In 2024, OMB revised the Uniform Guidance with the goal of reducing administrative burden for federal funding recipients. The latest proposal takes a different approach. On May 29, 2026, OMB issued proposed revisions to the regulations governing federal financial assistance that would increase federal oversight, expand agency enforcement authority, introduce new compliance obligations, and provide agencies with greater discretion in both awarding and terminating federal funding.
For nonprofit leaders, the proposal represents a potential shift from compliance simplification toward increased accountability, monitoring, and enforcement.
Top 10 Proposed Changes Nonprofit Leaders Should Be Watching
- Broader Federal Authority to Suspend or Terminate Awards
Federal agencies would have expanded authority to suspend, terminate, or otherwise restrict federal funding.
Why it matters:
Organizations that rely heavily on federal funding could face increased risk if agencies determine recipients are not meeting compliance or policy expectations.
What leaders should do now:
Evaluate your organization’s dependence on federal funding, review compliance monitoring procedures, and ensure leadership and the board receive regular updates on federal grant compliance risks.
- Increased Political and Policy Review of Federal Awards
Federal agencies would have greater flexibility to incorporate administration priorities and policy objectives into funding decisions.
Why it matters:
Organizations may need to pay closer attention to changing federal priorities when applying for grants. Future funding decisions may be influenced by factors beyond technical merit, organizational capacity, and program outcomes.
What leaders should do now:
Review your federal funding strategy and monitor agency priorities to ensure future proposals clearly align with funding objectives and program goals.
- Expanded Certifications and Assurances
Recipients would be required to make additional certifications regarding compliance with federal requirements.
Why it matters:
Additional certifications increase management responsibility and potential legal exposure if compliance issues are later identified.
What leaders should do now:
Establish a formal review process for certifications and clearly identify who is responsible for validating compliance before certifications are submitted.
- Potential E-Verify Requirement
Many federal funding recipients could be required to participate in E-Verify.
Why it matters:
Organizations not currently enrolled may need to modify hiring and onboarding procedures and establish new compliance processes.
What leaders should do now:
Work with HR to determine whether your organization currently uses E-Verify and assess the effort required to implement it if necessary.
- Increased Subrecipient Monitoring Requirements
Pass-through entities may be expected to perform additional oversight of subrecipients.
Why it matters:
Additional monitoring activities could increase administrative burden and documentation requirements, particularly for organizations that pass federal funding to multiple partners.
What leaders should do now:
Review risk assessment procedures, monitoring protocols, and documentation standards for subrecipients.
- Enhanced Documentation Expectations
The proposal places significant emphasis on documentation supporting compliance activities and organizational decision-making.
Why it matters:
Organizations with strong but informal processes may need to formalize procedures and retain additional supporting records.
What leaders should do now:
Identify key compliance activities that rely on institutional knowledge rather than documented procedures and begin formalizing those processes.
- Expanded Mandatory Disclosure Requirements
The proposal strengthens requirements related to reporting fraud, misconduct, and compliance concerns.
Why it matters:
Organizations may face increased expectations regarding the identification, escalation, and reporting of potential compliance issues.
What leaders should do now:
Evaluate whistleblower policies, fraud reporting procedures, and internal investigation protocols to ensure concerns can be identified and addressed promptly.
- New Conflict of Interest Disclosure Requirements
Additional disclosures may be required for individuals involved in grant administration who previously worked for federal agencies.
Why it matters:
Existing conflict of interest policies may not capture all information required under the proposed rules.
What leaders should do now:
Review conflict of interest questionnaires and determine whether additional disclosures would be needed under the proposed requirements.
- Additional Oversight of Foreign Relationships
The proposal includes new requirements related to foreign entities, foreign contractors, and certain international relationships.
Why it matters:
Organizations with international operations or partnerships may face increased due diligence and compliance requirements.
What leaders should do now:
Inventory foreign partnerships, contractors, and subrecipients and evaluate existing due diligence procedures.
- Increased Focus on Governance and Accountability
A common theme throughout the proposal is a greater emphasis on governance, oversight, and accountability.
Why it matters:
Federal grant compliance may increasingly become a board and executive leadership responsibility rather than solely a finance or grants management function.
What leaders should do now:
Ensure boards and finance committees receive regular updates regarding federal funding risks, compliance obligations, and monitoring activities.
Bottom Line
The 2024 Uniform Guidance revisions sought to reduce administrative burden for nonprofits. The 2026 proposal signals a move toward increased federal oversight, expanded enforcement authority, greater discretion in awarding and terminating federal funding, and additional compliance expectations for recipients.
While the proposal is not yet final, nonprofit leaders should begin evaluating their organization’s compliance framework, governance practices, and federal funding strategy to prepare for the possibility of a more rigorous regulatory environment.