‘ANTI-DEMOCRATIC’: Nonprofits That Received Tax Dollars Unite to Oppose Rules Cracking Down on Waste, Fraud, and Abuse

Organizations that received federal funding under President Joe Biden and previously sued President Donald Trump’s administration have now joined a coalition letter opposing the White House’s proposed grantmaking reforms.

The White House Office of Management and Budget proposed the reforms to crack down on the wasteful and ideological spending of taxpayer dollars exposed by the Department of Government Efficiency.

“An honest observer must admit, first, that the massive federal bureaucracy tilts left; second, that these bureaucrats love to send your tax dollars to their friends at left-leaning nonprofits that serve the left-of-center political party,” Scott Walter, president of the Capital Research Center, told the Daily Signal.

“What could be more anti-democratic than insisting that democratically elected officials, managing discretionary grants, may not use their discretion to control grant flows to these colluding groups?” Walter asked.

The OMB Rules

In May, OMB proposed changes to the Uniform Guidance rules governing most federal grantmaking. The proposal would allow agencies to suspend or terminate grants that no longer advance agency priorities or the national interest. OMB cited spending on DEI initiatives, “anti-American ideologies,” and “AI-powered social media censorship tools” as examples of funding warranting greater oversight.

DOGE targeted such spending, but courts blocked some grant cancellations under existing Uniform Guidance rules.

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Congress passed a government funding bill last week that delays implementation of the rules until Dec. 11.

Criticism

Independent Sector President and CEO Akilah Watkins told the Daily Signal her group signed the letter because the OMB rules “will deeply disrupt the work of charitable organizations and eliminate essential services they provide to Americans in need.”

She said the rules will apply a “vague standard,” allowing “political and ideological preferences to corrupt what should be a strictly nonpartisan process.” Independent Sector warned that the rules would weaken Congress by empowering the executive branch, politicizing grantmaking, and allowing for arbitrary termination of long-term grants.

Federal Grantees Opposing the Rule

At least five signatories to the coalition letter either received federal funding, participated in litigation against Trump administration policies, or both.

The Department of Health and Human Services awarded the Washington, D.C.-based American Public Health Association $22.3 million for fiscal years 2021-2024.

HHS awarded SAGE, a New York City nonprofit dedicated to helping “LGBTQ elders,” $1.9 million, with $1.2 million coming in 2024.

The National Council of Nonprofits teamed up with the American Public Health Association and SAGE in suing OMB in January 2025, seeking to block an OMB memo directing federal agencies to temporarily pause federal funding for “foreign aid, nongovernmental organizations, DEI, woke gender ideology, and the green new deal.” The law firm Democracy Forward represented the plaintiffs.

“What could make the nonprofits’ partisanship more obvious than the National Council of Nonprofits, when it sued the president, using lawyers from a nonprofit chaired by Democratic ‘super lawyer’ Marc Elias?” the Capital Research Center’s Scott Walter asked.

A federal appeals court concluded the case was moot after the administration rescinded the memorandum.

The American Public Health Association defended its decision to sign the petition, stating that “federal funding strengthens communities, leading to improved health outcomes, lifesaving research for cures, and families that are fed. Politicizing funding will only worsen the health of the nation.”

The Northwest Immigrant Rights Project, a Seattle-based nonprofit that represents immigrants—regardless of legal immigration status—in court, received more than $2.6 million in fiscal years 2021-2024 from the Justice Department, mostly for legal assistance to “immigrant survivors” and trafficking victims.

The project joined the Amica Center for Immigrant Rights in suing the Justice Department for pausing DOJ programs that give illegal aliens information about the laws. The district court upheld the DOJ policy, and the plaintiffs appealed.

The AIDS Vaccine Advocacy Coalition, a New York City-based nonprofit advancing HIV prevention, received more than $16 million for its HIV vaccine and biomedical prevention research project from the U.S. Agency for International Development during fiscal years 2021-2024. AVAC sued the State Department in February 2025, aiming to block an order temporarily freezing international aid spending. A district judge initially ordered the funds restored, but an appeals court reversed. The case remains active.

The Integrated Refugee and Immigrant Service, a Connecticut-based immigration nonprofit that signed the letter, received $30.3 million in federal grants in the years 2022, 2023, and 2024, according to audits obtained via the Federal Audit Clearinghouse. According to the Yale Daily News, IRIS was scheduled to receive $4 million in State Department contracts when Trump issued a stop-work order.

Since these organizations received millions in taxpayer funding, they arguably have an institutional incentive to oppose reforms to the system, even if those reforms are salutary for the nation.

The Daily Signal reached out to the National Council of Nonprofits, SAGE, the Northwest Immigrant Rights Project, AVAC, and IRIS, but did not receive responses by publication time.

‘Common-Sense Accountability’

The dispute reflects a broader debate over who should control discretionary federal spending. Opponents of the OMB proposal warn that allowing executive officials more discretion would introduce politics into grantmaking, but supporters note that federal grants had already systematically supported politically divisive initiatives. While federal grantees should be able to rely on long-term contracts, taxpayers should not be forced to foot the bill for gender ideology or DEI.

Rep. Michael Cloud, R-Texas, praised the OMB rules, saying they will return accountability to the federal funding system.

“For years, American taxpayer dollars have funded organizations engaging in unlawful activities and radical ideologies such as promoting gender ideology and racial discrimination, allowing biological men in women’s sports, and facilitating illegal immigration,” Cloud told the Daily Signal. “This is a misuse of taxpayer money, and we must eliminate waste, fraud, and abuse from the grantmaking process.”

“This rule would bring common-sense accountability by aligning taxpayer-funded grants with the law,” he argued. “Americans deserve to know their money isn’t being used to advance a political agenda they never agreed to.”