In late May, the Office of Management and Budget and an array of federal agencies published a proposed rule in the Federal Register innocuously titled “Federal Financial Assistance,” redefining how the government administers financial assistance, including grants.
With the stated intention of “ensuring that American tax dollars are not wasted or misused,” the rule stipulates that federal funds will not “fund, promote, encourage, subsidize, or facilitate” a defined set of causes, including “diversity, equity, inclusion, and accessibility policies, principles, or practices that violate any applicable federal anti-discrimination laws.”
Brenda Solórzano, who’s approaching her two-year anniversary as The California Endowment’s president and CEO, immediately recognized that the rule would have a devastating effect on its grantees and the communities they serve.
“It’s rooted in the administration’s belief that DEI is illegal, so it wants to eliminate that focus in federal funding,” she told me. “This would be a huge challenge for organizations that we have funded over our 30-year history, because they are trying to address health disparities that are seen most significantly by communities that are diverse and low-income.”
Solórzano and her team documented their concerns in a letter and shared it with colleagues at other California-based foundations that work on health-related issues. On July 13, TCE published a joint letter signed by over 20 grantmakers, including the James Irvine, Weingart, Grove, and California Wellness foundations, as well as the California Community Foundation, Latino Community Foundation, and San Francisco Foundation, strongly urging the OMB to withdraw the proposed regulation.
Fast forward to early August. The U.S. Senate Appropriations Committee issued a continuing resolution barring the OMB from issuing or finalizing the rule or “any substantially similar rule” through December 11, 2026.
“It’s an early win,” Solórzano told me. “But the rule still may move forward.”
TCE’s open letter was an example of how, by leaning into advocacy, it has broadened its efforts to ensure that all Californians have access to healthcare at a time when grantees continue to grapple with the cascading effects of federal funding cuts and are bracing for the full implementation of the One Big Beautiful Bill Act, which will have further disruptive effects. This work has also manifested in other areas, most notably TCE’s $85 million commitment to create the Movement Innovation Collaborative, a statewide effort to catalyze infrastructure support for nonprofits.
“When we look at our work,” Solórzano said, “we say, ‘OK, grantmaking is an important component, but how can we be a player in the narrative space, in the policy space, in the convening space?’”
I connected with Solórzano, whose 30-year career in philanthropy includes “every role that you can imagine in a foundation,” a few days after the OMB rule was paused to discuss how TCE is responding to the disruption roiling the sector and preparing for what comes next.
This interview has been edited for length and clarity.
The OMB’s rule is paused, at least for now, but another striking element is how it would empower an administration to appoint what is, in effect, a grants czar to vet funding decisions at each agency.
It’s inconsistent with statutes and congressional intent around how the federal government is funded. It would move us away from the practice of basing funding decisions on science-based criteria, and drive us toward an administration’s perspective. As far as TCE’s work is concerned, this shift would have a profound impact on the health and wellbeing of communities that suffer the greatest health disparities.
How else has The California Endowment responded to all that’s transpired over the past year and a half?
We’ve asked ourselves how we need to show up differently. Our board voted to double our spend, up to 10% last year, this year and next year to meet this moment.
We have thought about the things that create burdens for nonprofits that we don’t need to do. That led us to ask, “What if we stop collecting reports from our grantees so they can use that time to address the challenges that they’re facing?”
So last year, we waived interim and final grant reports for grantee partners. For new grantees, we did not add any reporting requirements, so there would be no need to waive the reports. We do continue to require reports for specific requests — expenditure responsibility, as required by law, and social bond grantees, due to our commitments to the bond evaluation — but for all other grants, we are in a period of suspended reporting since June of last year.
We also asked, “How do we play in the policy world?” We recently created a government affairs function at the foundation — not to lobby, because we can’t lobby, but to educate policymakers about the challenges created by these federal decisions. Usually, the only options policymakers think about are how to cut things or how to raise taxes. And the question we have is, what would an alternative look like? If there isn’t money to make Medicaid fully functional in California, what if we put our resources toward prevention and wellness centers?
We often see a lack of wherewithal from funders on the advocacy front. But if some funders pass on that work, they’re effectively working with one hand tied behind their back.
They really are. There are lobbying restrictions, but lobbying is a very narrow component in the policy space. Foundations can engage in the regulatory comment-making process, which is another way that policy decisions are made. When legislation is passed, it moves to the agencies, and that’s where the regulatory work comes in, and as foundations, we can participate in that.
Here in California, we have term limits, and that has caused a loss of institutional knowledge around complex policy issues related to the healthcare policy arena, so we play a role in educating policymakers. I’m hoping this new government affairs function will help us think very differently. It gives us the ability to more effectively stay true to our mission while still staying clear of any lobbying restrictions that we have to abide by.
We can also fund research. As we are trying to understand the impacts in California — how many Californians are actually going to lose coverage, how many children are going to be without food, all these kinds of things — and if government isn’t funding research of this type, then what’s our role in philanthropy to continue to fund that work?
Any other ways TCE has altered its practices to respond to the disruption we’re seeing?
We expedited our grantmaking. In philanthropy, we tend to have a lot of rules, policies and practices. A lot of them are in place to curtail the potential risk of something going off the rails or something negatively impacting the foundation. But I have been asking our folks, “OK, we have grantee organizations that we’ve been funding for 10, 15 years. Why do we still put them through the same rigorous process that you make a new organization go through?” If they’ve been a partner of ours that long, don’t we trust them? And don’t we know that the resources we’re going to deploy to them are aligned with the work that we want to see happen in California?”
The answers are most likely yes, so why don’t we literally hit a button in our system and renew the grant? So we’ve started to try to do some of that work by eliminating the amount of time and resources that have gone into these renewal conversations and renewal processes.
You mentioned the importance of researching anticipated health impacts facing Californians, such as the number of people who will lose coverage. What’s your take on the effects of the One Big Beautiful Bill Act once it becomes fully implemented?
Partnering with stakeholders, leaders, advocates and policymakers, we’ve achieved something like 94% healthcare coverage for Californians before the One Big Beautiful Bill Act came into being. We’re expecting significant drops in Medi-Cal coverage — that’s the Medicaid program in California — because of cuts and requirements around work and re-enrollment.
It’s a known play for government to create bureaucracies that make it difficult for people to enroll and stay enrolled. It’s a way to reduce the overall number of people being served by programs. In fact, we’re already starting to see some of that in terms of numbers of Medi-Cal people that have been coming off the rolls, and we think it’s going to grow once HR 1 actually becomes fully implemented next year.
This has a compounding effect on people in California — you’ve got increased costs, people can’t afford homes, people can’t afford gas, people can’t afford food, and now they’re not going to be able to afford healthcare.
It sounds cliché, but we’ve found that what’s been happening since January 2025 has forced leaders to engage in some serious introspection about philanthropy’s role in society.
Those of us in philanthropy tend to think in polarities. It’s either black or white. You’re either a strategic or you’re a responsive foundation; you’re either funding direct charitable services or you’re doing systems change work; you’re either doing collective impact, or you’re funding individual organizations. I’m trying to push us to not think about either/or decisions, because it’s more complex than that. We have an opportunity to think more holistically about what we can do.
I have been guilty of that. I’ve only wanted to be a strategic systems change funder, for example, but I’ve evolved in my thinking because the world is burning right now. People are losing coverage. People don’t have food. We can’t solve it all, but we can be doing some things to address the immediacy of the now. We also can’t lose sight of the big picture. And so what’s the bigger picture, long-term investment thinking that we can be doing? That sometimes means you have to spend a little bit more and work a little harder, and I think we can do both.
The other thing I wanted to stress is that you can’t 5% your way out of the current situation. The idea that you’re going to take 5% of any foundation’s assets and create social change to achieve your mission — it’s being dishonest about the reality of whether that is even possible, and so redefining how we think about impact and success, and what we’re trying to do is another component of the work that we need to do.
Anything else you’d like to add that we haven’t touched on?
We’ve been playing with the idea of not making grants, but rather making gifts. Grants are a contractual relationship based on an agreement, and that creates an inherent power dynamic that can have positive and negative components.
But what would it look like if you give a gift where you actually are saying, “This is a gift. We trust you, and we want you to move forward.” It’s not that you make a gift and you walk away. There has to be continued engagement, continued learning, a continued back and forth, but it should be less about the grantmaking and more about the work and the partnership.
So this is another example of the kinds of things that we’ve done at TCE this year as a result of everything that we’re seeing happen, because it’s clear to me that the world is changing. The ecosystem we work in is changing.
The things that we used to rely on in philanthropy — whether the federal government having a role in helping people, that there is a safety net, that a social contract still exists in our country — if all those things are going away, then we have to ask ourselves, “How do we need to do our work now differently?” Because those things we relied upon are no longer there.
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