By Adam Hursh
Grants are a major way the U.S. government supports education, research, infrastructure, health and many other public goods. They are meant to help where other sources of funding can’t meet public needs. However, grants also involve risks including duplication, waste, fraud and misalignment with priorities. Right now, there is a sharp push to strengthen oversight, transparency and accountability in federal grantmaking. Recent policy moves are reshaping how grants are awarded, how recipients are held accountable and what kinds of projects qualify.
What’s new
On August 7, 2025, President Donald Trump signed an executive order titled “Improving Oversight of Federal Grantmaking.” The executive order (EO) introduces rules meant to ensure that grant programs are consistent with administration policy priorities, avoid waste and promote accountability.
Some of the key elements:
- Designating senior political appointees in every federal agency who must review both funding opportunity announcements and discretionary grants to ensure alignment with agency priorities and what the EO calls “the national interest.”
- Review processes will include senior oversight, subject matter experts when needed and interagency coordination to prevent duplication.
- Plain language in announcements, minimizing unnecessary legal or technical requirements, making access potentially easier for organizations without big compliance departments.
- New clauses for termination “for convenience,” meaning grants can be ended earlier if, for example, they no longer serve agency priorities or the national interest.
- Restrictions on what grants can support, including bans on funding programs that promote what the order terms “anti-American values,” or that deny the biological sex binary or programs seen as promoting illegal immigration.
- Preference toward institutions with lower indirect cost rates, broader distribution of grants (not always to the same “repeat players”) and requiring clearer benchmarks or performance measures.
Additionally, a recent audit by the Department of Health and Human Services (HHS) Inspector General identified weaknesses in internal controls. The audit revealed that $7.8 million had been fraudulently diverted through the grant payment system because of insufficient verification of recipient banking information and other control failures.
Why these changes are emerging now
There are several reasons for this shift toward stronger oversight:
- Larger scale of federal spending and risk of waste or fraud. With trillions of dollars flowing annually through federal grants and financial assistance programs, even minor lapses in oversight can result in significant costs. Ensuring that every dollar is spent wisely is both politically and practically important.
- Public demands for accountability. Stories of misuse, fraud or lack of impact make headlines. Voters and watchdog groups are calling for clearer evidence that government funds are having the intended effects and are not being misused. The HHS audit is one example prompting concern.
- Policy shifts under new leadership. Executive orders are tools for changing how grants are managed without having to pass new legislation. The recent EO changes reflect the priorities of the current administration, which seeks more control over what kinds of projects receive funding, the amount of indirect cost allowed and how outcomes are measured.
- Complexity and administrative burden. Many smaller nonprofits, academic institutions and local governments have complained that grant applications are overly complex, too heavy with legal or technical jargon or require overly high administrative overhead. The new rules aim to reduce unnecessary red tape in certain respects, including the use of plain language and fewer unnecessary technical or legal requirements.
Risks and concerns
While many see the new oversight rules as necessary, they bring concerns that deserve attention:
- Influence in grant decisions. Since senior political appointees are now required to review and approve discretionary grants and funding announcements, grant decisions are expected to align more closely with federal policy goals. This change provides agencies with a clearer path to ensure that awarded projects align with current national priorities. While some experts have raised questions about maintaining the right balance between policy alignment and technical evaluation, most agree that experienced reviewers and subject matter specialists will continue to play a key role in shaping final decisions.
- Uncertainty for grantees. Existing grant recipients may find that their grant terms change (for example, introducing termination for convenience), which may disrupt ongoing projects. Also, institutions may have to adapt quickly to new requirements to remain eligible.
- Balancing oversight with flexibility. Some grant programs (especially research, public health and innovation) need flexibility to adapt to new findings or circumstances. Overly rigid oversight could hamper innovation. Grantees may face heavier reporting burdens.
- Legal and compliance challenges. Some of the prohibitions or restrictions, such as what counts as “anti-American values,” or definitions around gender, sex and immigration, may be subject to legal challenges, ambiguity or conflict with existing laws. Agencies and institutions may need to navigate new legal risks.
What organizations should do
For organizations that receive federal grants or plan to apply, these changes mean some proactive steps are essential:
- Review how your proposals align with administration priorities. Ensure that your project narratives and goals align with current policy priorities that are being emphasized.
- Strengthen internal controls. Especially for financial systems, banking information verification, cybersecurity and preventing fraud. The HHS audit showed gaps.
- Track grant terms closely. Watch for clauses about termination, drawdown requirements, benchmarks or performance measures and indirect cost rate changes.
- Be ready for more reporting and justification. Grant proposals may require clearer benchmarks, more measurable outcomes and simpler language. Proposals may also need to justify the use of higher indirect cost rates.
- Stay aware of changes in Uniform Guidance (2 CFR 200). The EO directs revisions to the Uniform Guidance, which is the rulebook that many grant recipients are familiar with.
Why it matters
These oversight changes are not just bureaucratic. They have real effects:
- For taxpayers, more oversight can lead to reduced waste, clearer results and better value from public funds.
- For grantees, it means more conditions, possibly more risk but also an opportunity: clarity and transparency can level the playing field, especially for smaller or less sophisticated applicants.
- For research, public health, infrastructure and other sectors, it alters what kinds of work are likely to be funded, how quickly and under what expectations.
Federal grantmaking is now tightly tied to evolving political priorities, measurable outcomes and increased oversight. All organizations that deal with federal grants must adapt quickly to these rules, aligning their proposals with the new accountability expectations to remain competitive.
