Federal Grant Alert: on Friday, May 29, 2026, the Office of Management and Budget (OMB) released a set of proposed rule changes to several parts of Title 2 Code of Federal Regulations (CFR) concerning grants. Many of the proposed changes will adversely affect grant-seekers and those holding grants. Click here for full text.
Take Action: this is your opportunity to weigh-in and let Congress and the Office of Management and Budget know about the impact of these proposed changes on your organization and programs. Comments on the proposed changes are due on or before July 13, 2026, with a projected effective date of October 1, 2026. Follow this link to add your comments: https://www.regulations.gov/document/OMB-2026-0034-0001.
The proposed changes to 2 CFR 200 will adversely affect grant-seekers and those holding grants. Here are some important consequences if the proposed changes are implemented:
- Elimination of fixed amount awards: The proposed elimination of fixed amount awards and sub-awards. (See 200.201) will reduce funding opportunities for small nonprofits and make it harder for them to compete with larger organizations.
- Overtly political awarding of grants: Grant-seekers and grant recipients will find that the review and awarding of grants are now overtly political, an over-reach where no others have dared to go. (See 200.205 (b) generally and (b)(1) and (c).
- Indirect Proposal Costs: Otherwise excellent grant proposals that score above the funding line could be eliminated because agencies believe that the indirect proposal costs are too high relative to other competing proposals.
- Risk Assessment Provisions: Other proposals could fail to be selected because of the new risk assessment provisions.
- Political Appointees have final say: Outside and agency panel reviews will be treated as advisory and not binding on award decisions. (See 200.205 (c) and(d). Political appointees will have the final say.
- Easier to Terminate Existing Awards: More alarming is that the proposed changes will make it much easier for an agency to terminate existing awards for virtually any reason (See 200.340 (a)(2) and (5). Suddenly, your funds can vanish and this risk is real.
- Challenging Loss of Funding: Challenging loss of funding decisions other than a termination for convenience will not be possible. (See 200.340-342 and the last sentence of 200.342). Hearing protections are modest at best. Some agencies have no procedures for appeal.
- Make No Awards: Suppose the awarding agencies does not like any of the proposals it has received from a notice of funding opportunity (NOFO)? At its discretion, the agency can reject all proposals and make no awards. (See 200.205(e)).
- Justification for Payment Requests: If you hold one or more grants, each payment request must be accompanied by some form of justification. Your approved narrative and budget are suddenly less secure.
These highlighted examples are accompanied by many others that are also concerning.
With the clock ticking and now less than 45 days to get your comments submitted through regulations.gov; what should the grants community be doing?
- Review with Care: The grant community, especially nonprofits, should review the proposed changes to 2 CFR 200 with great care and note these and other provisions that affect their needs and interests.
- Overtly Political Process: The grants community should strongly object to a grants process that would become overtly political, partisan, and less professionally managed.
- Commenting Suggestion: For each objection you note, you should explain how the proposed change adversely affects your access to funding or the management of what you have.
Henry Flood is the CEO of the newly created Grant Policy Network, LLC. He is a former Senior Advisor
to The Grantsmanship Center and a lifetime member of the National Grant Management Association.
