After the Environmental Protection Agency awarded a landmark $27 billion in funding from the Inflation Reduction Act to climate groups last year, recipients jumped into action. One issued $392 million in grant approvals to vetted applicants, and another committed $539 million for energy-efficient retrofits and new construction. A third launched a call for applications that brought in more in requests than their $800 million federal award.
But in mid-February, access to that funding was cut off by Citibank, which had been chosen to disburse a $20 billion chunk awarded under two programs of the EPA’s overall $27 billion Greenhouse Gas Reduction Fund: the National Clean Investment Fund and Clean Communities Investment Accelerator. The move followed still-unsubstantiated allegations of fraud leveled by the Trump administration.
And last month, EPA Administrator Lee Zeldin announced he was cancelling the grants, even though internal communications show the agency knew the legal justification for the move was flawed, according to the Washington Post.
The funding freeze has left some of the groups awarded money with fast-emptying bank accounts, struggling to meet basic costs like paying rent or making payroll. At least one has only avoided furloughing staff due to emergency funding from philanthropy.
With the federal awards now the subject of at least three lawsuits, those organizations say philanthropy’s stopgap support has been critical to keep them afloat — and that additional dollars would allow them to move the work forward.
Money from philanthropy was always the plan, if not in this form. The EPA program envisioned recipients using government dollars to help raise additional investment capital, including from foundations and other philanthropic institutions. The hope now is that money will arrive anyway.
“There’s a huge opportunity for philanthropy to come in and help support some of these projects to help them get off the ground,” said Brooke Durham, director of communications at Climate United, which was awarded $7 billion by the EPA, the largest of all the awards. Her organization is now suing the EPA and Citibank along with two other recipients.
Coming in to save these projects would in one sense bring philanthropy’s involvement full circle. Foundations and regrantors across the country helped lay the groundwork for the Greenhouse Gas Reduction Fund by backing national policy work, the development of regional green banks and the involvement of local communities, as I covered in a 2024 piece.
Here at IP, we’ve been impressed with climate philanthropy’s capacity to leverage its resources to bolster federal action under a friendlier government. Support for green banks and green financing got a shout-out last December in our Philanthropy Awards. Following that, we postulated — far too optimistically, it turns out — that the continued rollout of Biden-era climate funding might moderate the damage a climate-unfriendly Trump administration could do, especially since so much IRA funding has been slated for red states and districts.
The administration’s decision to simply start freezing climate funding outright, never mind Congress’s supposed power of the purse, has thrown a big bucket of cold water on that idea. Now groups are urging philanthropy to step up again, with some hoping foundations also consider using endowment funds to capitalize loan funds as disbursal is stalled. As a potentially lengthy legal battle gets underway, philanthropy and major donors could determine whether, at least in the short term, the promised loans materialize for communities eager for clean water and lower utility bills.
How the Justice Climate Fund thinks philanthropy can help
Philanthropy not only set the stage for the Greenhouse Gas Reduction Fund, it helped some of its awardees get off the ground. Take the Justice Climate Fund.
The group launched in 2023 with the help of $5 million in seed funding from Laurene Powell Jobs’ Waverley Street Foundation and the IRA-implementation funder collaborative Invest in Our Future. Founded by the Community Builders of Color Coalition, the nonprofit fund comprises a range of local, regional and national financial organizations.
After being awarded $940 million from the EPA’s Greenhouse Gas Reduction Fund, the operation launched an initial call for applications last December. It aimed to grant $800 million of that sum, as well as raise another $800 million in private funds. The team expected the first call would yield about $100 million in requests, said founding CEO Amir Kirkwood. Instead, applications totaled $820 million.
“Not even deploying a dollar, we were able to show a pipeline that would really justify going out and raising additional capital from investors,” he said.
Kirkwood sees that long list of potential projects — half were building retrofit projects, many for structures in the southeastern U.S. — as one of two key strengths of the Justice Climate Fund. The fund’s other advantage is its infrastructure and team, which includes staff experts on risk management, compliance and loan structuring.
The accusations of fraud that Zeldin has leveled around the Greenhouse Gas Reduction Fund seem to rely on a recording by the right-wing outlet Project Veritas, which is known for covert videos aimed at embarrassing its targets. In the oft-cited video, a then-EPA employee said, “It truly feels like we’re on the Titanic and we’re throwing, like, gold bars off the edge.” The former staffer’s lawyer told the Wall Street Journal the comments did not refer to the frozen funds and were taken out of context.
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So far, the judge in the case is not remotely convinced by the EPA’s reasoning. “Here we are, weeks in, and you’re still unable to proffer me any information with regard to any kind of investigation or malfeasance,” Judge Tanya Chutkan of the U.S. District Court for the District of Columbia told a Justice Department attorney who was arguing on behalf of the EPA’s decision to end the grants. In the New York Times, a Harvard environmental law professor called the agency’s arguments “just nonsense.”
Kirkwood, whose organization has also filed a lawsuit, said its internal controls are robust. “We believe that we run a program that has no risk of waste, fraud and abuse,” he said.
To raise additional funds and meet its operating costs, Justice Climate Fund has been in talks with potential funders, including the philanthropic arms of mission-aligned banks, according to Kirkwood and a spokesperson.
But time is running short.
“It’s really important that the philanthropies see this as a moment with a little bit of urgency — and not just because of the political situation in D.C.,” he said. “People are starting to believe more and more that local-based climate finance is part of the solutions set. We don’t want to lose that drive and commitment that’s happening at the local level.”
Stop-gap funding has prevented layoffs, but projects are still stalled
For Climate United, the Greenhouse Gas Reduction Fund recipient now suing the government, recent support from private philanthropy has helped the organization avoid furloughing staff, said Durham, who also said she was unable to name those funders due to the pending lawsuit and potential reputational risk.
Climate United’s would-be borrowers are unfortunately still in the lurch, unable to pay contractors or order needed supplies. The list of stalled works include a $31.8 million solar energy project in Arkansas and $250 million electric truck financing program launched at the ports of Los Angeles and Long Beach.
Durham said the team has also heard from private philanthropies interested in funding such projects while federal grants are unavailable. Even if the government funding arrives, additional philanthropic dollars would allow the group to provide additional support beyond the strict remit of its EPA grants.
“We can only do very specific things,” Durham said. “That does create this opportunity for private philanthropy to fill in those gaps.”
Climate philanthropy has been notably quiet about its plans lately, as I reported earlier this month, but philanthropic networks do report interest among members in scaling up non-grantmaking support.
Many members of the Environmental Grantmakers Association are looking at new ways of using their assets and the financial tools available to them, including making impact or mission-aligned investments with endowment dollars, said Tamara Toles O’Laughlin, president and CEO. Another network also said they had seen interest in backing Greenhouse Gas Reduction Fund awardees.
“There are conversations about the different silos and what utility they have,” Toles O’Laughlin said. “I have seen people trying to figure out, ‘Well, why are we doing this this way?’”
Correction (4/18/25): An earlier version of this story incorrectly indicated that Justice Climate Fund had not filed a lawsuit against the EPA, based on outdated information.
