Nonprofits Sue to Block Federal Funding Freeze

Nonprofits, Public Health Leaders, Small Businesses File Suit to Block OMB Attempt to Halt Essential Services

Washington D.C. – A coalition of organizations, including the National Council of Nonprofits, the American Public Health Association, the Main Street Alliance, and SAGE, filed a lawsuit in the U.S. District Court for the District of Columbia on January 28th, 2025, to challenge the White House Office of Management and Budget’s (OMB) decision to pause all federal agency grants and loans. The lawsuit alleges that this action violates the First Amendment and the Administrative Procedure Act.

The lawsuit argues that the OMB’s decision is a “reckless action” that would have a “catastrophic” impact on nonprofit organizations and the communities they serve. It also argues that the decision is illegal and should be blocked.

The plaintiffs in the lawsuit are represented by Democracy Forward, a nonpartisan organization that advocates for government accountability.

The OMB’s decision to pause all federal agency grants and loans was announced on January 27th, 2025. The decision was made in response to a memo from the White House that called for a review of all federal programs.

The lawsuit argues that the OMB’s decision is based on a flawed legal analysis and that it would have a devastating impact on essential services, including healthcare, education, and housing assistance.

The lawsuit also argues that the OMB’s decision is a violation of the First Amendment because it would discriminate against nonprofit organizations that receive federal funding.

The plaintiffs in the lawsuit are seeking a temporary restraining order to block the OMB’s decision. They are also asking the court to declare that the decision is illegal.

The lawsuit is expected to be heard in the coming weeks.