Top takeaway: A new OMB proposal would create significant financial risk and instability for federal grantees, including nonprofits, making it more difficult to provide vital services to communities.
On May 29, 2026, the U.S. Office of Management and Budget (OMB) proposed sweeping changes to overhaul the rules, known as the Uniform Guidance, governing federal grants, cooperative agreements, and other monetary awards to nonprofits, state and local governments, and other grantees (read the full proposal).
If implemented, the proposal would create significant financial risk and instability for federal grantees, including nonprofits, making it more difficult to provide vital services to communities.
The proposal attempts to:
- Grant unprecedented discretion to any administration to withhold, suspend, or terminate grants, or change terms and conditions mid-performance, forcing grantees to operate in a shifting environment.
- Allow an administration to determine federal awards based on partisan ideology, rather than objective criteria, and congressional intent, while decreasing transparency.
- Bar federal funding from being used to promote “unlawful” diversity, equity, and inclusion (DEI) efforts. However, many DEI-related practices and policies the administration claims are unlawful have been upheld by courts as permissible under the law or can be administered lawfully. Those most impacted are people of color and their communities, which have experienced historic and ongoing federal disinvestment.
If implemented:
- Grantees would face unpredictable financial, legal, and reputational risks that increase the costs of accepting federal awards while decreasing the benefits. Many effective and qualified grantees may be unable to accept those risks.
- This could disrupt essential services, including housing, community development, health, education, food, shelter, community services, disaster recovery, and more in communities and states nationwide.
Where we are now:
- During the public comment period, MCN and nearly 500,000 individuals and organizations commented on the potential harm these changes could have on the nonprofit sector and the communities we serve.
- Shortly before the August recess, the U.S. Senate voted to keep the government open and included a bipartisan provision that would temporarily block OMB from implementing the proposed changes. This would delay the October 1 implementation deadline the administration had previously outlined.
- To block the proposed changes, the continuing resolution (CR) must also pass the U.S. House of Representatives. NCN and affiliates like MCN are urging nonprofits to contact their Members of Congress and take action during the August recess.
What can I do?
- There is still time for the U.S. House to act. We have until September 14 to share why these changes are harmful and urge Congress to pass the CR provision blocking their implementation.
- Call or email your Members of Congress. Contact both Republicans and Democrats and urge them to act now to block the proposed changes and protect our communities.
- Schedule in-district meetings with your Members of Congress. Use the August recess to meet with your congressional delegation or attend their public events and ask them to block the proposed changes. NCN’s August Recess checklist here has more information.