The federal government provides grants – any amount of money that the recipient doesn’t have to pay back – for a wide array of purposes that serve the public interest. States, local governments, colleges and universities, students, nonprofits and other kinds of organizations receive these funds.

Huge sums are involved.

The federal government dispatches at least US$1.2 trillion – more than $1 out of every $6 it spends – through grants and other kinds of transfers. That money has historically been distributed through programs authorized by Congress, using statutory, regulatory, formula-based or competitive criteria, rather than direct tests of political loyalty.

But the Trump administration aims to rewrite the federal government’s rules for awarding those grants. The Office of Management and Budget, a government agency that develops budgets and helps set policy priorities, says its proposed revisions of those rules are designed to ensure that all grants “demonstrably advance the President’s policy priorities.” The OMB published the proposed changes on May 29, 2026, in a 400-page document,

If these changes become official, the White House would exert greater control over funding for medical research, early childhood education, public safety and many other programs. The focus would shift from how much money the government spends to who decides where that money goes.

Politically appointed officials, instead of career civil servants, would have more power to steer discretionary grants toward projects that match the preferences of whoever is in the White House.

As a scholar of nonprofit and public management, I know that presidents have always influenced federal programs through budgets, appointments, executive orders and agency leadership. But I’m also certain that this move would break norms that have always guided those routine forms of leadership.

Striking a balance with grantmaking

Grants can support essential work, such as housing assistance and disaster preparedness and recovery. Some grants are distributed according to formulas – the basic allocation method is set by law. Other grants are discretionary, meaning agencies review applications and decide which ones to fund.

To be sure, exercising that discretion has always required a balance between political accountability and administrative neutrality. Yet, until now, the official rules guiding federal grantmaking mostly worked like the objective instructions that agencies were expected to follow rather than political tests.

The pending proposal would give political appointees more authority over decisions that have previously been made through agency review, expert assessment and program rules.

Earlier signals

This isn’t the first time the Trump administration has tried to give political appointees more power over federal grantmaking.

An executive order on federal grantmaking that President Donald Trump signed in August 2025 said that political appointees should not simply approve recommendations made by staff with knowledge about the issues at hand. They should, instead, use independent judgment to make sure discretionary awards advance the president’s policy priorities, follow the administration’s view of civil rights and “American values,” and serve agency priorities or the “national interest.”

But executive orders don’t have the clout of official grant rules. Executive orders tell agencies what the president wants them to do. They don’t rewrite the formal rules that govern federal grantmaking.

By contrast, the Office of Management and Budget’s proposal would change official federal regulations, forcing government agencies and grant recipients to follow revised rules. While the executive order points agencies in a new direction, the OMB rule would make that shift mandatory.

The OMB has called for clearer rules guiding federal grantmaking to prevent the waste, fraud and misuse of taxpayer dollars. It also objects to grants that, in the administration’s view, advance diversity and gender-related or other ideological goals rather than the core purposes Congress authorized.

The White House made similar arguments in its proposed 2026 budget, which it released in May 2025. It calls for reducing nonmilitary discretionary spending and eliminating programs it deems wasteful or politically objectionable.

Scientists, nonprofits, higher education object

Many groups representing grant recipients are voicing their objections.

The National Council of Nonprofits argues that the proposal would allow discretionary awards to be shaped by partisan ideology rather than community needs or congressional intent.

Three of the largest higher-education groups issued a joint statement warning that the proposal would require politically appointed officials to make grant decisions based on the administration’s political priorities. Two others have cautioned that this could weaken the peer-review process and make federal research funding less predictable for colleges and universities.

Recent National Institutes of Health disputes illustrate the risk: some grants were terminated for no longer aligning with agency priorities, while other projects reportedly changed language to avoid diversity-related terms.

Such cases show how grantees may avoid disfavored topics or rewrite proposals to fit the administration in power. Some scientific groups have warned that review by political appointees could make grant decisions more opaque and less predictable.

Health and science research priorities

A big concern is how this might affect funding for the scientific and health research supported through grants from the National Institutes of Health and the National Science Foundation.

Together, the two agencies accounted for an estimated $44 billion a year in federal science and health-research funding in 2025. They rely on expert review to evaluate tens of thousands of proposals. Both award more than 8,000 grants each year.

Separately, the Trump administration has been slashing both the NIH and the NSF budgets.

The National Science Foundation says its grant reviewers assess “intellectual merit” and “broader impacts.”

The National Institutes of Health’s review framework considers the importance of the research, the strength of the methods and whether the investigators and institutions can carry out the work.

Changing the rules of the road

The effects of this proposed change would be felt far beyond the lab.

Head Start grants, for example, support local government agencies, school systems, nonprofits and community organizations that provide early childhood education and family services.

Today, applicants vying for those grants must show that they can serve children and families well, meet federal performance standards and respond to the needs of a particular community.

FEMA’s nonprofit security grants work similarly. Churches, other houses of worship, schools and community organizations at risk of terrorism or targeted violence must show that they face real security risks and that federal funds would help them improve safety.

Applicants for these grants don’t have to show that they embrace the administration’s political goals.

Instead of focusing on how they can serve children, families or vulnerable institutions, under the proposed rule applicants could feel pressure to use the language and priorities preferred by whoever controls the White House.

Risk of grant termination

The Trump administration also wants more freedom to terminate grants that have already been approved.

If the Office of Management and Budget’s proposed rule takes effect, many agencies could gain the power to cancel grants that don’t further their priorities or what the White House believes to be in the national interest. The government, however, would have to notify those grant recipients and give them a chance to submit information about termination costs.

For grant recipients, losing those funds can be destabilizing. A nonprofit may have to hire new staff, sign leases, enroll participants or contract with partners after winning a federal grant. A university lab may recruit graduate students and begin multiyear experiments.

If a multiyear grant can unexpectedly end midstream because the federal government’s priorities have changed, government agencies, nonprofits, universities and other institutions that obtain revenue from federal grants may become more cautious about embarking on long-term projects from now on.

The government doesn’t track how many federal grants are terminated ahead of schedule. It’s generally exceptional and often connected to noncompliance, poor performance or a change in funding availability.

Possible obstacles ahead

The public may submit comments on this proposal until July 13, 2026. The Office of Management and Budget wants the changes to take effect on Oct. 1, 2026, the first day of the 2027 fiscal year. The OMB does not have to heed that feedback, but it cannot simply ignore serious concerns. It must consider relevant comments and explain its reasoning in the final rule, or the rule could be vulnerable in court.

The final rule may change after public comments, and it seems likely that, should this policy take effect, many nonprofits and other institutions would try to block it in court.

Congress could also stop the rule by passing a new law or by using the Congressional Review Act to reject the final rule. Either route would require political agreement that may be hard to achieve: Both chambers of Congress would have to act. And either Trump would have to sign the measure or enough members of Congress would have to join forces to override a veto.

Democrats have already objected to what they say is the Trump administration’s disregard for “Congress’ constitutional power of the purse.”

Disputes that have already arisen aren’t just about how federal funds should be distributed. They’re about striking the right balance among political considerations, expertise and statutory rules when this money is parceled out.

Mirae Kim does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.