When President Donald Trumpordered an across-the-board freeze on all grants, loans and federal financial assistance on Monday, it threw nonprofits that provide services to millions of Americans into a state of chaos and fear.
Federal funding for everything from health care, disability care, veteran’s care, housing, special education, substance abuse support, after-school care, food assistance and more flows to thousands of nonprofits across the country every week. All of a sudden, that funding stopped, threatening to throw people onto the streets, out of jobs and deprive them of much-needed services that allow them to live their fullest lives.
Meals on Wheels, the program providing food assistance to the elderly, feared it wouldn’t be able to deliver food. Preschool operators who receive Head Start funding thought their kids would no longer have a place to go. Small nonprofits with little outside funding and limited reserve funds faced the prospect of immediate closure. This fear even extended to Easterseals, a more than 100-year-old nonprofit that provides a gamut of services to the disabled, children, the elderly and veterans. Easterseals’ experience is illustrative of the chaos Trump’s freeze created on Tuesday and the vast damage to society it could wreak if it were to go into full effect.
“Everything that we do would have been impacted,” said Donna Davidson, the president of Easterseals North Georgia.
Easterseals was originally founded in 1919 as the National Society for Crippled Children to provide services and advocate for the disabled. The success of its “Easter Seals” fundraising campaign, which had donors put the organization’s seals on letters, led the nonprofit to eventually adopt that name in 1967. Today, Easterseals provides services to 1.5 million people through 70 affiliates in nearly every state. Most of the group’s funding comes from federal and state grants and financial assistance programs.
All of that was put at risk on Tuesday when the Office of Management and Budget issued a memo seeming to freeze all grants, loans and financial assistance distributed by the federal government as part of a policy to implement Trump’s executive orders combating “Marxist equity, transgenderism and the green new deal.” That memo was rescinded on Wednesday after a wave of controversy and a federal judge imposing a temporary restraining order on the freeze, although the administration still says the underlying policy is in place. Judge Loren AliKhan’s order blocking the freeze runs until Feb. 3 when she will hear further arguments on whether or not to extend the restraining order or not. In the meantime, it appears that some agencies are blocking funding from going to grantees.
‘A Terrible, Terrible Day Of Chaos And Utter Confusion’
At 7:30 a.m. on Tuesday, Davidson received a phone call informing her that the payment portal her organization uses to draw down money through federal programs, specifically Medicaid and Head Start, was down. There had been no warning and no message as to what was going on.
“We had no information,” Davidson said. “That was the most difficult thing for us.”
The portal had gone dark after Trump’s budget office issued a vague memo ordering a freeze for all grants, loans and financial assistance across the federal government. Easterseals North Georgia is one such grant recipient, receiving funding through the portal on an as-needed basis to pay a staff of 400 people and for their programs servicing disabled people, seniors, veterans and 1800 children and their families. The organization needs to draw down funds on Tuesday to meet payroll on Friday. But the system was shuttered.
“We didn’t have any funds to pay our employees,” Davidson said. “What that means for us is, [if] this was going to continue, we would have to immediately close.”
The potential consequences were stark. Without the federal payment portals they use to cover their expenses, Easterseals’ national office and local affiliates faced the prospect of simply not being able to provide services.
“I hate to use the word catastrophic, but the ripple effects could have been catastrophic,” said Tracy Garner, president of Easterseals Louisiana.
One program under Garner’s chapter provides housing to 500 disabled Louisianans who otherwise faced homelessness. The portal to access that urgent funding, provided by the Department of Housing and Urban Development, had gone down. If the funding freeze continued, these 500 people would be left without homes.
“Many of those individuals have underlying or co-occurring behavioral health and oftentimes intellectual and developmental disabilities,” Garner said. “This critical funding keeps Louisiana citizens from being un- or under-housed. Any halt or reduction would really set our state back literally years. The amount of homelessness would spike immediately.”
Further north in Georgia, Davidson was concerned about Easterseals’ Head Start-funded programs that serve thousands of children in Atlanta and Northeast Georgia. Head Start funding does not come from just one source, but through a variety of federal agencies and grants: The Child and Adult Care Food Program provides meals. Medicaid provides speech and autism therapy. The Department of Education provides funding for early childhood intervention for disabled infants and toddlers.
Absent federal funding, Easterseals’ programs would cease to operate, leaving thousands of children without the services they need while forcing parents to quit their jobs.
“Seventy-five percent of our families work, many in positions that are hourly,” Davidson said. “If they don’t have our program and had to pay for child care, it would be so expensive that they couldn’t continue to work.”
Davidson convened a meeting on Tuesday to discuss what the organization would be able to do if the payment portal remained shuttered. Who could they pay? What services would be shuttered? She began to draw up contingency plans. But one thing became clear.
“We would have had to close our doors if this continued,” Davidson said. “All of those families and children would go without those much-needed services.”
In Louisiana, Garner spent Tuesday “scrambling” to obtain any information to provide to her staff who were “fearful for their jobs” and to people she serves afraid of losing support.
The national Easterseals office was hit by the OMB memo, too, as it administers a program funded by grants from the Department of Labor to help seniors transition back into the workforce for 10 affiliates.
“The chaos that memo created forced us to start to talk about layoffs,” Kendra Davenport, Easterseals CEO, said. “It was a terrible, terrible day of chaos and utter confusion.”
The Walkback
By 5:30 p.m. on Tuesday, Davidson was finally able to access the federal payment portal. The Trump White House had begun a major walkback of the OMB memo.
The initial memo had been extremely vague. It called for a freeze on all grants, loans and federal financial assistance, but specifically said that this did not apply to Medicare and Social Security. In a second memo issued late Tuesday afternoon, OMB stated that the original order was not meant to apply to assistance that goes directly to individuals.
But this is equally vague. Medicaid, for example, is not paid directly to individuals. It goes to states, which then disburse payments to individuals, health care providers, hospitals and nonprofits. Medicaid also partially pays the salaries for the professional speech therapists, autism specialists and behavioral and mental health therapists that Easterseals employs to help the disabled people the organization serves. Does that assistance go directly to individuals?
The same goes for Head Start. That program is funded through multiple grants and goes to nonprofits and other institutions to provide services to individuals. Is that going directly to individuals?
“It’s been very confusing,” Davenport said. “How we interpret it is that Medicaid to individuals was not going to be touched, but Medicaid to organizations was going to be touched. None of this is clear. The memos coming out on an hourly basis only add to the confusion.”
The administration added to the confusion on Wednesday when OMB rescinded the original memo, but the White House stated that the policy outlined in the memo remained in place. A federal judge had already issued an injunction blocking the memo from being implemented on Tuesday, and a second judge followed suit on Wednesday after the memo was rescinded.
Nonprofits like Easterseals are now left in a state of limbo. The funding freeze is now like Schrodinger’s cat — is it alive or is it dead? Nobody knows. That question looms over all the work that the nonprofit does for the disabled, elderly, children and veterans.
Instead of going about their normal business, Easterseals’ leaders had to divert their attention to draw up contingency plans to determine “what we are going to shut down and where,” Davidson said, in case the order came back into effect.
“The chaos has only just begun,” Davenport said. “Yes, these grants being frozen again would impact us in a terrifically bad way.”
Davenport, Davidson and Garner hope that there is a lesson for the public, and maybe the administration, to be learned from this about the importance of these federally funded services.
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“There’s a lot of disinformation out there about how many programs funded by the federal government are just wasteful and that money’s being thrown out the window,” Davidson said. “People need to understand that these are just really critical programs.”