Understanding the Pending Uniform Guidance Changes for 2026

On May 29, 2026, OMB released proposed revisions to the Uniform Guidance (2 CFR Part 200) that would expand agency authority to terminate grants, restrict certain federally funded activities, and increase accountability requirements across the full award lifecycle, with a proposed effective date of October 1, 2026. The final rule has not yet been released, and core compliance requirements — including allowable costs, internal controls, and the current Single Audit threshold — remain in effect under the existing regulation.

Since early 2025, nonprofits, local governments, and higher education institutions have watched executive orders, proposed regulatory changes, funding pauses, and legal challenges unfold in rapid succession. For organizations that depend on federal funding, it’s been difficult to separate headlines from reality and proposals from actual requirements.

We are now approaching another important milestone.

The OMB proposed Uniform Guidance changes for 2026. The public comment period has closed, and OMB is reviewing thousands of comments before issuing a final rule. While the proposed implementation date is October 1, 2026, the final rule has not yet been released, and changes could still occur before anything becomes effective.

Rather than speculate about what may happen, this is a good time to understand what has been proposed, what has already been clarified, and how your organization can prepare regardless of what the final regulations look like.

What Are the Biggest Proposed Changes?

The proposed revisions cover dozens of sections throughout the Uniform Guidance, but several stand out because they could have the greatest impact on grant recipients.

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OMB proposes to issue the “Uniform Grants Regulation” as an OMB regulation with “one government-wide effective date” and to remove language stating that Part 200 is only guidance and “not regulation.” The stated goal is to create a single, government-wide grants management regulation with uniform implementation across federal agencies.

While this may sound like an administrative change, it is more significant than simply giving the Uniform Guidance a new name. By establishing one government-wide regulation, OMB is attempting to create greater consistency across federal agencies and eliminate the staggered implementation that has often occurred in the past. 

For grant recipients, that could make the rules easier to understand and apply. However, it also means future updates could take effect more uniformly across the federal government, making it increasingly important for organizations to stay informed and regularly evaluate their grants management practices.

Grant Suspensions and Terminations

Proposed §200.340(a)(2) states:

“The Federal agency or pass-through entity, to the extent permitted by law, may terminate a Federal award in part or its entirety if the Federal agency or pass-through entity determines that a termination is in the interest of the Federal agency or pass-through entity, including if a Federal award does not effectuate program goals, Federal agency priorities, or the national interest as they exist at the time of the termination.”

The proposal also expands language surrounding grant suspensions and terminations that would give agencies broader authority to terminate awards when they were determined to no longer align with agency priorities or the national interest. This language generated significant concern throughout the nonprofit sector because it created uncertainty around the stability of existing grant awards.

In July 2026, a federal district court ruled that agencies cannot rely on changing program goals or agency priorities after an award has already been made as justification for terminating an existing grant under the current Uniform Guidance.

The court concluded that grant recipients must know the program goals, priorities, and conditions of an award before deciding whether to accept it. In other words, organizations cannot reasonably be expected to comply with expectations that did not exist when the award was issued.

While the ruling does not prevent agencies from establishing priorities for future funding opportunities, it does provide important clarification for organizations currently managing federal awards.

For grant recipients, that decision reinforces the principle that predictability and transparency remain essential components of sound grants management.

Although the recent court ruling provides important clarification for existing awards, this proposal highlights a broader shift that organizations should pay attention to. Federal agencies are placing greater emphasis on ensuring that grant-funded activities continue to align with the goals established at the time an award is made. 

For grant recipients, that means maintaining strong documentation, demonstrating measurable progress, and being able to clearly show how grant activities continue to fulfill the purpose for which funding was awarded. Organizations that can readily demonstrate compliance and performance will be in a much stronger position should questions arise during the life of a grant.

Restrictions on Federally Funded Activities

Proposed §200.300(b) begins:

“In administering Federal awards, to the maximum extent permitted by law, the Federal agency or pass-through entity must ensure that Federal awards and subawards are not used to fund, promote, encourage, subsidize, or facilitate:”

The proposed language also includes:

“‘Diversity, equity, and inclusion’ (DEI) or ‘diversity, equity, inclusion, and accessibility’ (DEIA) policies, principles, or practices that violate any applicable Federal anti-discrimination laws.”

The proposed pre-issuance review provisions also state:

“Discretionary awards must, where applicable, demonstrably advance the President’s policy priorities.”

The proposed rule would add express limitations on how federal award funds may be used. Proposed §200.300 would require federal agencies and pass-through entities, “to the maximum extent permitted by law,” to ensure that awards and subawards are not used to “fund, promote, encourage, subsidize, or facilitate” specified activities. The provision includes DEI or DEIA policies, principles, or practices that violate applicable federal anti-discrimination laws.

The proposal would also affect the award-selection process. It states that discretionary awards must, where applicable, “demonstrably advance the President’s policy priorities.” This means policy alignment could become more explicit not only in how funding is used after an award is made, but also in how applications are reviewed and selected.

For nonprofit applicants, this increases the importance of carefully reviewing each Notice of Funding Opportunity, the stated program purpose, selection criteria, award conditions, and incorporated federal policies. Organizations should assess whether a funding opportunity supports their mission and whether they can comply with its requirements without changing the essential purpose or values of their work. This should be considered before an application is submitted, not after an award is accepted.

Increased Accountability

OMB states:

“The overarching goal of OMB’s proposed revisions is to improve transparency, accountability, and oversight for how Federal taxpayer dollars are used in the context of Federal grantmaking.”

The proposal also says the revisions are intended to ensure that recipients “are held accountable when they fail to meet relevant standards.”

Increased accountability is not confined to one new requirement. It is the central theme running through the proposed regulation and reaches into several operational areas, including:

The proposal reaches into several operational areas, including:

• award selection and pre-issuance review 
• changes to terms and conditions 
• discretionary termination 
• mandatory disclosures and conflicts of interest 
• allowable and unallowable costs 
• subaward structures 
• enforcement remedies

The proposal attempts to accomplish this through changes affecting conflicts of interest, mandatory disclosures, program design, merit review, award monitoring, allowable costs, remedies for noncompliance, and subaward management. For example, OMB proposes eliminating fixed amount subawards because it believes they do not provide the same level of transparency and oversight as other award structures.

For grant recipients, the practical effect could be broader review of both financial and programmatic decisions throughout the entire award lifecycle. Organizations may need to demonstrate not only that a cost was recorded correctly, but why it was allowable, how it supported the approved program, who authorized it, and how it aligned with the award’s terms and objectives.

This does not necessarily mean every nonprofit will need to create more paperwork. It does mean information should be complete, consistent, and accessible. Grant budgets, accounting records, cost allocations, procurement documentation, personnel records, subrecipient monitoring, and performance reports should tell the same story. When those records are maintained in separate spreadsheets, inboxes, and systems, responding to heightened oversight becomes much more difficult.

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More Emphasis on Post-Award Management

OMB explains that deficiencies exist:

“throughout the lifecycle of grants—from program design, to award selection, to project delivery and oversight.”

It also proposes remedies for noncompliance that include:

“Temporarily withhold payments,”
“Disallow costs,”
“Suspend or terminate the Federal award,” and
“Withhold further Federal funds.”

One of the broader themes throughout the proposed revisions is a continued shift in focus from simply awarding grants to actively monitoring them throughout their lifecycle. 

The proposed changes also reinforce the importance of post-award management. OMB states that weaknesses can occur “throughout the lifecycle of grants – from program design, to award selection, to project delivery and oversight.” The proposal strengthens or clarifies remedies that may be used when recipients fail to meet applicable requirements, including withholding payments, disallowing costs, suspending or terminating an award, and withholding future federal funds.

This is why winning a grant cannot be treated as the finish line. Once an award is accepted, organizations must continuously monitor spending, performance, restrictions, reporting requirements, subrecipients, and changes communicated by the grantor. A problem identified early can often be corrected. A problem discovered during an audit, monitoring review, or reimbursement request is usually more difficult and costly to resolve.

What Isn’t Changing?

With so much attention focused on proposed revisions, it’s easy to overlook what remains the same.

The proposed rule does not change the current $1 million Single Audit threshold established in the 2024 revisions.

It also leaves the existing 15 percent de minimis indirect cost rate unchanged and does not modify the current indirect cost rate negotiation framework.

More importantly, the core principles of good grants management remain exactly as they have always been.

• Organizations are still expected to maintain strong internal controls.
• Financial information must still be accurate, timely, and supported by appropriate documentation.
• Costs must still be allowable, allocable, and reasonable.
• Financial reports must still withstand scrutiny from auditors and grantors alike.

The Opportunity Hidden Within the Uncertainty

Whenever regulations change, it’s natural to focus on compliance. But this also presents a much bigger opportunity.

Organizations that have invested in strong financial infrastructure rarely view regulatory change as a crisis. When expectations change, they adjust because they have visibility into their financial operations.

This is what we mean by Grant Readiness. Many people think grant readiness is something only organizations preparing to pursue or receive their first grant need to consider. But grant readiness is about building the financial infrastructure that allows your organization to confidently manage federal funding, adapt to changing requirements, and demonstrate responsible stewardship every day. It is something that organizations must evaluate and manage throughout their organizational lifecycle. 

Organizations that strengthen their financial systems today will be better prepared tomorrow for unexpected changes. Uncertainty isn’t new. Funding priorities change. Regulations evolve. Grant requirements are updated. Organizations that navigate those changes successfully aren’t necessarily the ones with the biggest budgets or the largest finance teams. They’re the ones that are prepared.

The pending Uniform Guidance changes offer a great opportunity to evaluate your organization’s grant readiness. Rather than waiting for the regulations to become final, use this time to strengthen the financial foundation that supports every grant you manage.

Ask yourself a few simple questions.

• Can we quickly identify where every grant dollar comes from and how it has been spent?
• Do we have documented processes for managing allowability, allocations, procurement, reporting, and other compliance requirements?
• Can leadership easily see the financial health of every grant and understand potential risks before they become problems?
• If we were audited tomorrow, would our documentation tell the story of good financial stewardship?
• Can we adapt if a grant requirement changes, a funding source is reduced, or a new opportunity becomes available?

These are important leadership questions related to grant management.

Organizations with strong financial visibility can make better decisions regardless of what happens in Washington. Whether funding increases, decreases, shifts to new priorities, or becomes more competitive, leaders who understand their financial position can respond with confidence.

That’s what grant readiness is really about. It is the continuous work of building and strengthening the financial infrastructure that allows your organization to remain resilient through whatever changes come next.

Looking Ahead at Uniform Guidance Changes for 2026

The strongest nonprofits are strengthening their internal controls, documenting their processes, and ensuring they have the tools needed to manage grants effectively so they can respond to change based on documented scenario plans.

That’s why we continue talking about Grant Readiness. If you’re not sure where your organization stands, we created the Guide to the Grant Readiness Model to help. It provides a practical framework for evaluating your financial infrastructure, identifying opportunities to strengthen your grants management practices, and preparing your organization for whatever changes lie ahead.

Because regardless of what Washington ultimately decides, organizations that build strong financial infrastructure today will be in the best position to remain compliant, make informed decisions, and continue delivering on their mission tomorrow.

Frequently Asked Questions

Are the proposed Uniform Guidance changes already in effect?

No. As of the date of this post, the proposed revisions to 2 CFR Part 200 released on May 29, 2026 are not yet in effect. The public comment period has closed and OMB is reviewing comments before issuing a final rule. While the proposed implementation date is October 1, 2026, no final rule has been published. Organizations should continue operating under the current Uniform Guidance requirements until a final rule is issued and becomes effective.

What does the proposed termination language in §200.340 mean for organizations with existing grants?

The proposed language would give federal agencies broader authority to terminate awards that no longer align with agency priorities or the national interest at the time of termination. However, in July 2026, a federal district court ruled that agencies cannot use shifting program goals or priorities as justification for terminating awards that have already been made under the current regulation. The court affirmed that recipients must know the conditions of an award before accepting it. That ruling applies to existing awards under the current Uniform Guidance. If the proposed language is finalized, organizations applying for future awards should carefully review award terms and conditions before accepting funding.

Does the proposed rule change the Single Audit threshold?

No. The proposed revisions do not change the $1 million Single Audit threshold that was established in the 2024 Uniform Guidance update. Organizations subject to Single Audit requirements under the current threshold should continue planning accordingly. The de minimis indirect cost rate of 15 percent is also unchanged under the proposal.

How do the proposed activity restrictions affect nonprofits that incorporate DEI into their programs?

Proposed §200.300(b) would require agencies and pass-through entities to ensure that federal awards are not used to fund, promote, or facilitate DEI or DEIA policies, principles, or practices that violate applicable federal anti-discrimination laws. The operative phrase is “that violate any applicable Federal anti-discrimination laws.” Organizations should review the specific language of each Notice of Funding Opportunity, the stated program purpose, and any award conditions before applying. If you believe your programs and practices are consistent with applicable federal law, that analysis — and the documentation supporting it — matters. These decisions should be made before submitting an application, not after receiving an award.

What does “demonstrably advance the President’s policy priorities” mean for grant applicants?

The proposed pre-issuance review provision states that discretionary awards must, where applicable, demonstrably advance the President’s policy priorities. In practical terms, this could mean that policy alignment becomes a more explicit factor in how grant applications are reviewed and selected, not just how funding is used after an award is made. For applicants, this increases the importance of carefully reading each Notice of Funding Opportunity, including its stated purpose, selection criteria, and any incorporated policies. Organizations should assess whether a funding opportunity genuinely supports their mission before investing time in an application.

What should our organization be doing right now while we wait for the final rule?

The most productive thing any organization can do during this period is strengthen the financial infrastructure that supports grant management regardless of how the final rule reads. That means ensuring that grant budgets, accounting records, cost allocations, personnel documentation, procurement files, subrecipient monitoring records, and performance reports are complete, consistent, and accessible. Organizations should document their internal processes, confirm that controls are operating as intended, and evaluate whether they could clearly demonstrate responsible stewardship if a grantor or auditor asked questions today. The core requirements of good grants management — allowable costs, accurate records, adequate internal controls — are not changing. Organizations that meet that standard are well-positioned for whatever the final regulation requires.