08-12-2025

Improving Oversight of Federal Grantmaking

Executive OrderView the Original .pdf
View the Original .pdf

The 1-Minute Brief

What: Executive Order 14332, issued on August 7, 2025, mandates that senior political appointees will now review and approve all discretionary federal grants to ensure they align with the administration's priorities and the "national interest." It also gives agencies broad power to terminate grants for convenience.

Money: The order does not appropriate new funds but redirects how existing grant money is awarded. It prioritizes applicants with lower indirect cost rates—the administrative overhead charged by recipient institutions. This follows earlier 2025 policies by agencies like the NIH to cap these rates at 15%, a significant reduction from the typical 30% to 70%.

Your Impact: For the average American, the direct effect is minimal. However, for those in academia, scientific research, and non-profit sectors, the impact is significant. The order introduces uncertainty for long-term projects, which can now be terminated if they are deemed to no longer align with agency priorities.

Status: The Executive Order was signed on August 7, 2025, and published in the Federal Register on August 12, 2025. It is in effect.

What's Actually in the Bill

This Executive Order fundamentally changes how federal agencies award and oversee billions of dollars in discretionary grants. It centralizes control within the executive branch by requiring a new layer of review by senior political appointees. Historically, grantmaking has been guided by a peer-review system where subject-matter experts evaluate proposals based on merit. While peer review is still permitted, its recommendations will now be purely advisory.

Core Provisions:

  • Political Appointee Oversight: Each agency must designate a "senior appointee" to create a process for reviewing all new funding announcements and discretionary grants. Until this process is established, all new grant opportunities are paused unless required by law.
  • New Grant Criteria: Senior appointees must use their "independent judgment" to ensure grants advance the President's policy priorities. The order explicitly prohibits funding for initiatives that involve racial preferences, deny the "sex binary in humans," support illegal immigration, or promote "anti-American values."
  • Termination for Convenience: The Director of the Office of Management and Budget (OMB) must revise federal rules to ensure grant agreements can be terminated "for convenience." This allows an agency to end an award at any time if it "no longer advances agency priorities or the national interest," not just for non-compliance by the grantee. Agencies are directed to try to amend existing grants to include this clause.
  • Lower Indirect Costs: The order gives preference to grant applicants from institutions with lower indirect cost rates.
  • Restrictions on Funds: Future grant agreements must prohibit recipients from drawing down funds for projects without specific, affirmative agency authorization for each request.

Stated Purpose (from the Sponsors):

The order's stated purpose is to stop the "offensive waste of tax dollars" and ensure federal spending improves American lives. The text cites several examples of what it deems problematic spending:

  1. To end funding for "far-left initiatives" like "drag shows in Ecuador," critical race theory, and certain diversity, equity, and inclusion (DEI) programs.
  2. To prevent funding for risky science, such as the gain-of-function research it links to the Wuhan lab, and to stop support for NGOs that it claims worsen the border crisis.
  3. To improve the efficacy of federally funded research, citing a "reproducibility crisis" and data falsification scandals at prominent universities.
  4. To reduce the amount of grant money that goes toward university administrative costs instead of "groundbreaking research."
  5. To simplify the grant application process, which it claims is too complex and favors institutions with expensive technical experts.

Key Facts:

Affected Sectors: Higher Education, Scientific and Medical Research, Non-Profits, International Aid Organizations.
Timeline: Agency heads have 30 days from the order's issuance to report to OMB on their current termination clauses. New funding announcements are paused until the new senior appointee review process is implemented.
Scope: The order applies to all federal agencies that award discretionary grants, including major funders like the National Institutes of Health (NIH) and the National Science Foundation (NSF).

The Backstory: How We Got Here

Timeline of Events:

The Post-WWII Research Consensus (c. 1945-2010s):

Following World War II, the U.S. government became the primary funder of academic research and development, creating a system largely reliant on expert peer review to award grants based on scientific merit. This model, which aimed to insulate science from political interference, is credited with fueling major innovations like the internet, GPS, and modern medicine.

Growing Political Scrutiny (2010s-Present):

In recent years, federal grantmaking, particularly by the NIH and NSF, has faced increased political scrutiny. Debates have intensified over several key areas:

  • Indirect Costs: Universities charge "indirect costs" on federal grants to cover overhead like utilities, administration, and facilities. These rates, often between 30% and 70%, have been criticized as being too high. In early 2025, several agencies, including the NIH, announced policies to cap these rates at 15%.
  • Culture War Flashpoints: Specific grants have become targets in political debates. The Executive Order explicitly mentions funding for research on critical race theory, gender identity, and DEI initiatives as examples of "wasteful" spending.
  • "The Reproducibility Crisis": A growing concern within the scientific community is that the results of many published studies cannot be reproduced by other researchers, leading to questions about the efficacy and rigor of funded projects. The order cites this as a key justification for increased oversight.
  • Project 2025: This executive order aligns with the broader goals of "Project 2025," an initiative organized by the Heritage Foundation to create a policy playbook for a potential conservative administration. A central theme of Project 2025 is to assert more direct presidential control over the administrative state, including its grantmaking functions, to advance specific political and social agendas.

Why Now? The Political Calculus:

  • Consolidating Executive Power: This order represents a significant effort to shift control over the federal government's vast financial resources from career civil servants and scientific experts to political appointees loyal to the President.
  • Advancing a Policy Agenda: The administration aims to defund research and programs it deems ideologically out of step with its platform while redirecting funds toward its own priorities.
  • Responding to a Political Base: The order addresses long-standing conservative critiques of "wasteful" government spending on projects that are perceived as frivolous or politically biased, such as those mentioned in the "Purpose" section.

Your Real-World Impact

The Direct Answer: This order directly affects a specific group of Americans—scientists, researchers, academics, and non-profit leaders who depend on federal grants for their work.

What Could Change for You:

Potential Benefits:

  • For researchers at smaller institutions or those with lower overhead costs, the preference for low indirect cost rates could make their grant proposals more competitive.
  • Taxpayers who agree with the administration's criticism of certain research topics may see this as a positive step toward fiscal responsibility and aligning spending with their values.
  • The emphasis on simplifying applications could, if successful, lower the barrier to entry for applicants without access to specialized grant-writing support.

Possible Disruptions or Costs:

Short-term (Next 1-2 Years):

  • A freeze on new funding opportunities until the new review processes are in place could halt research pipelines.
  • Increased bureaucracy and new layers of political review may significantly slow down the awarding of grants, causing delays and uncertainty.

Long-term:

  • The "termination for convenience" clause creates significant instability. A university or non-profit could have a multi-year project canceled mid-stream if political priorities shift, even if they are meeting all project goals.
  • Research on topics deemed politically sensitive (e.g., climate change, racial equity, gender studies, vaccine hesitancy) could be systematically defunded. This could have a chilling effect, discouraging scientists from pursuing research in controversial fields.
  • Institutions with higher, federally negotiated indirect cost rates may face a significant loss of revenue, potentially impacting their ability to maintain research facilities and administrative support.

Who's Most Affected:

Primary Groups: University researchers, medical research institutions, scientific laboratories, and non-profit organizations that receive federal discretionary grants.
Secondary Groups: Graduate students, post-doctoral fellows, and technical staff whose positions are funded by grants. Industries and communities that benefit from scientific innovation and the services provided by non-profits.
Regional Impact: States with large research universities and a heavy reliance on federal R&D funding may be more affected by shifts in grant allocation and potential funding cuts.

Bottom Line: The Executive Order centralizes control over federal grant awards in the hands of political appointees, allowing the President's administration to align billions of dollars in public funding with its specific policy and ideological goals.

Where the Parties Stand

Republican Position: "Ending Wasteful Spending, Ensuring Accountability"

Core Stance: The administration and its supporters frame this order as a necessary reform to stop unaccountable bureaucrats from wasting taxpayer money on projects that are ineffective or contrary to American interests.

Their Arguments:

  • ✓ The government has a right and duty to ensure that taxpayer-funded grants align with the priorities of the elected administration and the national interest.
  • ✓ Injecting political oversight will curb spending on frivolous or "far-left initiatives" and ensure money goes toward solving real-world problems.
  • ✓ Focusing on lower indirect costs and simplifying applications will make the grant process more efficient and equitable.
  • ✗ They oppose the idea that scientific peer review should be the final, binding word on how public funds are spent, viewing it as an insular process that can be captured by special interests.

Legislative Strategy: As this is an Executive Order, the strategy is one of implementation. The White House will direct the OMB and agency heads to enact the new regulations and processes, using the full authority of the executive branch to enforce compliance.

Democratic Position: "Defending Scientific Integrity and Free Inquiry"

Core Stance: Opponents view this order as an unprecedented assault on the independence of science and an attempt to politicize research for ideological ends.

Their Arguments:

  • ✗ Placing final funding decisions in the hands of political appointees, rather than scientific experts, will corrupt the merit-based peer-review system that has made American research a global leader.
  • ✗ The "termination for convenience" clause will create chaos and instability, crippling long-term scientific projects and discouraging ambitious research.
  • ✗ Vague criteria like "advancing the national interest" or "anti-American values" will be used to censor research and defund entire fields of study based on political whim, not scientific merit.
  • ⚠️ The move will have a chilling effect on academic freedom, pushing researchers away from important but potentially controversial topics and damaging America's reputation as a place for free inquiry.

Legislative Strategy: Opponents will likely challenge the order through litigation, arguing it violates the Administrative Procedure Act or First Amendment principles. Advocacy groups will lobby Congress to push back through oversight hearings and potentially by adding language to appropriations bills to limit the administration's ability to implement the most controversial parts of the order.

Constitutional Check

The Verdict: ✓ Constitutional

Basis of Authority:

The order is based on the President's executive authority under Article II of the U.S. Constitution, which grants the President the power to oversee the faithful execution of the laws. Congress appropriates funds and authorizes agencies to issue grants, and the President, as head of the Executive Branch, has broad authority to direct how those agencies carry out their duties, so long as it is consistent with the law.

Relevant Portion of the Constitution (Article II, Section 1): "The executive Power shall be vested in a President of the United States of America."
(Article II, Section 3): "...he shall take Care that the Laws be faithfully executed..."

Constitutional Implications:

[Executive Power]: The order is a clear exercise of the President's power to manage the operations of federal agencies. Courts have historically granted the President significant discretion in this area.
[Precedent]: Presidents have long used executive orders to set policy and priorities for federal agencies, including in the areas of procurement and grantmaking.
[Federalism]: The order directs federal agencies, not state governments, so it does not directly implicate federalism by overstepping into powers reserved for the states.

Potential Legal Challenges:

While the order itself is likely constitutional, its implementation could face legal challenges.

  • Administrative Procedure Act (APA): Groups denied funding could sue, arguing that an agency's decision under the new criteria was "arbitrary and capricious" or that the new rules were not implemented with proper procedure.
  • First Amendment: Lawsuits could claim that denying grants based on the content of research or the viewpoint of the applicant (e.g., on topics like gender or race) constitutes unconstitutional viewpoint discrimination. However, the government has much broader latitude to make content-based decisions when it is funding speech than when it is regulating it.
  • Contract Law: Attempts to retroactively apply the "termination for convenience" clause to existing grant agreements could be challenged as a breach of contract.

The order itself anticipates these challenges by stating it "is not intended to, and does not, create any right or benefit, substantive or procedural, enforceable at law or in equity." (Sec. 7c)

Your Action Options

TO SUPPORT THIS EXECUTIVE ORDER

5-Minute Actions:

  • Contact the White House: Use the White House comment line or website to express your support for Executive Order 14332 and the goal of increasing oversight of federal spending.
  • Share on Social Media: Share news articles and commentary favorable to the order, using hashtags related to fiscal responsibility and government accountability.

30-Minute Deep Dive:

  • Write a Letter to the Editor: Submit a letter to your local newspaper applauding the move to ensure taxpayer dollars are spent on projects that align with national priorities and are not wasted.
  • Support an Organization: Find and support think tanks or advocacy groups that promote government accountability and align with the policy goals of the order, such as The Heritage Foundation.

TO OPPOSE THIS EXECUTIVE ORDER

5-Minute Actions:

  • Call Your Rep/Senators: Use the Capitol Switchboard at (202) 224-3121. Tell them you are a constituent and you oppose Executive Order 14332. Urge them to conduct oversight hearings and protect scientific research from political interference.

30-Minute Deep Dive:

  • Write a Detailed Email: Contact your congressional representatives and members of the House and Senate appropriations committees. Detail your concerns about the politicization of science, the "termination for convenience" clause, and the potential harm to research and innovation.
  • Join an Organization: Support scientific societies, university associations, or civil liberties groups that are actively opposing this order and working to protect academic freedom, such as the ACLU or the Association of American Medical Colleges.