By JMT Consulting

1. National Institutes of Health v. American Public Health Association
2. Radio Free Europe (RFE/RL, Inc.) v. Kari Lake
3. President and Fellows of Harvard College v. United States Department of Health and Human Services
4. Trump v. CASA
5. Follow Up Steps Nonprofit Leaders Should Consider Doing Today

Why Federal Court Rulings Matter for Nonprofit Funding

Staying in compliance with federal funding requirements is an ever-shifting challenge for nonprofits, particularly in the last year. That’s because new laws, executive orders, agency directives (that could be a result of an executive order), and any updates to the Office of Management and Budget’s ‘Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards’ (commonly called the Uniform Guidance) can change the steps your organization must do to remain compliant.

These changes could also trigger legal actions, where the subsequent findings can impact your compliance as well. Plus, they could change how you pursue damages if your organization feels that it has been unlawfully harmed by a change.

And that’s just at the federal level. We’re not even talking about developments on the state level.

At JMT’s recent Innovate 2026 conference in Washington D.C., Scott S. Sheffler, a partner at the premier law firm of Venable LLP, spoke on “Navigating the Evolving Federal Grant Landscape: Key Issues Facing Nonprofit Finance Leaders,” drawing from his more than 15 years of experience advising on federal grant compliance, government procurement law, and internal investigations.

A Note on This Analysis

We should note that the views expressed were exclusively those of the presenter, Scott S. Sheffler and they should not be attributed more broadly to Venable LLP or anyone other than Mr. Sheffler. These are Sheffler’s opinions and should not be construed as legal advice.

While JMT Consulting are also not a law firm, and our report should not be treated as legal advice, but as a close to possible explanation from his presentation. Finally, these lawsuits are quickly evolving. The reporting and analysis below reflect the status of the litigation as of the writing of this article and later appellate decisions may change any subsequent analysis. We and Sheffler encourage you to check with your organization’s legal counsel to determine if these or other lawsuits affect your specific nonprofit.

1. National Institutes of Health v. American Public Health Association, Citation: 145 S. Ct. 2658 (2025)

Sheffler reported that after the current administration came into office, numerous grants from the National Institutes of Health (NIH) were terminated, which were then challenged in District Court under the Administrative Procedure Act (APA).

As a result, the District Court for the District of Massachusetts stopped the terminations and set aside some of the underlying agency policy directives. On appeal, the First Circuit declined the government’s request to stop these rulings.

He said the government then appealed to the Supreme Court, arguing that the case was filed in the wrong court.

The Supreme Court, through what has been sometimes referred to as the “Shadow Docket” agreed and determined that the plaintiffs’ challenges to the NIH grant terminations likely belong in the Court of Federal Claims, while leaving room for challenges to the underlying agency policy under the APA to later proceed in federal district court.

“The Shadow Docket is essentially the Supreme Court stepping in, procedurally, early in a case, to pause either the implementation of a lower court’s ruling or to pause the effectiveness of an agency policy where a lower court didn’t pause it through an injunction,” explains Sheffler.

Justice Barrett, who was the tie breaker among the justices and wrote the decision, acknowledged that the plaintiffs would need to pursue two separate actions through sequential litigation. “Her decision is essentially the law of the land right now,” says Sheffler.

In other words, under the circumstances similar to those present in the APHA case, policy challenges would likely first need to proceed in district court and then claims seeking reinstatement or payment under terminated grants would then proceed in the Court of Federal Claims. “ [T]his is inconvenient for grantees, but it’s not necessarily legally wrong,” says Sheffler. “The way the federal jurisdiction can get sliced up can sometimes be very inconvenient for parties who want to sue the federal government.”

2. Radio Free Europe (RFE/RL, Inc.) v. Kari Lake, Citation: 25-cv-799 // 2025 U.S. Dist. LEXIS 138057 (2025)

Although Radio Free Europe/Radio Liberty (RFE/RL) was listed by statute as an entity to which grant funds are to be awarded each year for its operations, the U.S. Agency for Global Media (USAGAM), which is responsible for issuing them, withheld them and then offered a grant agreement with terms very different from the previous agreements, reported Sheffler.

Aiming to get the funds released, RFE/RL sued USAGAM in District Court seeking injunctive relief and arguing the new terms were “arbitrary, capricious, and an abuse of discretion, or otherwise not in accordance with law” under the APA. While the arguments for the two parties get too into the weeds for our purposes, the court ultimately blocked USAGAM from terminating the congressionally mandated federal funding and ordered the agency to disburse the earmarked funds.

“The big takeaway here, says Sheffler, “is if Congress names you by name, your rights are much more powerful in a grant termination or refusal of fund case than simply being in a discretionary program, where the program’s being cut, but you yourself don’t appear [in] the statute.”

But there is another way to get this safeguard and that’s through earmarks, i.e., congressionally directed spending or also called community project funding. “Congressionally directed spending can be a really useful tool for having more secure funding in uncertain times,” says Sheffler. “So, the big takeaway in my view is to think about earmarks if you have got that opportunity.”

3. President and Fellows of Harvard College v. U.S. Department of Health and Human Services, et al, Citation: 25-cv-11048 // Appeal: 25-2230

“This one, of course, you’ve probably seen in the news,” says Sheffler. “Various federal agencies accused Harvard of not doing enough to prevent anti-Semitic activity on campus. And as a result, they threatened termination of several hundred million dollars of federal grant funds via several agencies, HHS and some other agencies.”

The issue started in April 2025 when Harvard rejected their demands. Following Harvard’s rejection, the agencies suspended, froze, or terminated funding streams and awards to the university. They asserted that the awards no longer helped them achieve their priorities. In response, Harvard sued in District Court. It alleged violations of its First Amendment rights, violations of Title VI procedural safeguards, and violations of the APA.

The government argued that this was grant termination case, so per the first case we discussed above, it belonged in the Court of Federal Claims, not in District Court. But Harvard argued that the district court had jurisdiction, because the underlying action was retaliatory for First Amendment conduct and they were challenging the violation of those rights. Harvard also argued that it was challenging the government’s failure to follow Title VI’s statutory and regulatory procedures before cutting off federal funds.

The District Court agreed with Harvard on both arguments, because First Amendment and Title VI cases are typically asserted in District Court, not the Court of Federal Claims and because the Court found the terminations were a result of the underlying unlawful actions.

“I didn’t know this, but First Amendment-protected conduct includes a right, if you’re an educational institution, to run your institution the way you see fit,” says Sheffler.

As the result, Harvard obtained a preliminary injunction and then a summary judgment in its favor.

The government then appealed the case to the First Circuit on December 30, 2025 (Docket No. 25-2230) and, as of the Sheffler’s presentation there had not been substantive updates that Sheffler could provide. “It’s a really messy case,” says Sheffler. “And it’s a good one to watch.”

4. Trump v. CASA, Inc. Citation: No. 24A885 // 606 U.S. 831 (2025)

In this case, the Supreme Court determined by 6-3 decision that nationwide injunctions likely exceed the authority of an individual federal district court. They reasoned that such remedies were not supported by historical common law rights and practice.

As a result, courts are now more likely to limit injunctions, including preliminary injunctions issued early in a legal case, to the plaintiffs, certified classes, or association members. In other words, individuals and organizations affected by a policy, but not associated with a particular legal case, may no longer be able to receive the benefit of broad district-court injunctions for immediate protection.

It’s important to note that this case involved birthright citizenship and did not focus on federal grants. “This is not a Grant’s case,” says Sheffler, “but it was really important for grantees and others who operate in a federal regulatory environment.”

The problem?

“Even if [a] new rule is clearly unlawful,” says Sheffler, “the only people who will prevent it from being implemented are those who bring lawsuits, and it’ll only be prevented for them, or those they directly represent. From a regulatory standpoint, any new federal policy, at least in the funding environment, will be the de facto law, because most aren’t going to be able to go to court.”

Sheffler explained that “it is possible that at the very end of the lawsuit, the district court could still wipe out the action for everyone, but along the way, while it’s in litigation for a year or two, there won’t be any benefit to those who aren’t part of the lawsuit.”

Follow Up Steps Nonprofit Leaders Should Consider Doing Today

As part of your scenario planning, which we’ve previously recommended, nonprofit CEOs and CFOs should identify which, if any, of your programs depend on federal grants as well as if you are a direct recipient or a subrecipient by receiving federal funds through states, universities, hospitals, local governments, or other entities.

If you are a recipient or subrecipient, we urge you to consult with your legal counsel as soon as possible to help you understand how the shifting federal landscape may affect you and the steps you need to take.

In the meantime, we at JMT Consulting are here to help to implement effective compliance processes based on your lawyer’s recommendations. And feel free to reach out to us at any time. After all, we see every nonprofit as our client, even if we’ve never worked directly with you.

For more details about us, check out our Nonprofit Financial Management Solutions page or contact a client account manager today.