Positive Overhaul of Federal Grants Guidance Announced

Last week, the federal Office of Management and Budget (OMB) released its major rewrite of the Uniform Guidance, the set of common rules governing most federal grantmaking to charitable nonprofits, state, local, and Tribal governments, and others.

The reforms correct longstanding challenges in the government grants process that have limited nonprofit effectiveness, discouraged qualified organizations from seeking and performing under federal grants, and wasted billions of dollars and countless hours in needlessly complex application and reporting requirements.

Of particular note, the revised Guidance:

• raises the de minimis indirect cost rate that governments using federal funds must pay to every grantee 15% (up from 10%),
• removes multiple barriers to accessing federal grant funding,
• mandates streamlining and simplifying of Notices of Funding Opportunities (requests for proposals),
• raises the Single Audit threshold to $1 million,
• and more.

A new resource from the National Council of Nonprofits, OMB Uniform Guidance Final Rule, highlights the key provisions affecting charitable nonprofits working with governments at all levels.

The newly released reforms to the OMB Uniform Guidance embrace equity from the outset. As stated by the Administration from the beginning of its grants reform rulemaking, “unnecessary complexity means that often the recipients most in need of Federal financial assistance cannot access it.” This includes “those who may be most well suited to serve the populations many Federal programs are designed to serve.”

The new rules seek to overcome these barriers in numerous ways. The exclusive use of English language in notices, applications, and reporting will no longer be required, thus providing access to many more organizations and communities. OMB clarifies that a federal agency should consider diversity when developing policies and procedures for merit review panels and encourages federal agencies to develop programs in consultation with the communities that will benefit from or be impacted by a program.

Perhaps most clearly, the reforms to simplify and clarify Notices of Funding Opportunities have been expressly designed, according to OMB, “in consideration of applicants with less experience applying for federal financial assistance, such as applicants from underserved communities.”

Why It Matters

The newly revised OMB Uniform Guidance, effective Oct. 1, 2024, corrects longstanding challenges in the government grants process that have limited nonprofit effectiveness, discouraged qualified organizations from seeking and performing under federal grants, and wasted billions of dollars and countless hours in needlessly complex reporting requirements.

Additional Resources

• MANP's comments in the Federal Register on the draft OMB Uniform Guidance rule
• NCN webpage on OMB Uniform Guidance
• NCN webinar on the Urgency of Government Grants Reform for Your Nonprofit
• Blog post on negotiating an indirect cost rate (while the new de minimis rate will be 15% - you'll still have to ask for it up front for many agencies, and 15% may not be enough to cover your true costs)
• Recorded webinars related to federal grantseeking and management
  • Federal Funding Blueprint: Finding and Managing Federal Grants in a Changing Environment, April 24, 2024 (Your Part-time Controller)
  • Federal Grants 101: Uncle Sam Wants You!, November 30, 2022 (Your Part-time Controller) and accompanying checklist