The Shift Is Here: Federal Funding, Project 2025, and What to Build Next

What Is Actually Happening

For nonprofits and small businesses serving BIPOC communities, the funding environment has not simply become more competitive — it has been structurally reorganized. The organizations doing the most essential community work are now operating in a federal funding landscape that has been deliberately redesigned to make that work less eligible for public dollars. Understanding what changed, why it changed, and what to build in response is not optional. It is essential infrastructure.

The Blueprint

In 2023, the Heritage Foundation published a 900-page document called Mandate for Leadership: The Conservative Promise, the policy foundation of what became known as Project 2025. The document is publicly available and obvious in its intent.

The mandate calls for DEI to be deleted from "every federal rule, agency regulation, contract, grant, regulation, and piece of legislation that exists" — eliminated entirely. Among the key directives related to economic development of affected communities:

It directs the administration to remove terms like "diversity," "equity," and "inclusion" from all federal rules, regulations, contracts, and grants. It calls for the elimination of DEI offices and personnel across the entire federal government, specifically targeting the Department of Education, Department of Justice, USAID, NIH, the Treasury, and financial regulators. It also calls for ending the collection of EEO-1 data — the workforce diversity statistics used to document and prove that systemic disparities exist. Without that data, inequality is not only implicitly permissible by law, it also becomes officially invisible.

What Has Been Implemented

The policy shifts in the blueprint are currently in play. Since January 2025, federal agencies have terminated thousands of grants and funding vehicles, including awards that were active and mid-stream. Organizations that had funded, running programs received termination notices without warning.

The dismantling extends beyond grant funding into the certification and contracting infrastructure that minority-owned businesses have depended on for decades.

The Department of Transportation's Disadvantaged Business Enterprise program was revised by an interim final rule on October 3, 2025, eliminating the longstanding presumption that minority and women business owners face systemic disadvantage. Applicants must now individually prove disadvantage regardless of race or gender, removing decades of structural recognition that had made MWBE certification meaningful in federal contracting.

A note worth highlighting: even where certification pathways bear the appearance of being available, the practical infrastructure to access them has largely disappeared. Call-to-action links on federal agency websites return 404 errors or redirect to internal knowledge bases with no public-facing process. The policy may state a pathway exists. The operational reality is that the pathway does not function.

A March 2025 executive order directed the elimination of the Minority Business Development Agency — which under the prior administration helped minority businesses secure over $2.6 billion in contracts and $1.5 billion in capital.

The Rule That Changes Everything

Most recently, on May 29, 2026, the Office of Management and Budget published a proposed rule rewriting 2 CFR Part 200 — the regulation governing every federal grant administered by every federal agency. This is the largest revision to federal grant regulations since 2013.

The proposed rule embeds prohibitions on using federal awards to promote, encourage, subsidize, or facilitate DEI policies directly into the terms of every grant. It requires that grants align with administration priorities, giving political appointees the authority to review and reject applications that address racial equity, racial disparities, or community-based advocacy. It gives agencies the authority to terminate active awards at any time if they no longer align with current federal priorities.

What This Means for Your Organization

If your organization serves BIPOC communities, addresses racial disparities, or uses language like "equity," "inclusion," or "underserved populations," you are now operating in a federal funding landscape that has been restructured to make your work less eligible — simply because your work acknowledges race. Under the current policy framework, that acknowledgment has been made a liability.

Organizations that have been depending heavily on federal funding — direct grants, pass-through funding from state agencies, ARPA allocations, federal technical assistance programs — need to understand that the rules of the game have shifted. Awards that existed last year may not exist next year. Many are dismantled as of today. Programs you were counting on are being restructured or eliminated. And the organizations most at risk are those that never engaged in strategic planning nor built financial strategies beyond a single funding channel.

The Storm and the Infrastructure Response

The call to action for leaders now is to see the storm — not to fight it but to understand what you have been navigating. The system was not designed for affected communities to thrive in it, and it is clearly documented. Once you see it clearly, you stop wondering if you will survive it and start building what you need to build better, thrive, and scale.

The uniqueness of this era is that we have been presented with extreme, unprecedented change in our generation — confronted with deepening systemic challenges at the government level, yet also at the dawn of exponential opportunities for liberation from these systems. New tools have surfaced in response to this shift, making it easier to identify diverse funding options so organizations do not have to rely on federal funding. The gap that still exists — until now — is the capacity for nonprofits as social impact enterprises to acquire and sustain funding.

For those who want to pursue federal funding, those dollars are still available — but only for organizations that build compliance infrastructure and internal governance. Federal funding cannot be the only strategy, and organizational infrastructure cannot be built on the assumption that the system will always be favorable. That is what Project 2025 reveals in this moment.

The Shift Is Here. The federal government has made it clear that they no longer recognize systemic inequity as a valid problem to be solved with public funds. The mandate now is to build the infrastructure that can sustain that work independently of them.

What You Can Do Right Now