DHS Funding Lapses: What the Partial Shutdown Means for Grant Seekers

Hook: DHS Shutdown Disrupts Federal Programs

As of February 23, 2026, funding for the Department of Homeland Security (DHS) has expired, leading to a partial government shutdown that directly affects agencies like FEMA, TSA, ICE, and the Coast Guard. With no legislative resolution in sight after Congress returned from recess, grant seekers tied to DHS programs are facing immediate uncertainty and a likely slowdown in federal grant processing, payments, and operations.

For organizations, researchers, and small businesses depending on DHS-related grants—or services such as disaster relief, emergency preparedness, or homeland security initiatives—the ongoing stalemate creates both logistical and financial headaches that could persist for weeks or even months.

Context: Why This Shutdown Matters More Than Most

This is the third DHS shutdown in fiscal year 2026. While most federal departments (including HHS, Education, Labor, and HUD) secured full-year funding via the latest appropriations legislation, DHS was extended only through February 13. Since then, critical DHS services have been running on previously-obligated funds, but these reserves are dwindling. (For reference: FEMA, TSA, and other agencies are tapping into $170 billion in FY25 reconciliation balances to keep basic functions operating.)

The political dispute centers on House Democrats’ demand for changes to ICE and CBP operations, clashing against resistance from Republicans and the Trump administration—stalling the needed 60 votes in the Senate for a new $64 billion DHS appropriation. This impasse has real fiscal ramifications, both for operational continuity and for the processing of grants, cooperative agreements, and contracts administered by DHS and its sub-agencies.

The partial shutdown is limited to DHS—other agencies remain funded through September 2026—but the impact is acute. Furloughs and pay suspensions are mounting across essential DHS functions, and nonessential personnel have already ceased work. Processing of new grants and the disbursement of pending payments are expected to face delays as more staff are affected each day the shutdown drags on.

Impact: How Grant Seekers and Partners Are Affected

If your work depends on DHS or its component agencies—including FEMA grants (for disaster relief), preparedness and resilience programs, anti-terrorism funding, or even TSA-related innovation contracts—expect delays and administrative disruptions. Grant reviews, awards, payments, and post-award program management may be slowed or halted as key federal staff are furloughed or reassigned to essential services.

For current grantees, payments may stall—even on existing awards—if funds are not already obligated. Any technical assistance or oversight from DHS program offices is likely to be sporadic or paused. New grant competitions may not be announced, and application reviews can be postponed, pushing the entire grant lifecycle backwards once normal operations resume.

Small businesses holding SBIR or research contracts with DHS sub-agencies face similar interruptions. Even for contractors and researchers paid from previously obligated funds, warning signs are growing: if the shutdown lasts for weeks or months, new obligations won't be signed, and modifications or payments may be delayed.

Local governments, tribal organizations, and nonprofits—which often rely on timely FEMA grants or homeland security funding—face added risk if disaster strikes while agency capacity is compromised. Disasters this month have already seen FEMA suspend hundreds of aid worker deployments, and the ripple effect for recovery efforts will likely grow.

Action: What Grant Seekers Should Do Now

1. Monitor Agency Communications: Regularly check the DHS, FEMA, and your program office’s websites for update bulletins. Watch for guidance on allowable actions during the shutdown.
2. Communicate with Program Officers: If your assigned program officer is furloughed, look for emergency contacts. Document all correspondence—you may need it once operations resume.
3. Track Payments and Deadlines: If you’re waiting for a payment or compliance approval, anticipate delays. Notify your finance and project teams about contingency plans.
4. Delay New Submissions (If Possible): Unless a deadline is fixed, it may be wise to await further notice before expending significant effort on new DHS funding applications.
5. Engage with Stakeholder Networks: Local and national organizations (e.g., the National League of Cities) are tracking impacts. Connect for timely alerts and advocacy opportunities.

Outlook: How Long Could This Last—and What to Watch

Without a congressional deal, the DHS shutdown could continue for weeks or even months—especially if the administration further redirects unobligated funds to forestall a complete agency standstill. While the partial shutdown is narrower than the broad 2025 closures, it puts longstanding fiscal guardrails to the test and will likely heighten the risk of cascading impacts the longer it drags on.

Watch for: congressional negotiations, White House shifts in funding strategy, and new agency announcements on pay, service cuts, and grant operations.

Granted AI continues to monitor developments impacting federal grant seekers; our platform provides tools and updates to help you navigate uncertainty with confidence.