With Denunciation of Digital Grants as ‘Woke Handout,’ $2.5 Billion in Funding Scrapped

In 2025, one of the nation’s most ambitious attempts to close the digital divide collapsed. 

The Trump administration cancelled every pending grant under the Digital Equity Act, a $2.75 billion program Congress funded as part of the bipartisan Infrastructure Act of 2021 to ensure Americans could not only access broadband infrastructure but also afford it, learn to use it, and participate fully in an increasingly digital society.

The decision, delivered first through a Truth Social post and then through a chain of emails, blindsided the communities, tribes, and nonprofits that had spent two years building plans approved by the federal government. It halted $1.25 billion in competitive grants, including $619 million in awards recommended by the Biden administration, prompting the National Digital Inclusion Alliance to bring a federal suit.

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At the same time, the administration terminated $1.44 billion in state capacity grants that funded statewide digital literacy, device access, and skills initiatives. Every state and U.S. territory had been awarded funds and was preparing subgrants and program rollouts.

What followed was a months-long unraveling marked by confusion, mixed signals, and silence from the federal government.

Awardees grantees navigated weeks of ambiguity from NTIA

In early April, an NTIA spokesperson was quoted in The Free Press saying the administration was “reviewing the awards and related program policies to ensure they are free of burdensome regulations, race-based mandates, and identity politics.”

As rumors spread that the administration had frozen digital equity awards, grantees said they had received no notice of any pause. Instead, they received a message that federal funds could no longer be used to support travel related to diversity efforts. But no one at NTIA would confirm whether awards were being delayed, reviewed, or canceled.

Angela Siefer, executive director of the National Digital Inclusion Alliance (NDIA), one of 65 recommended awardees, said at the time the group had not been told anything official. “NDIA has not been able to verify the accuracy of the article,” Siefer said in early April. “The grants have not been paused.”

By May, when asked again, she said: “We really don’t know anything other than the social media post from President Trump.”

The Truth Social post that changed federal policy

The ambiguity ended on May 8, in an afternoon post on Truth Social, President Donald Trump declared that digital equity funding was “unconstitutional,” “racist,” and a “$2.5 billion giveaway.” He said he had spoken with Commerce Secretary Howard Lutnick and that the two agreed to “end this immediately.”

“No more work handouts based on race!” Trump declared.

The administration’s rationale centered on one section of the Digital Equity Act: Its definition of “covered populations” which included rural residents, older Americans, veterans, people with disabilities, English language learners, people with low literacy, and others.

The sentiment was originally sparked by Sen. Ted Cruz, R-Texas, chair of the Senate Commerce Committee, who called on the NTIA to pause the Digital Equity Act program in November 2024. He argued that targeting “covered populations” amounted to an impermissible racial preference.

The next evening, the Commerce Department sent formal cancellation notices to nonprofits and states, declaring the entire program unconstitutional and voiding every award, $1.25 billion in total.

At the time, states such as Illinois, Oregon, Arizona, and California were still opening subgrant applications and hosting webinars. Some competitive grantees had full or partial access to their funds. Others, including NDIA, had signed contracts but could not draw down a single dollar.

Interestingly, Texas had paused its digital equity efforts in March, before the May announcement, citing “ongoing federal government realignment.”

A change in rhetoric 

From a Congress that acknowledged in the Infrastructure Investment and Jobs Act (IIJA) of 2021 “that race- and gender-neutral efforts alone are insufficient to address the problem” to one that characterized the words “diversity, equity, inclusion, and accessibility” as “radical, wasteful preferencing.”

Digital equity programs had not been a partisan flashpoint until the administration elevated them into a target. Trump issued the executive order that declared so on Jan. 20 and required the termination of all activities relating to DEI across the federal government.

Grant recipients and legal scholars quickly noted that the bipartisan infrastructure law explicitly prohibited discrimination on the basis of race, color, religion, national origin, sex, gender identity, sexual orientation, age, or disability. 

As defined in the Digital Equity Act – a prior legislative effort that was included in IIJA – digital equity simply refers to the “condition in which individuals and communities have the information technology capacity that is needed for full participation in the society and economy of the United States.” 

States scramble to respond

All 50 states and every U.S. district or territory had submitted detailed digital equity plans in 2024 because the federal government required them as a condition of receiving broadband funding. States hired staff, launched training programs, and in some cases opened full application cycles for community partners.

The cancellation threw that work into chaos.

Vermont, which had been awarded $5.3 million, halted its digital skills and device distribution initiative and convened its attorney general’s office to weigh possible litigation. “We are looking at options up to and including filing a lawsuit,” said Toni Hamburg Clithero, general counsel of the Vermont Community Broadband Board.

Maine Connectivity Authority, which received $10 million, said it was “deeply disappointed” and evaluating how to maintain programs that were already underway. Indiana suspended its own subgrant program mid-application, sending out an email announcing that the state had been “notified by our federal partners to suspend” all activities until further notice.

By mid-May, Clithero said she had heard from 37 states that received cancellation notices and that attorneys general across the country were coordinating their next moves.

Digital inclusion groups mobilize and consider suing

As the administration’s position solidified, advocates responded. At the Net Inclusion 2025 conference in late May, executive director of the American Association for Public Broadband and longtime public advocate Gigi Sohn urged attendees to mobilize their political leaders and prepare for legal action.

“Nearly $3 billion in funding and years of work came to a halt,” Sohn told the audience, saying it was illegal and unconstitutional for Trump to cancel funds appropriated by Congress.

Sohn urged states to sue: “The more [lawsuits], the merrier.”

Members of Congress, including Sen. Patty Murray, D-Wash., the original sponsor of the Digital Equity Act, went even further. “Needless to say, the president cannot overrule a law. Period,” she said. “And certainly not through a tweet.”

Lawmakers across Georgia, Illinois, Maine, New Jersey, and New Mexico, along with at least 140 organizations mobilized to urge the grant funding to be restored.

On October 7, that threat of litigation finally materialized when NDIA, representing roughly 2,000 affiliates, filed suit in the U.S. District Court for the District of Columbia, challenging the administration’s repeal of the Digital Equity Act’s competitive grant program and the termination of NDIA’s $25.7 million award. 

NDIA argued that the White House and Commerce Department decision to end the grant program in May was unconstitutional and unlawful. NDIA, represented by the Lawyers’ Committee for Civil Rights Under Law, asked the court to reinstate the program.

The case has been assigned to Judge John Bates, a George W. Bush appointee with a long reputation for serious attention to administrative record, executive branch power issues, and procedural fairness.

Bates has ruled against the Trump administration in important contexts, including in February when he ordered U.S. health agencies to restore websites after Trump issued an executive order telling them to scrub websites of "gender ideology extremism.”

As of Dec. 5, the government has not yet filed its response. Under federal rules, a respondent has 60 days from service to answer or move to dismiss unless an extension is granted.

Programs for seniors, veterans, and tribal communities cut off

Almost a year after the funds awardees were selected, the cancellation has delivered a blow to communities counting on the funds.

In rural Iowa and Alabama, nonprofits preparing to distribute laptops had to halt their plans. In Oregon, Free Geek’s digital basics classes, which teach older adults how to use a keyboard, navigate a browser, and avoid online scams, faced severe funding gaps. In western North Carolina, where Hurricane Helene devastated devices and connectivity, local officials hoped to use grants to rebuild.

Veterans’ groups lost funding for telehealth and device refurbishing programs. Tribal communities lost support for digital navigators, the human guides who help residents access healthcare, job applications, and federal benefits online.

“It's painful,” Siefer said. “Not only for the digital inclusion programs that were assuming these funds would be there, but for the actual people who were going to be supported by those dollars.”

A year of broadband expansion and adoption retreat

The collapse of DEA funding may well impact the success of the broader Broadband Equity, Access and Deployment program. Because BEAD's success depends heavily on take-rates, the number of people who actually subscribe, learn to use, and benefit from the service was poised to be impacted by DEA programs that fueled affordability, access to devices, digital skills, an understanding of basic cybersecurity, and trust.

Advocates for the programs also warned in June that the administration’s changes would undermine the workforce upskilling needed to ensure Americans can use and maintain the broadband networks being built through federal infrastructure programs.

Instead, 2025 became a year of paradox: historic investment in broadband infrastructure paired with the dismantling of the national program designed to help people use it.