Navigating DEI Changes Under the New Administration: What Nonprofits Need to Know

Beginning January 20, 2025, several executive orders were issued that could impact nonprofits’ diversity, equity, and inclusion (DEI) initiatives. These orders focus on DEI policies within the federal government, federal contractors, and the private sector. While these changes may seem disruptive, it is important to understand their actual implications and how nonprofits will likely want to respond.

Key Executive Orders Impacting DEI

The Executive Order on “Ending Radical and Wasteful Government DEI Programs and Preferencing” targets DEI offices and initiatives within the federal government. It also affects contractors and grantees that provide DEI training materials to federal employees.

The Executive Order on “Ending Illegal Discrimination and Restoring Merit-Based Opportunity” is more relevant to the private sector. This order instructs the Attorney General to work with federal agencies and the Office of Management and Budget (OMB) to review federal civil rights enforcement. Within 120 days, a report will be submitted to the White House with recommendations on how the administration should address discrimination and preferences, including DEI policies in the private sector.

This second executive order is particularly important for nonprofits and grantees to monitor, as further developments are expected in the coming weeks. Additionally, for the first time, large foundations face greater compliance and operational risks.

Understanding the Impact

These changes can be confusing and disruptive, but it is important to remember that executive orders are not legislation—they do not change the law. Policies that were legal before these executive orders remain legal now. However, there are some immediate effects to be aware of:

• DEI training for federal employees will be eliminated.
• Federal funding recipients may lose key contacts within agencies, potentially leading to delays in funding or program approvals.
• Organizations that rely on government grants or contracts should review compliance risks and monitor further developments.

How Nonprofits May Choose to Respond

Given the complexity of laws and regulations surrounding DEI, nonprofits may want to consult legal counsel to assess any current DEI-related policies and practices. Now is a good time to:

✔ Review policies and procedures to ensure they align with existing legal standards.
✔ Update training materials and employee handbooks to reflect any necessary adjustments.
✔ Examine contracts to confirm compliance with evolving federal regulations.

Communicating DEI in a Changing Landscape

Nonprofits should take the initiative to reflect on what DEI means within their mission and communicate these values clearly to stakeholders. Keep in mind:

• External communication will face greater scrutiny than internal messaging.
• Prioritize clear, concise, and direct communication with the public.
• Leverage the board of directors for guidance, particularly in smaller organizations, to ensure governance and public messaging remain aligned.

Moving Forward

The most important takeaway is that these executive orders do not change existing laws. Nonprofits should stay informed but avoid overcorrection in response to these policy shifts.

Some organizations are examining other means of responding to these developments. However, nonprofits could benefit from evaluating policies, reflecting on mission and prioritizing clear communications regardless of a chosen course of action.

CHC will continue to monitor these developments and provide weekly updates to its nonprofit partners. Nonprofits outside the CHC network can sign up to receive updates to stay informed about the latest changes.