Recipients of Federal Financial Assistance Can Look to the New DEI Clause to Prepare for Potential Increased Scrutiny of Their Own Awards
McCarter & English – Given the slew of Executive Orders (EOs) last year focusing on diversity, equity, and inclusion (DEI) and roiling the funding and operations of recipients of federal financial assistance, such as universities and nonprofits, recipients may be forgiven for passing over EO 14398, dated March 26, 2026. EO 14398 marks a second phase of the administration’s focus on “racially discriminatory DEI activities.” While EOs from 2025 focused on broad policy shifts and internal agency operations, 2026 EOs seek the prospective operationalization of the administration’s policy preferences by embedding restrictions on DEI activities into federal contracts.
