said, explaining that fewer sites mean less access for clients, who often have issues securing transportation.
While some agencies are scaling back services, others remain concerned about surviving through the summer.
“Nonprofits operate on very tight budgets,” said Joan M. Gustafson, external affairs officer for the Michigan Nonprofits Association. “Most do not have large amounts of operating capital, and we estimate that most cannot survive a freeze or a pause for more than three to six months.”
The MNA has recommended nonprofits take steps, including modeling different scenarios to assess the risk of cuts happening and consulting with legal counsel about the implications of potential funding reductions. There is no one-size-fits-all fix since each organization’s situation is unique, Gustafson said.
Funding cuts would force nonprofits to explore getting more money from local donors and philanthropic outlets as well as collective giving — when individuals pool their resources to direct their charitable giving, a trend that was on the rise before Trump took office.
“While good, it can also result in greater regional disparities, depending on access to donors, wealth, etc.,” Gustafson said in a statement. “Greater economic disparities will grow if alternative funding sources fail to scale up.”
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