The Office of Management and Budget (OMB) is federal government entity responsible for overseeing the implementation of the President’s vision across the Executive Branch. It is part of the Executive Office of the President. One of the OMB’s mandates is coordinate and review all significant federal regulations from executive agencies.  

Yesterday, April 4th, the OMB released its major rewrite of the Uniform Guidance. These are the set of common rules governing most federal grantmaking to charitable nonprofits, state, local, and tribal governments. The changes go a long way to correcting longstanding challenges in the government grants process that have limited nonprofit effectiveness. The past guidance discouraged many qualified nonprofits from seeking and implementing federal grants and wasted billions of dollars as well as countless hours in complex reporting requirements that were over-lapping or simply needless. The changes were announced in a special webinar held yesterday as well as in a White House news release.

Our friends at the National Council of Nonprofits prepared an initial analysis of the highlights of the 648-page document:  OMB Uniform Guidance Final Rule.

Some of the big takeaways from the new rules:

  • The new guidance raises the de minimis administrative rate from 10% to 15% and provides more robust protections and appeals process to help ensure nonprofits get paid fairly.
  • The new rules go out of their way to advance equity for smaller, culturally specific, and rural nonprofits by removing barriers to accessing federal grant funding. Many of these changes were anticipated by, and are expanded on, in the pending legislation, the Streamlining Federal Grants Act (S. 2286/H.R. 5934) that NAO has reported on previously.
  • Federal departments and agencies have been instructed to rewrite their Notices of Funding Opportunities (NOFO) to make it clear up front who is eligible and what is required, and to only include reporting requirements and measurements that are absolutely necessary.
  • Nonprofit concerns about up-front payments are addressed but only to say that the current and updated rules [2 CFR Sec. 200.305] say that “advance payments” are already the default payment method, if certain criteria are met. This is not new but something NAO keeps reminding Oregon state governments during legislative debates is critical to effective programming.
  • The Guidance raises the Single Audit threshold from $750,000 to $1 million.
  • Guidance on reporting program performance was changed, requiring federal agencies to eliminate reports that are not necessary for the effective monitoring of the grant. In short, OMB is adopting the approach of only measuring things that matter.

The public comments from NCN, NAO, and others urged OMB to address additional topics of concern to the sector, but OMB did not make changes to these current procedures or requirements:

  1. prohibit or discourage match requirements;
  2. make adjustments for changes in government labor standards mandates (i.e., the forthcoming overtime rule); and
  3. streamline the grant process for organizations receiving earmarks from Congress.

OMB addressed each in its executive summary but declined to revise the Guidance. Although not successful on these issues in this round, we should all be happy that many of the reforms included in the new Uniform Guidance have been top agenda items for the nonprofit sector for a long time.