Setting Priorities for Nonprofits, Higher Ed, Health Care, and Government

Few organizations have been left untouched by the changing economy, policies, and executive orders — and the uncertain impact these changes may have on the individuals you serve or who support your entity.

Whether you’re a nonprofit, a higher education institution, health care organization, or state and local government entity, federal activity impacts you. However, where to focus your energies can be difficult, and prioritizing leadership time and efforts can be overwhelming.

It may be helpful to frame and group activity in the following ways:

• Focus #1: Federal policy and funding changes
• Focus #2: Markets outlook
• Focus #3: Tariff impacts

Focus #1: Federal policy and funding changes

Federal policy and funding varies significantly across types of entities. The following is a high-level look at a few key policies of interest by industry.

Watch for our subsequent article on tax-exempt policies, such as excise tax changes on executive compensation, on investment income for certain private colleges and universities, plus changes to unrelated business taxable income among others.

Higher education

Higher education is closely watching budget reconciliation bill policies since many may negatively impact their finances. These include:

• Eliminating federal subsidized loans for undergraduates and Direct Plus loans for graduate students beginning July 1, 2026. This would accrue more interest on Direct Loans, making those loans more expensive for students.
• Capping Parent Plus Loans and allowing those only when a student has taken the maximum unsubsidized loans available.
• Setting loan limits of $200,000 per student across all federal loan programs.
• Changing Pell Grants. Currently, to receive the maximum Pell Grant amount, a student is required to have 24 course hours per academic year. The legislation increases this to 30 course hours per academic year. A student enrolled less than half time would no longer qualify for Pell Grants.
• Changing student eligibility for Title IV aid for non-resident students.
• Revising “risk-sharing” for colleges and universities, which would require institutions to pay a financial penalty for large default rates on federal loans.

These significant changes will impact student financial aid and should be monitored closely. If they become law, student financial aid departments will need to comply with the policies and financial staff will need to assess potential changes on student enrollment and aid.

Health care and life sciences (HCLS)

HCLS is keenly attuned to both regulatory changes and congressional activities. The Department of Health & Human Services (HHS) is undergoing a reorganization plan, including a 20,000-employee reduction and policy shifts under the “Make America Healthy Again” moniker. There is a new focus on chronic conditions, changes to vaccine recommendations and drugs policies, health care costs, price transparency, and “waste, fraud, and abuse.” New leaders at the Centers for Medicare & Medicaid Services, the Food & Drug Administration, and the National Institutes of Health will likely drive different priorities than previous administrations.

In Congress, tackling multiple major issues — tax policies, energy policies, debt, and more — under an expedited budget reconciliation process continues to move forward. Within this process, all health care eyes are on Medicaid cuts to drive savings — the most frequently raised are work requirements and provider taxes.

Nonprofit

Many nonprofits receive funding through a variety of federal agencies — HHS, housing and urban affairs (HUD), and education. Budget reductions to these agencies have downstream impacts. Reductions include $33.5 billion in HUD grants, $49.1 billion in state and international grants, $33.2 billion in HHS, and $12 billion in education.

One policy considered but since removed from the budget reconciliation bill relates to revocation of tax-exempt status. Many nonprofits may view this as a significant threat were it to resurface as the legislation continues moving forward.

Focus #2: Markets outlook

All industries are impacted by rapidly changing tax, trade, and tariff policies — which are having direct or indirect effects on markets and the economic outlook. To keep you current on how markets could be impacted, CLA continues hosting our Outlook series and providing regular updates to our Tax Policy Watch resources. These are your one-stop shop for keeping abreast of moving pieces related to tax policy. Another recommendation for any board or leadership team is having strong investment policy statements and regular connections with your advisors.

Focus #3: Tariff impact

Trade and tariff impacts are largely linked to how much an entity’s costs are in materials and supplies versus personnel. For example, nonprofit organizations, which are heavy on personnel costs, may experience fewer disruptions while others, like HCLS, may experience more targeted impacts related to items containing rare minerals or supplies (like personal protective equipment) largely imported from foreign countries.

How your organization is impacted by tariff policies is specific to you and requires ongoing review. CLA’s new tariff roadmap assessment tool is a great place to start. The structured, 20-point diagnostic helps organizations understand their tariff exposure and mitigation opportunities. Additional insights are available in many articles, such as preparing for new tariffs.

Next steps to move forward

1. With so much activity, keeping leadership, governance, and other key stakeholders informed is important. In an environment where shifts are occurring rapidly, leadership needs to have a firm handle on the major moving parts of impact while also keeping a steady hand and calm presence with employees and governance. This can be done through periodic updates to governance boards related to key organization priorities or policies to help facilitate decision making when needed.

Solving for Uncertainty: Power of Financial Modeling

Register for CLA’s June 17 webinar or watch on replay.

2. Consider a tariff roadmap assessment customized to your organization.
3. Revisit current investments strategies, investment policy statements, and financial modeling scenarios.
4. Review your grants regularly, including successfully closing out any federal grants.
5. Leadership, governance, and others may want to advocate with their elected officials. Doing so helps legislators understand how various policy and funding changes impact organizations, the community, or the local economy.
6. Connect regularly with your advisors.

How CLA can help with setting priorities for nonprofits, higher ed, health care, and government

These three focus areas and follow-up actions vary by industry and by entity. That’s where CLA’s broad-based experience across nonprofits, higher education, health care, life sciences, and more helps us provide valuable insights and resources.

Whether your board needs to better understand the current budget reconciliation bill’s impacts on your grants, or you think a tariff roadmap assessment is a next step, CLA can assist. Reach out today.

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