The comment window on the largest revision of federal grant rules since 2013 closed Monday, and it closed loud. The proposal drew nearly 100,000 comments by its final days, a tally still growing as late submissions post, and a volume rule changes rarely see, one regulatory scholar told the Chronicle of Philanthropy, usually a signal that the response is critical. Published by the Office of Management and Budget on May 29 as the Regulation for Federal Financial Assistance, it would recast the Uniform Guidance, the rulebook that governs how federal agencies award, monitor, and end most grants to nonprofits. OMB now turns to reading those comments and drafting a final rule. If your organization holds a federal award or subaward, the planning question has shifted from whether to comment to what should be in place if the rule lands as written.
The Proposal Reaches Terminations, Not Just Paperwork
Legal analyses from Ropes & Gray and Holland & Knight converge on four changes that matter most for recipients:
- Broader termination authority, narrower appeals. Current rules already let agencies end an award that "no longer effectuates the program goals or agency priorities." The proposal adds "the national interest" to that list, measures alignment at the moment of termination, and drops objection, hearing, and appeal rights for these discretionary terminations. Appeals would survive only where the stated ground is noncompliance.
- A new suspension power. Agencies and pass-through entities could pause an award for up to 90 days, extendable by agreement, while they weigh what to do with it.
- No more fixed amount awards. The proposal eliminates fixed amount awards and subawards except where a statute requires them, citing transparency concerns, which would push recipients toward cost reimbursement and the fuller documentation it requires.
- New screening machinery. Recipients would enroll in E-Verify for staff working under federal awards, and agencies and pass-through states would screen payees against Treasury's Do Not Pay system before money moves.
The proposal would also have senior political appointees review awards for alignment with administration priorities, and it adds funding prohibitions tied to those priorities, including restrictions on diversity, equity, and inclusion programming. The prohibitions took many of the headlines, but a docket analysis found commenters cited the political-review and termination provisions more than any other sections. What the proposal does not touch is worth knowing too: the National Council of Nonprofits notes that indirect cost rates, including the 15% de minimis rate, and single audit thresholds are left alone, though Ropes & Gray flags a proposed merit-review preference for applicants with lower indirect rates.
When Would the New Rules Take Effect?
October 1, 2026 is the proposed effective date, and the rule as drafted would apply to new awards and new incremental funding on existing awards issued on or after that date. Two caveats apply as of July 2026. First, the date is a proposal; digesting roughly 100,000 comments can slow a final rule, and legal challenges to pieces of it are widely expected. Second, existing awards are not permanently insulated: agencies can incorporate new terms when they modify or renew an award, so a multi-year grant will meet these rules at its next amendment, not in some distant cycle.
Four Things to Do While the Rule Is Pending
- Map your exposure by date. List every federal award and subaward, then mark which ones renew, amend, or draw incremental funding after October 1. That subset is where new terms would land first.
- Reread termination and amendment clauses. Know what notice you are owed today, and what your subrecipient agreements promise downstream, before those terms change underneath you.
- Stress-test the cash plan. A 90-day suspension on your largest federal award is now a scenario worth running: what pauses, what reserves cover, and which costs keep accruing.
- Assign one person to watch the docket. The final rule will surface on the public docket and in agency guidance, and the National Council of Nonprofits keeps a running analysis page. If you are deciding which federal opportunities are still worth pursuing in the meantime, our guide to reading a grant RFP applies double right now.
Supporters argue the changes tighten oversight of taxpayer money and keep grantmaking accountable to an elected administration; opponents argue that discretion without appeal rights invites arbitrary terminations. Whichever framing you find persuasive, the operational fact is the same: discretion moves toward agencies, and the planning burden moves toward grantees.
The takeaway
Nothing is final until OMB publishes the rule, but October 1 is close enough that waiting for certainty is its own risk. Inventory your federal awards this month, flag anything renewing after September, and put a 90-day suspension scenario in front of your finance committee. If the final rule softens, you have lost nothing but a planning exercise; if it does not, you are ahead of it.