Did Your Grant Get Canceled?

Amid broader federal shifts, many entities are experiencing federal funding fluctuations or even cancellations. Reports show that up to 400 National Science Foundation (NSF) grant recipients, and at least 20 states receiving digital equity planning and capacity grants through the National Telecommunications and Information Administration’s (NTIA) experienced unexpected cancellations. Meanwhile, the National Institutes of Health (NIH) has reduced indirect cost rates for its research grants, and the Substance Abuse and Mental Health Services Administration (SAMHSA) is undergoing a consolidation into a new federal entity. 

These abrupt changes are already having a significant impact on recipients who depend on federal funding to implement critical programs, sustain research, and serve communities. In this shifting landscape, understanding what’s happening and knowing the next steps is crucial. 

Understanding the Cancellation 

A shift in federal priority and policy directions has led to various grant cancellations or reduced funding in certain areas. These types of changes may stem from new legislative mandates, budget realignments, or evolving agency strategies under a new administration. While the cancellation may feel abrupt, it's important to recognize that it’s often not a reflection on the effectiveness of your organization or program. 

If your grant was canceled, your next steps should focus on strategic adjustment rather than remediation: 

1. Review the Cancellation Notice: The official communication may reference the specific federal directive or policy realignment that triggered the cancellation. Understanding the rationale can help you tailor your communication with internal stakeholders and partners.
    
2. Engage Your Federal Contacts: Reach out to your assigned program officer or grants management specialist. They may offer context on the broader shift and guidance on whether similar funding opportunities are anticipated in the future or available through different Assistance Listings. 
   
   
3. Reposition Strategically: Start identifying how your program goals might align with the federal government’s new priorities. Explore upcoming Notices of Funding Opportunity (NOFOs) that reflect current federal focus areas and consider how your existing work can be reframed or repurposed. 
   
   
4. Document Everything: Maintain detailed records of all communications with the funding agency, including the steps taken in response to the cancellation, and any internal decisions made. This documentation supports effective grant program closeout and positions your organization well for future applications. 

What Are the Necessary Steps to Take if Your Grant Is Canceled? 

Submitting Your Closeout Report 

A closeout report marks the formal conclusion of your grant program and is a key compliance requirement for all federal grant recipients. This report should give a clear picture of how federal funds were used, along with supporting documentation to confirm that all activities complied with the award terms. 

Your closeout report typically includes: 

• Final programmatic performance details 
• Required financial documentation 
• Audit trails 
• Resource reallocation updates 
• An overall project assessment 

Closeout-related costs may be included as part of your final grant expenditures if they are reasonable, allocable, and consistent with applicable cost principles. These can cover time and resources used for preparing final reports, financial reconciliation, and compliance documentation. When completing the report, there are three key steps to follow: 

1. Gather the correct data and documentation. 
2. Follow the guidelines outlined by your funding agency.  
3. Submit your report through the agency’s specific channel. For instance, you would submit your report through Research.gov if your funding is an NFS grant. 

Completing a Final Financial Statement  

Even if your grant is terminated early, you are still required to submit a final financial statement. This statement should be comprehensive and reflect the financial status of the grant at the time of cancellation. Since programs may have been terminated during an active project period, pay close attention to how unspent funds are handled and make sure to meet the deadlines and submission protocols outlined by the awarding agency. Although these processes can be time-consuming, completing them thoroughly can help maintain your eligibility for future federal funding. Failure to comply could result in financial penalties, reputational damage, legal issues, operational disruptions, and trouble securing financing for later projects. 

Exploring Alternative Funding: Non-Federal Grants 

As the federal government continues to shift priorities during this transition period, diversifying your funding sources is a practical way to stay afloat. Non-federal opportunities—such as grants from private foundations, corporate funders, and community foundations—can provide vital support during times of transition. 

Private and corporate foundations typically support national or thematic initiatives aligned with their missions. 

Community foundations often focus on regional impact and are excellent partners for locally rooted work. 

To identify potential opportunities, visit online databases that provide consolidated grant information from various funders or connect with your community’s foundations for support. When determining which grant aligns with your goals, carefully review the objectives and requirements and tailor your proposal.  

Best Practices to Navigate Grant Cancellation 

While this period may bring heightened concern, operational disruptions, and financial strain, you are not alone. Canceled funding does not mean the end of your mission, but it does require a proactive, strategic response to stabilize operations and position your organization for future success. 

If your federal grant has been terminated, consider the following key steps: 

• Review the cancellation notice to fully understand the rationale and any next steps provided. 
• Cease grant-related activities as directed, particularly those tied to federal reimbursement. 
• Prepare and submit all required documentation, including closeout reports and final financial statements. 
• Engage with advisors and internal stakeholders to align messaging, strategy, and recovery planning. 
• Assess legal and compliance obligations to minimize risks and protect your organization. 
• Define your future goals and begin exploring alternative funding sources, including private and community-based grants. 

By staying informed, organized, and forward-thinking, your organization can weather these changes and continue to deliver a meaningful impact. 

EisnerAmper’s trusted grants management team is here to support you every step of the way. Whether you seek compliance, grant writing and identification of new opportunities, program management, documentation, or financial reconciliation, our experienced advisors have the resources and experience to meet your needs. To learn more, contact us below.