Beyond Symbolism: How Nonprofits & Local Governments Can Sustain DEI Efforts Amid Federal Rollbacks

Today, President Trump hosted a Black History Month event at the White House, recognizing the contributions of Black Americans. At the same time, his administration has rapidly moved to dismantle DEI initiatives across the federal government, including policies that have historically aimed to address racial inequities in hiring, funding, and decision-making.

For nonprofits and local governments working to build more equitable communities, this moment raises urgent questions. How do we reconcile symbolic gestures of recognition with policies that undercut equity-driven progress? What will these shifts mean for funding, public-private partnerships, and local policy? Most critically, how do organizations continue advancing DEI when the federal government is actively working to suppress it?

These are not abstract concerns. The reality is that nonprofits and municipalities don’t have the luxury of waiting for the next policy shift to determine their approach. They are responsible for delivering critical services - housing, education, public health, workforce development, and economic opportunity - that directly impact communities disproportionately affected by systemic inequities. As federal DEI initiatives disappear, the burden will fall even more heavily on state and local governments, philanthropy, and nonprofit institutions to keep this work alive.

The Real-World Impact of DEI Rollbacks

Federal DEI policies didn’t just shape government hiring and workplace culture; they influenced billions of dollars in funding, research, and contracting opportunities that prioritized historically marginalized communities. As these policies are reversed, organizations will likely face:

• Disruptions in Federal Funding Streams – Grants and contracts that once prioritized equity initiatives may be eliminated or redirected, leaving nonprofits and local agencies scrambling to fill gaps.

• Shifts in Philanthropic & Corporate Giving – Many foundations and corporations align their giving strategies with federal priorities. The rollback of DEI at the federal level could signal to private funders that equity is no longer a priority, reducing available funding for community-driven initiatives.

• Local Governments Facing Political & Legal Challenges – Municipalities with strong DEI commitments may find themselves targeted by legal challenges or political pressure to scale back their own equity initiatives. This could put public sector leaders in the difficult position of defending programs that were previously uncontroversial.

• Workforce & Leadership Pipeline Challenges – With one in five federal employees identifying as Black, according to a 2023 OPM report, cuts to DEI programs will have a direct impact on employment, advancement, and retention for Black and other underrepresented professionals in government and beyond.

What Nonprofits & Local Governments Can Do Now

Harvey & Smith Impact works at the intersection of funding, strategy, and policy - helping mission-driven organizations secure resources and sustain their work in times of uncertainty. Based on our expertise, here are concrete actions nonprofits and municipalities can take now:

1. Strengthen Your Funding Resilience

Federal grant priorities may shift, but opportunities still exist. Nonprofits and local governments should assess their current funding mix and identify ways to diversify revenue streams. This could mean expanding local and state funding partnerships, strengthening individual giving campaigns, or exploring innovative earned-income strategies. We recommend conducting a grant readiness assessment to ensure your organization is prepared to adapt to changing priorities.

2. Build Cross-Sector Alliances

Federal rollbacks don’t erase the demand for equity-focused work - they just shift where the leadership must come from. Local governments, nonprofit coalitions, and philanthropic partners must coordinate to sustain critical DEI initiatives. Now is the time to form regional collaboratives that align resources, share knowledge, and present a unified voice advocating for continued investment in equity.

3. Defend & Reinforce Local Policy Commitments

While federal policies may change, states and municipalities still have the authority to implement their own DEI initiatives. Public sector leaders should take steps to protect equity-based policies from legal challenges while embedding DEI into core local government functions - such as procurement, economic development, and workforce training - so they are harder to dismantle.

4. Proactively Shape the Narrative

The rollback of federal DEI programs will undoubtedly be used as a talking point to challenge local and nonprofit efforts. Organizations must be ready to clearly articulate the impact of their work - not just in moral terms, but in economic and community resilience terms. Document and share success stories that highlight how DEI policies have contributed to stronger local economies, healthier communities, and more effective public services.

5. Invest in Community-Led Solutions

With the federal government stepping back, it’s more critical than ever to center the voices and leadership of those most impacted by inequity. Nonprofits and municipalities should focus on funding grassroots initiatives that directly empower Black, Indigenous, and other communities of color to lead policy and programmatic solutions.

This Is a Moment for Action, Not Just Reflection

Symbolic gestures like today’s Black History Month celebration at the White House have value, but they do not replace meaningful policy commitments. The real test for nonprofits and local governments is not whether they acknowledge the tension between recognition and action - but whether they take the necessary steps to sustain and strengthen equity work despite federal opposition.

At Harvey & Smith Impact, we specialize in helping organizations navigate these shifts with strategic funding development, policy alignment, and capacity-building support. If your organization is looking for ways to sustain DEI-driven work in this changing landscape, we’re here to help.

How is your organization responding to these federal shifts? Are you seeing changes in funding, policy, or community engagement? Let’s continue the conversation.