By Richard L. Gaw
Staff Writer

On Jan. 27, Matthew J. Vaeth, the acting director of the Office of Management and Budget released a memo whose subject read: Temporary Pause of Agency Grant, Loan, and Other Financial Assistance Programs.

From the first paragraph, its message was clear that the presidency of Donald J. Trump would devote its energy to eliminating what it considered to be wasteful federal spending by cutting back on the more than $3 trillion it spent in fiscal year 2024 on grants and loans.

“Career and political appointees in the Executive Branch have a duty to align Federal spending and action with the will of the American people as expressed through Presidential priorities,” Vaeth wrote. “Financial assistance should be dedicated to advancing Administration priorities, focusing taxpayer dollars to advance a stronger and safer America, eliminating the financial burden of inflation for citizens, unleashing American energy and manufacturing, ending ‘wokeness’ and the weaponization of government, promoting efficiency in government, and Making America Healthy Again. 

“The use of Federal resources to advance Marxist equity, transgenderism, and green new deal social engineering policies is a waste of taxpayer dollars that does not improve the day-to-day lives of those we serve.”

The memo stated that each agency was required to complete a comprehensive analysis of its federal financial assistance programs by Feb. 10 that identify programs, projects and activities that may be implicated by Trump’s executive orders. Additionally, federal agencies were required to temporarily pause all federal financial assistance targeted at foreign countries; non-governmental organizations; diversity, equity and inclusion (DEI) programs; woke gender ideology; and initiatives connected to the green new deal.

The spending pause, which went into effect on Jan. 28, quickly sent shockwaves around the U.S. that reverberated in nearly every department, coalition and organization that relies on federal support to fund – at least in part -- their agencies and operations. The memo specified that the pause in federal spending would not affect Social Security or Medicare benefits.

Echoing the key point of his campaign agenda and arriving on the heels of sweeping legislation from Trump during his first week in office, this action is part of the new administration’s vision to undo progressive steps taken on transgender rights, environmental justice and diversity, equity and inclusion and DEI efforts, and may cause disruption in health care research, educational directives, disaster relief finding and other planned initiatives.

Almost immediately after the letter was distributed, waves of protest followed that led to the Trump administration rescinding the memo on Jan. 29. Simultaneously, a coalition of 22 states sued President Trump and his administration on the grounds that the attempt to end federal finding is unconstitutional. On Jan. 31, U.S. District Judge John J. McConnell of Rhode Island sided with the states, granting the coalition’s request for a temporary restraining order. 

Despite its decision to rescind the memo, the White House said that the executive order halting federal funding remains “in full force and effect” and applies to foreign aid, those who are recipients of “DEI-related purposes” and all funding through the Inflation Reduction Act.

Responses from Commonwealth leaders

Immediately following the release of the Vaeth memo, state lawmakers responded. Gov. Josh Shapiro told reporters in Harrisburg that he will have a better sense of the memo’s directive “once the White House figures it out.”

“The memo that they put out last night affected trillions of dollars, and now as they issue the guidance, it’s going to narrow the focus according to the White House,” Shapiro said. “Let’s see once they narrow the focus ultimately what it impacts and then we can walk through the price tag and the effect on the Commonwealth.

Shapiro discussed the potential ramifications of the reductions were it to be enacted.

“If they go and cut trillions of dollars from the states, that is going to have a profoundly negative impact on school kids, a profoundly negative impact on our ability to fix roads and bridges, to care for our veterans, to make sure our farmers have the support they need, and that’s going to impact every single state – states led by Democrats and states led by Republicans,” he said.

Shapiro highlighted the state’s non-profit organizations and the residents who benefit from their work as potentially absorbing the biggest financial hit from the projected federal funding limits.

“The White House’s memo created the kind of havoc that these non-profits are now having to deal with,” he said. “Remember, these are nonprofits who are serving our fellow Pennsylvanians – our veterans, our kids and our families – people who are in need, and they rely on this funding, funding that was promised to them, funding that went through an appropriations process supported by members of Congress and signed by the former President of the United States.”

In a statement on his website released on Jan. 29, Sen. John Fetterman wrote that he is closely monitoring the potential windfall in Pennsylvania in light of the federal funding pause.

“My office just received calls from over a dozen [Pennsylvania] organizations, including one that serves low-income families, and their access to funds through the Federal Payment Management System have been cut off,” the statement read. “We’re also aware of reports of PA’s Medicaid portal being down. These services, including Medicaid, are critical to our most vulnerable and I am calling on the President to immediately restore access.”

‘Absolutely and terrifyingly irresponsible’

While the Pennsylvania Medicaid portal has been restored, the fervor of opposition that has met the proposed halt on federal spending continues to reach a fever pitch in all corners of the U.S., including the halls of State legislature in Harrisburg. 

When State Rep. Christina Sappey first read the Vaeth memo, she expressed what she called “absolute shock.” She said the action demonstrated an “impulsivity that is absolutely and terrifyingly irresponsible.”

“This memo pointed to the fact that there are people making decisions that don’t understand all of these programs and how we spend federal dollars,” she said. “My mind went immediately went to families of disabled children. Do we really think that paying a nurse to go to the home of a medically fragile child to change a colostomy bag is a waste of medical dollars? If you say you value life, you really need to understand how we care for it.

“I think we all need to be talking to each other at a very human level before we start thinking that all spending is evil and wasteful.”

Sappey said that the initiative to cut off federal spending by the Trump administration demonstrates a lack of knowledge about the work the agencies who receive this funding do, who they serve and the levels of communication that exist between state and federal agencies. 

“We can all agree to disagree politically, but there is no room for political disagreements right now,” she said. “We need to make sure that the people who need services receive them.

“I hope going forward that we are talking with each other and that the public is paying very close attention. We can’t take anything for granted. We need to be crystal clear about the rights that we may have taken away could have life-threatening consequences, and they need to make sure that our elected officials remain fully aware, so that we can continue to fight against it.”

County’s Community Foundation pledges continued support

Working directly with over 800 non-profit organizations in the county, the Chester County Community Foundation provides its partnering agencies with capacity building initiatives and programming that include training and workshops, opportunities for networking, peer learning circles, community conversations and GetOnBoard ChesCo, which trains, connects and supports emerging leaders in the county’ nonprofit community. 

“I would expect [if federal funding to nonprofits] are cut, there will be huge repercussions for every one of us, which would be a real tragedy for the people of our community,” said Beth Krallis, the Foundation’s marketing, analytics and IT director. “There are organizations that we visit every day that people may not even be aware are nonprofits who would be affected – YMCAs, after school programs for children and universities and hospitals.

“I want to stress how important nonprofits are to the health and vitality of our communities. We work with nonprofits focused on education, social services, the arts and culture and the environment. People interact with these agencies every single day, and the Community Foundation wants to do what we can to strengthen our non-profit community, and that’s what we will continue to do.”

‘Impulsive, illegal edict’

For 20 years, Carrie Freeman served as the Chief Executive Officer of the United Way of Southern Chester County, an agency that serves as the fundraising arm for health and human service needs for residents who live in the Avondale, West Grove, Unionville, Kennett Square and Oxford areas. She called the move to strike down federal funding an “impulsive, illegal edict.”

“My immediate reaction was, ‘He [Trump] can’t do that,’” said Freeman, who is currently on the Board of Directors for Kennett Area Community Service (KACS). “Spending is agreed upon budgetarily in Congress, and these were approved funds before he got into office. A president is not allowed to say, ‘You’re not allowed to spend the funding that Congress has already approved.’ There used to be guardrails, but there is not a soul in Washington who will say to him, ‘Sir, can we pause and think it through?’”

Whether or not the aspirations of the Trump administration to unilaterally strike down federal finding to areas such as non-profit organizations will ultimately happen, Freeman said that the message handed down is reflective of that which is contained in Project 2025, which aspires to downsize the federal government and change how it functions, as well as make sweeping changes to immigration enforcement, federal spending, social welfare programs and energy policy.

“Nonprofits are mission driven, caring people who serve those in need,” she said. “Their life is hard enough but now they are facing the uncertainty about what they will face in the next four years – their jobs, the future of our agencies, whether they will receive funding that they have already been promised, whether or not they will be force to removed DEI commentary from their websites and what new pressures will be put upon them, when all they want to do is their jobs and do the right thing.

“At KACS, we’re working on a new building and receiving government funding, but in today’s climate, do we have any assurance that the promises that have been made to us actually be fulfilled?”

To contact Staff Writer Richard L. Gaw, email [email protected].