The Office of Management and Budget has released proposed revisions to 2 CFR Part 200, also known as the Uniform Guidance. These rules affect how federal grants and cooperative agreements are managed, so the proposed changes could have a meaningful impact on organizations that apply for, receive, or administer federal funding.
In practice, nonprofits should expect more documentation, more pre-award scrutiny, more payment justification, tighter program-alignment review, and broader termination language if the rule is finalized as proposed.
The comment period is short. Comments are due July 13, 2026, and OMB has stated that it intends to issue a final rule effective by October 1, 2026. That timeline gives applicants, recipients, and subrecipients limited time to understand the proposed changes, assess operational impact, and consider whether to submit comments.
Related Resource: How Nonprofits Can Build a Grant Compliance Checklist to Stay Audit-Ready
Key proposed changes to watch
Based on the proposed rule and industry summaries, several provisions may be especially important for federal award recipients:
Indirect cost rates
OMB did not amend §200.414 to restrict indirect cost rates in response to recent congressional appropriations language.
Compliance Supplement:
OMB proposed removing the word “annual” from the Compliance Supplement definition as it evaluates whether a new document should be released every year.
Fixed amount awards:
OMB proposed removing the ability for agencies and pass-through entities to issue fixed amount awards, except where authorized by federal statute.
Internal controls:
OMB proposed removing the recommendation that recipients follow the GAO Green Book or Treadway Commission principles for effective internal controls.
E-Verify:
OMB proposed a new requirement that recipients and subrecipients enroll in and use DHS E-Verify for every employee and contractor working on a federal award.
Program design and award review:
The proposal would require program goals and funding opportunities to align with administration policies and priorities. The proposal includes new or revised national policy requirements, including language related to discrimination, DEI/DEIA, “gender ideology,” free speech, religious liberty, and other administration priorities. It would also make peer review recommendations advisory rather than binding in discretionary award decisions.
Cost allowability:
The proposal includes changes that could affect costs related to advertising, public relations, conferences, memberships, subscriptions, publication costs, and certain advocacy-related activities.
How will cost allowability be impacted?
The proposed rule would not completely rewrite the basic cost principles, but it would make allowability more restrictive in several practical areas. Nonprofits should expect more scrutiny around whether costs are directly tied to the award, expressly approved when needed, and fully documented.
|
Section |
Cost area |
Proposed change |
What this means for nonprofits |
|
§200.421 |
Advertising, public relations, and outreach |
Public relations and outreach costs would be unallowable unless specifically required by statute. |
General awareness campaigns, PR, outreach, and promotional communications may not be chargeable to a federal award unless the law specifically requires them. |
|
§200.432 |
Conferences |
Conference attendance costs would be allowable only if the federal agency explicitly approves them and includes them in the award terms and conditions. |
Nonprofits should not assume conference travel or registration is allowable just because the conference relates to the project. Written approval would be needed. |
|
§200.450 |
Issue advocacy and related activities |
Award funds could not be used for messaging that promotes or opposes a social, political, or public-policy position unrelated to the specific statutory goals of the award. The restriction would also cover voter registration and certain state-level lobbying. |
Advocacy, public messaging, voter registration, and lobbying-related activities would need careful review before being charged to a federal award. |
|
§200.454 |
Memberships and subscriptions |
Professional society memberships would be allowable only if needed to meet award requirements and approved in writing. Professional, academic, and technical journal subscriptions would be unallowable as direct costs. |
Dues and memberships may need advance written approval. Journal and technical subscriptions generally could not be directly charged to the award. |
|
§200.461 |
Publication and open-access costs |
Publication costs, including page charges, article processing charges, and open-access fees, would generally be unallowable unless required by statute or approved by the agency case by case. |
Nonprofits should not assume publishing or open-access fees can be charged to a federal award. These costs would need a legal requirement or agency approval. |
What this means for your organization
These proposed revisions are not final, but they are worth watching closely. If adopted, they could affect grant applications, budgeting, internal controls, HR and procurement processes, subrecipient monitoring, and documentation practices.
Organizations that receive federal funding may want to begin by reviewing current awards, upcoming applications, and internal compliance procedures. It may also be helpful to identify which proposed changes would create the greatest operational or financial impact for your organization.
Wegner CPAs Single Audit Advisors will continue monitoring these developments and sharing updates as the rulemaking process moves forward. If your organization has questions about how these proposed changes may affect your federal awards, our team is here to help you talk through the details.
Looking for more guidance? Join us on July 21st for a free webinar: Strengthening Your Single Audit Readiness.
