19 Jun Proposed Federal Grant Changes Could Impact Nonprofits Nationwide
Just as many nonprofits have adjusted to the 2024 Uniform Guidance updates, another wave of potential federal grant changes is already on the horizon.
The U.S. Office of Management and Budget (OMB) recently proposed significant changes to the Uniform Guidance—the rules that govern how organizations manage and report federal grant funds. While these changes are not yet final, they could affect how nonprofits apply for, manage, and comply with federal grants in the future.
The proposal comes less than two years after the most recent Uniform Guidance updates took effect in October 2024, signaling that the federal grants landscape continues to evolve.
What Is the Uniform Guidance?
The Uniform Guidance is the set of federal rules that establishes requirements for:
- Managing federal grants
- Tracking and documenting expenses
- Maintaining internal controls
- Monitoring subrecipients
- Preparing for Single Audits
- Reporting to grant-making agencies
In short, if your nonprofit receives federal funding, the Uniform Guidance helps determine what you can spend grant dollars on and how you must document those expenditures.
Why Are Changes Being Proposed?
According to OMB, the goal is to improve accountability and oversight of federal funding while simplifying certain administrative processes.
Federal agencies distribute billions of dollars through grants each year, and OMB believes stronger oversight is needed to ensure taxpayer dollars are being used appropriately.
At the same time, the proposal includes several measures intended to reduce administrative burden for grant applicants and recipients.
What Changes Could Affect Nonprofits?
While the proposal contains numerous revisions, several stand out for nonprofit organizations.
Increased Oversight of Federal Awards
Federal agencies could receive expanded authority to suspend or terminate grants if they determine an award no longer supports program goals, agency priorities, or national interests.
For nonprofits that rely heavily on federal funding, this could increase the importance of ongoing compliance monitoring and strategic planning.
New Restrictions on Certain Costs
OMB is proposing additional limitations on costs that can be charged to federal awards, including:
- Advertising and public relations expenses
- Conference costs
- Publication expenses
- Lobbying-related activities
Organizations may need to reevaluate budgets and cost allocation practices if these changes move forward.
Additional Compliance Requirements
The proposal would introduce new requirements related to employee verification and federal screening systems.
If finalized, nonprofits may need to update policies, procedures, and internal controls to ensure compliance.
Changes to Grant Administration
OMB is also proposing changes that could simplify parts of the grant process, including:
- More consistent use of Grants.gov for funding opportunities
- Shorter executive summaries for applications
- Increased use of multi-year awards
- Reduced application burden through preliminary Statements of Interest
These changes could make the application process more efficient for some organizations.
Why This Matters for Nonprofits
Even if your organization has strong financial processes in place, changes to federal grant regulations can affect everything from budgeting and reporting to audit preparation and compliance monitoring.
Potential areas of impact include:
- Grant management procedures
- Internal controls
- Cost allowability
- Documentation requirements
- Subrecipient oversight
- Single Audit compliance
- Federal reporting obligations
Organizations that receive federal funding should begin evaluating how these proposed changes could affect their operations if adopted.
There’s Still Time to Weigh In
It’s important to remember that these changes are only proposals at this stage.
OMB is accepting public comments through July 13, 2026, giving nonprofits and other stakeholders an opportunity to provide feedback before any final regulations are issued.
Historically, public comments have influenced major revisions to the Uniform Guidance, making this an important opportunity for organizations to share concerns and perspectives.
How Nonprofits Can Prepare
While we don’t yet know which proposals will become final, nonprofits can take several proactive steps:
- Stay informed about ongoing developments.
- Review current federal grant compliance practices.
- Assess areas where new requirements could create operational challenges.
- Consult with accounting and compliance advisors about potential impacts.
- Consider participating in the public comment process.
Federal funding remains a critical resource for many nonprofit organizations. Staying ahead of regulatory changes can help ensure continued compliance and minimize disruptions to your mission.
At Blackman & Sloop, our nonprofit specialists help organizations navigate grant compliance, Single Audits, and changing regulatory requirements. If you have questions about how these proposed Uniform Guidance revisions could affect your organization, we’re here to help.