How federal funding cuts could hit Sioux Falls

Megan Raposa -

Simplified: Several Sioux Falls nonprofits on Tuesday expressed concern that a freeze on federal loans and grants – a directive from President Donald Trump that, as of Tuesday evening, was temporarily blocked by a federal judge – would prevent them from helping people in need of their services. Meanwhile, local government agencies are relatively unconcerned.

Why it matters

  • The initial letter from the U.S. Office of Management and Budget left many Sioux Falls service providers with more questions than answers.
    • That includes The Compass Center, who announced an immediate pause on their Youth Voices in Prevention Program. Executive Director Michelle Trent also noted that federal funds make up anywhere from 40 to 60% of their annual budget.
  • It's unclear the extent to which the pause could potentially impact the city, county or state budget. City Finance Director Shawn Pritchett said grants represent a "relatively minor" portion of the city budget, and in the short term, the city should be able to cover the gaps.
    • County officials didn't respond to requests for comment, and a state Department of Social Services spokesperson also declined comment but sent along a memo detailing guidance on what the freeze will or will not apply to.
  • There's also concern among other nonprofits, many of whom rely on federal grants for a significant portion of their budgets. Lutheran Social Services of South Dakota President and CEO Rebecca Kiesow-Knudsen said her organization typically receives $6.5 million – just shy of a quarter of the overall budget.
"This is harming people," Kiesow-Knudsen said. "It's harming services and agencies providing services. I don't know how we'll withstand it if it holds up. There is definitely an immediate harm if it stays."

What happens next?

Some of the affected nonprofits have put out a call asking the community to contact South Dakota's congressional delegation to support federal funding for their services.

  • The Compass Center and South Dakota Voices for Peace were among organizations posting resources on social media Tuesday.
"People are relying on this money – sometimes for their life," Trent said. "In cases for clients escaping violent relationships, access to resources can be life or death."

At the national level, the Associated Press reports that the federal judge blocked the order from taking affect until Monday evening. A court hearing is scheduled that morning to discuss the funding freeze.

In the meantime, Trent said she's encouraging folks to donate, volunteer or offer emotional support to nonprofits who are in a stressful situation right now.

"It's a hard thing to fight for existence," she added, noting that many nonprofits also, by nature, do not have a deep well of reserves because it would make them ineligible for many grants. "That gets tiring."