Maryland Just Routed 69% Of A $73.3 Million Community Revitalization Round To Equity-Designated Census Tracts. The State Just Communities And ENOUGH Models Show What State-Led Equity Funding Looks Like After Federal DEI Restrictions Take Effect October 1

The Office of Management and Budget's proposed rewrite of 2 CFR Part 200, published on May 29 and slated to take effect on October 1, 2026, contains a provision that has drawn most of the early commentary: the prohibition on agencies "applying DEI or other identity-based concepts to grants." The language is broad. The practical effect, when the rule becomes final, is that any federal grant program that has historically incorporated equity-focused targeting into eligibility, scoring, or geographic prioritization will need to be rebuilt before it can issue another award. Federal community development funding, federal housing assistance, federal workforce development funding, federal economic development funding — all programs that have routinely used equity-focused criteria — will be affected.

Two days after OMB published the proposed rule, the Maryland Department of Housing and Community Development announced a $73.3 million round of community revitalization awards that points the other direction. Of the total, $50.7 million — 69% — went to projects in "Just Communities," a designation Maryland has used since 2024 to identify geographic areas where the state intends to direct investment to "repair past harms, reduce disparities, and create equitable opportunities for residents." An additional $18.6 million went to projects in ENOUGH-eligible census tracts, areas designated under Maryland's ENOUGH Act as concentrations of childhood poverty. Together, the equity-designated allocations accounted for $69.3 million of the $73.3 million — 95% of the round.

The geography of the awards, the specific programs through which the money flows, and the political infrastructure Maryland has built around the equity designations together describe a state-led model for the kind of targeted community investment that federal programs will not be able to conduct after October 1. This piece works through what Maryland funded, how the equity designations actually operate, what other states have built similar infrastructure, and what nonprofit, local government, and community development applicants should be doing to position for the state-led funding environment that is about to become significantly more important.

The six programs and the geographic logic

The $73.3 million is distributed across six State Revitalization Programs administered by Maryland's Department of Housing and Community Development under the leadership of Secretary Jake Day. Each program has a distinct mission, eligibility set, and grant structure. The June 1 announcement provides program-level allocations and project counts that show how the equity designations operated as a routing mechanism rather than a scoring adjustment.

Baltimore Regional Neighborhood Initiative received $20 million across 83 projects — the largest count of any program. BRNI funds community development projects within the city of Baltimore and Baltimore County's older inner suburbs, with eligibility tied to designated Community Development Network areas. Average project size: roughly $241,000.

National Capital Strategic Economic Development Fund received $20 million across 34 projects. The program serves Prince George's County and Montgomery County's older suburbs adjoining the District of Columbia. Average project size: roughly $588,000.

Strategic Demolition Fund received $10 million across 25 projects. This program funds the acquisition and demolition of dilapidated structures and is concentrated in areas with high vacancy rates. Average project size: $400,000.

Seed Community Development Anchor Institution Fund received $10 million across 17 projects. This program partners with universities, hospitals, and other anchor institutions to support neighborhood revitalization adjacent to those institutions. Average project size: roughly $588,000.

Community Legacy received $8 million across 42 projects. This program funds streetscape improvements, downtown revitalization, and small-scale capital projects in designated Community Legacy Areas. Average project size: $190,000.

Maryland Facade Improvement Program received $5 million across 46 projects. The program funds storefront and commercial corridor facade upgrades. Average project size: $109,000.

The six programs together cover the spectrum from acquisition and demolition of blighted properties at one end to small-scale facade improvements at the other. The geographic eligibility for each program — BRNI for Baltimore-area, National Capital Fund for D.C.-adjacent counties, the others largely statewide — already builds in regional targeting. The Just Communities and ENOUGH designations add a second layer of targeting on top of the program-level geographic eligibility. The result is that 95% of the $73.3 million flowed to projects that were simultaneously eligible under a program's standard criteria and located within an equity-designated area.

How Just Communities and ENOUGH operate as targeting infrastructure

The Just Communities designation is the foundational equity layer in Maryland's framework. The state identifies Just Communities through a multi-factor analysis that combines historical disinvestment patterns, current demographic and economic indicators, and policy-relevant geographic boundaries (census tracts, neighborhood districts, municipal areas). The designation is not means-tested at the individual level — it operates at the area level — and it is not application-based. Areas are designated through state administrative process, and projects located within designated areas become eligible for routing of state revitalization investment.

This structure matters because it sidesteps the legal mechanisms that have been used to challenge federal equity-targeting programs. The Just Communities designation does not classify individual recipients by race or ethnicity, does not impose race-conscious eligibility, and does not require demonstration of discrimination at the individual project level. It is a geographic designation that the state has determined warrants targeted investment, and the state directs funding to projects in those areas without inquiring into the demographic composition of the project's beneficiaries or the project's sponsoring organization.

The ENOUGH designation operates similarly. The ENOUGH Act, signed by Governor Wes Moore in 2024, directs investment to census tracts where childhood poverty is concentrated. The designation is based on Census Bureau small-area poverty data. The Act authorizes state agencies to use ENOUGH-eligible census tracts as a targeting criterion across multiple state funding programs.

Together, the two designations function as a state-administered infrastructure for equity-targeted investment that operates at the geographic level rather than the individual level. The infrastructure is durable in the face of federal restrictions because it does not depend on federal funding mechanisms, does not require federal approval, and does not classify individual recipients in ways that would expose the program to disparate-treatment claims. The state's authority to designate areas for targeted investment derives from state law and state administrative discretion.

Why the timing matters

The proposed federal Uniform Guidance rewrite that OMB published on May 29 contains language at multiple points that restricts federal grant programs from incorporating equity-focused criteria. The most consequential is the cross-cutting prohibition on "DEI or other identity-based concepts to grants," but the rewrite also incorporates restrictions on disparate-impact liability theories, restrictions on grantee activities that might be characterized as DEI-adjacent, and expanded termination authority that allows agencies to terminate awards that they later determine to conflict with the rule's prohibitions. The combined effect is that federal community development, housing, and economic development programs will not be able to continue to administer equity-focused targeting under the framework that has governed them for the past several years.

Maryland's June 1 announcement of the $73.3 million round operates outside that framework. The funding source is state appropriation. The administrative authority is state law. The targeting criteria are state-defined geographic designations. The federal restrictions do not apply.

This matters in two distinct ways for applicants and for the broader community development sector. First, organizations that have historically depended on federal funding for equity-focused community development work will need to reorient toward state and local funding sources if they want to continue the work in its current form. Second, the Maryland model — geographic designation as a state-administered targeting infrastructure — is replicable. Other states with the political infrastructure to support equity-targeted investment can establish similar designations and route state funding through them. Several already have.

Which states have built comparable infrastructure

Massachusetts, California, New York, Illinois, New Jersey, Minnesota, Washington, and Oregon have all enacted state-level equity designations or state-administered targeting frameworks that operate at the geographic level. Massachusetts's Gateway Cities designation, California's Disadvantaged Communities designation under SB 535 and the related CalEnviroScreen tool, New York's Disadvantaged Communities designation under the Climate Leadership and Community Protection Act, and Illinois's Restore, Reinvest, and Renew designation under the Cannabis Regulation and Tax Act all function similarly to Maryland's Just Communities — state-administered geographic designations that route state investment to areas the state has determined warrant targeted attention.

None of these state-level designations are vulnerable to the kind of federal restriction that the OMB rule imposes. They operate under state law, are administered by state agencies, and route state funding. The applicants who learn how to position projects for these state-level designations — which programs use which designations, what the application calendars are, how project narratives need to be framed — will have access to a category of funding that federal restrictions cannot reach.

What to do between now and October 1

Three actions follow from the Maryland announcement.

Identify the state-level equity designations that apply to your geography. For nonprofit and community development applicants in Maryland, identify whether your project sites are located within Just Communities or ENOUGH-eligible census tracts. For applicants in other states, identify the analogous designations and the mapping tools the state provides. Most states publish web-accessible mapping tools that allow applicants to confirm designation status by address. The mapping tool URLs become a standard part of project applications for state revitalization funding.

Build a state-funding portfolio that does not depend on federal pass-through. Federal pass-through funding to states — Community Development Block Grants, HOME Investment Partnerships, the Continuum of Care Program — will be subject to the federal restrictions the OMB rule imposes. State direct funding programs are not. Applicants who have historically used federal pass-through funding for equity-focused work should identify which state direct programs can substitute, what the application calendars are, and how the application requirements differ. The Maryland round announced on June 1 has applications opening June 22 and closing August 6 — a six-week response window that requires applicants to be ready when the round opens.

Engage your state legislature on funding levels. Maryland's $73.3 million round reflects appropriation decisions made during the state's FY2027 budget cycle. The state legislature determines the funding levels of each State Revitalization Program. Nonprofit, community development, and local government applicants who want to maintain or expand the state-led equity-targeting infrastructure as federal restrictions take effect will need to engage state legislators on funding levels during the next budget cycle. The political economy of state-level equity funding is fundamentally different from the political economy of federal funding, and the advocacy infrastructure that has historically focused on federal appropriations will need to extend to state appropriations.

The Maryland announcement is small in absolute terms — $73.3 million is a small fraction of what the federal government distributes for community development each year. The model it represents is the structurally important part. State-led, geographically-targeted equity investment is now the part of the community development funding landscape that can continue to operate in its current form after October 1. Applicants who have built their programs around federal equity-focused funding have a four-month window to identify state-led substitutes and to position their work for the funding cycles that are about to become significantly more important than they have been.