Proposed Changes to Federal Grant Rules for Nonprofits

ARTICLE | July 08, 2026

Authored by Aprio, LLP

Summary: The federal government has proposed significant changes to the Uniform Guidance (2 CFR 200), the framework that governs how federal grants are awarded and managed. If these changes are finalized, the updates would increase oversight, expand agency authority, and add new compliance requirements for nonprofit organizations that receive federal funding. The comment period closes July 13, 2026.

Federal grant rules may be changing. On May 29, 2026, the Office of Management and Budget (OMB) released a proposed rule in the Federal Register that would substantially revise the Uniform Guidance (2 CFR 200). What does this mean for nonprofit organizations that depend on federal funding? If finalized, these changes would represent one of the most significant updates to federal grant requirements in several years and could affect organizations across the nonprofit sector.

This article highlights how the proposed changes may signal a meaningful shift in how grants may be awarded, monitored, and managed going forward.

What is the Uniform Guidance, and Why Does It Matter?

The Uniform Guidance, more formally known as 2 CFR 200, is the set of federal rules that governs how federal grants are awarded by federal agencies and how recipients use and account for federal award dollars. It covers everything from allowable costs and procurement standards to reporting requirements and audit thresholds. For nonprofits, it is the framework that shapes how federal grants are structured, spent, and scrutinized. This framework has been in place since 2014.

The new Office of Management and Budget (OMB) proposed rule represents one of the most significant revisions in years.

What are the Key Changes Proposed in the New Rule?

The proposed rule touches on several core areas of federal grant administration. At a high level, the proposal aims to strengthen oversight and accountability across federal funding programs while also clarifying and formalizing existing requirements. Key themes in the proposed rule include:

1. A shift from guidance to regulation.

One of the most fundamental changes in the proposed rule is the redesignation as the “Uniform Grants Regulation.” This is more than just a name change; it is the movement from ”guidance” to ”regulation” that gives the framework enhanced legal power. The Uniform Guidance would formally become a binding regulation, referred to as the “Uniform Grants Regulation,” rather than a set of administrative guidance.

2. An increase in federal oversight and control.

The proposed rule introduces stronger federal involvement throughout the grant lifecycle, which includes pre-award review processes and increased scrutiny of how funds are used once grants are awarded. For nonprofits, this represents a meaningful expansion of the risk of mid-grant disruption.

3. Additional compliance and disclosure requirements.

The proposed rule adds new requirements around conflicts of interest, foreign affiliations, and other risk factors that may affect eligibility or the level of oversight applied to an award. Organizations that have not previously had to address these areas in detail may find themselves navigating unfamiliar territory.

4. Changes in award decision-making tied to federal policy priorities.

Under the proposed rule, federal agencies would confirm awards align with their own priorities and broader federal policy goals, which may influence how discretionary grants are evaluated and awarded.

5. Expanded authority for termination and enforcement.

Agencies would have broader flexibility to suspend or terminate awards if they no longer align with program goals or federal priorities.

6. Emphasized focus on transparency, accountability, and administrative burden.

The OMB has stated that the proposal is intended to balance stronger oversight with efforts to streamline certain administrative processes.

How Could These Changes Affect Your Nonprofit?

For nonprofit organizations that receive federal funding, these changes could affect both the application process and ongoing grant management. That said, certain themes are likely to surface across the nonprofit sector.

Some nonprofit organizations may face greater scrutiny during the application process, including expanded risk assessments and closer review of how proposed activities align with federal priorities. Once grants have been awarded, there will be more documentation and oversight during grant execution, particularly related to compliance and reporting.

Additionally, there will be an increase in uncertainty for discretionary funding, as federal priorities may play a larger role in award decisions. Organizations that have previously relied on specific funding streams may experience uncertainty at renewal. Lastly, if program goals or policy priorities shift over time, there is going to be an expanded risk of award modification or termination.

Because of the added layers of scrutiny, nonprofits should expect a more structured and closely monitored grant environment, with increased emphasis on compliance and alignment with federal expectations. Now is a good time to assess whether your current processes are positioned to meet a higher bar.

How Can Your Nonprofit Submit Comments on the Proposed Rule?

The OMB is accepting public comments on the proposed rule through July 13, 2026, and feedback from grant recipients is an important part of the process. Comments become part of the public record and are reviewed by the OMB before any rule is finalized.

• Deadline for comments: July 13, 2026
• Where to submit: Comments can be submitted directly through the Federal Register or the Regulations.gov portal associated with the rule (OMB-2026-0034).
• What to expect: Submitted comments become part of the public record and are reviewed by OMB before the rule is finalized.

You can view the full proposed rule here: View the Federal Register Notice (2026-10817)

Final Thoughts: Stay Informed on the Proposed Uniform Guidance Changes

The proposed revisions to the Uniform Guidance may seem significant, but they are not yet final. However, it signals a meaningful shift in how federal grants may be awarded and managed going forward. It is incredibly important for nonprofits that depend on federal funding to be proactive and not wait until the rule is finalized to start preparing.

We recommend starting by reviewing the proposed rule to understand which provisions would directly affect your programs. Next, assess your current grant management and compliance processes against the proposed requirements. If you have concerns or perspectives to share, submit your comments before the July 13 deadline. Remember, your input can shape the final rule.

Please connect with your advisor if you have any questions about this article.