On May 29, 2026, the Office of Management and Budget published a proposed rule that would revise 2 CFR Part 200, the Uniform Guidance governing federal financial assistance. This is the most significant proposed overhaul of the federal grant rules since the Uniform Guidance was first consolidated in 2013.

If your organization pursues, receives, or manages federal awards, this affects you. Here is what you need to know, and what you can do about it before July 13, 2026.

What Is 2 CFR 200 and Why Does This Matter?

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The Uniform Guidance at 2 CFR Part 200 is the regulatory framework that governs how federal grants and cooperative agreements work. It covers everything from how agencies post funding opportunities to how recipients account for costs, procure contractors, report on performance, and close out awards. Every nonprofit and local government that touches federal funding operates under it.

OMB has proposed this round of revisions alongside more than 40 federal grantmaking agencies. The proposed changes would take effect October 1, 2027, if finalized.

The Three Biggest Changes to Know

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1. Fixed amount awards are being eliminated.

Fixed amount awards allow organizations to receive a set amount of funding without detailed cost monitoring or financial reporting. They are common in research, capacity building, and community development grants. The proposed rule would eliminate them entirely.

Every fixed amount award and subaward would become subject to cost monitoring and standard financial reporting requirements. For local governments that pass federal funds through as fixed amount subawards, the administrative implications are significant. For nonprofits that have relied on fixed amount awards to reduce accounting burden, the transition requires planning.

2. Federal agencies would have broader authority to terminate grants mid-performance.

The proposed rule clarifies and expands the discretionary authority of federal agencies to terminate awards that are no longer considered consistent with agency priorities, regardless of the stage of performance.

This is not hypothetical. We have seen awards disrupted in recent months across multiple agencies. Understanding termination risk and building contingency plans into program design is now a practical necessity for any organization that delivers services through federal funding.

3. Subaward reporting and payment documentation requirements would increase.

Pass-through entities face strengthened requirements to report subawards on SAM.gov, including for transfers to affiliated or subsidiary organizations. Payment requests would need to be accompanied by formal justification. Treasury's Do Not Pay system would be integrated into the payment process.

For small and mid-size organizations with limited compliance staff, these changes require real preparation.

What It Means for Your Organization

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For local governments and school districts: The elimination of fixed amount subawards hits pass-through entities hardest. If your department distributes federal funds to contractors or subrecipients under fixed amount structures, those structures would need to change. The expanded termination authority is also a risk planning issue for programs that fund essential public services.

For nonprofits: The combination of fixed amount award elimination and stricter payment documentation creates the most friction for smaller organizations operating with lean finance teams. The termination provisions warrant a close read for any organization with active multi-year federal awards.

Both audience types benefit from understanding the proposed changes now, while the comment period is open and while there is time to build systems before the proposed October 2027 effective date.

The Comment Period Is Open Until July 13, 2026

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A proposed rule is not a final rule. OMB is required to consider public comments before issuing a final version, and the recipient community's practical experience with these rules matters in that process.

Comments are submitted electronically at regulations.gov under Docket OMB-2026-0034. OMB has asked that comments reference specific section numbers in brackets, for example [200.201], so feedback can be matched to the relevant provision.

You do not need to comment on every section. A concise, data-supported comment on one or two provisions that directly affect your organization is more useful than a comprehensive response covering every change. Focus on what you know from direct operational experience.

Resources to Help You Get Started

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The Grant Project has prepared a full regulatory analysis of the proposed rule, covering the side-by-side comparison of current and proposed provisions, section-by-section implications, and practical guidance for the comment process.

We have also built free comment templates for local governments and nonprofits, with pre-drafted neutral language and instructions for submitting on regulations.gov.

[LINK: Read the full 2026 2 CFR 200 regulatory analysis]

[LINK: Download your free comment template]

The comment period closes July 13, 2026. There is time to respond thoughtfully. The organizations that engage now will have a hand in shaping what the final rule looks like.

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The Grant Project is a grant strategy consultancy serving nonprofits and local governments. Our work spans grant readiness, funding strategy, and federal compliance, including 2 CFR 200. We have supported organizations in securing more than $1.25 billion in competitive grant funding.

This post is provided for informational purposes only and does not constitute legal advice. Organizations should consult legal counsel regarding the applicability of the proposed rule to their specific circumstances.