New Executive Order Targets NGO Funding

An executive order the White House issued this morning signals a major shift in how the U.S. government funds nongovernmental organizations (NGOs). Citing concerns that some NGOs engage in activities that “undermine the security, prosperity, and safety of the American people,” the Trump administration has directed federal agencies to reassess their funding of NGOs. This is a further development to the prior orders that impact exempt organizations.

Under the new order, agencies must review all existing NGO funding and ensure that future grants align with the administration’s priorities, which priorities include eliminating DEI and environmental justice initiatives, stopping funding or other assistance to illegal immigrants, and cutting foreign assistance. While the order does not specify which organizations may be affected, all forms of federal assistance are under scrutiny and agencies have been given broad discretion to withhold funds. The administration’s efforts to align the exempt organization sector to the administration’s priorities could extend to the U.S. Internal Revenue Service (IRS) — for example, enabling the IRS to use audits and other methods for restricting which entities qualify for exempt status.

For tax-exempt organizations that rely on federal grants, the review process could have a substantial impact on operations and programming. Organizations engaged in international work, humanitarian aid, and targeted areas of policy advocacy (including climate and equity initiatives) may be particularly impacted; those organizations should prepare for potential shifts in funding availability, increased scrutiny, and possible new compliance requirements or challenges to their tax-exempt status. Organizations at risk of losing funding may need to explore alternative revenue streams or engage in advocacy efforts to clarify their missions’ alignment with the administration’s interests and to educate policy makers about the impact that their programs have on the ground.

Arnold & Porter’s Tax Exempt lawyers and Executive Order Task Force are monitoring the fast-changing regulatory landscape, conducting reviews of clients’ programming to identify high-risk areas, implementing plans resulting from the reviews, and developing action plans for advocacy efforts on Capitol Hill and with the general public.

© Arnold & Porter Kaye Scholer LLP 2025 All Rights Reserved. This Blog post is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.