Federal grant rule delayed until December as nonprofits get more time

Nonprofits, universities and other organizations that rely on federal grants have more time before a proposed government-wide overhaul of grant administration could move forward. But the policy dispute is not over.

President Donald Trump signed H.R. 6500, the Continuing Appropriations and Extensions Act, 2027, on September 2, 2026. The law generally keeps federal agencies operating through December 11, 2026, at rates based on fiscal year 2026 appropriations.

It also temporarily blocks the Office of Management and Budget from issuing or finalizing its proposed Regulation for Federal Financial Assistance, or a substantially similar rule, through that date.

What changed

Section 157 of the enacted law says that through December 11, a rule revising the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, commonly known as the Uniform Guidance, may not be issued or finalized if it arises from OMB’s May 29 proposal or is substantially similar to it.

The section also says that if a covered rule had been issued or finalized before the law was enacted, it would have no force or effect through December 11. The Government Publishing Office recorded the enrolled bill on September 3.

That language prevents the proposal from taking effect on OMB’s originally proposed October 1 timeline. It is a delay, not a permanent rejection. The law does not repeal the proposal, settle its final language or determine what OMB and federal agencies may do after the statutory pause ends.

What the proposed rule would cover

OMB published the proposal in the Federal Register on May 29, with comments due July 13. The proposal would revise government-wide requirements for federal financial assistance, including grants, cooperative agreements and related forms of assistance.

Its provisions address award administration, oversight, compliance and how federal agencies adopt and update government-wide requirements. OMB presented the proposal as a way to increase transparency, accountability and oversight while reducing administrative burden for recipients.

Because the Uniform Guidance applies across federal grantmaking, the proposal could affect nonprofit service providers, research institutions, universities, local governments and other organizations that apply for or administer federal awards.

What the law does not do

The continuing resolution does not freeze all federal grant activity. Agencies may continue making funding decisions and administering awards under existing law, appropriations and award terms.

It also does not automatically protect every existing grant, renewal or future award from separate agency action. Grant-dependent organizations still need to review notices from their awarding agencies, current award conditions and program-specific guidance.

The practical effect is narrower: organizations get additional time before the specified government-wide rule can be issued or finalized.

Why the issue remains contested

OMB describes the proposal as an effort to improve oversight of taxpayer money, clarify regulatory authority and reduce recipient burden. The proposal also says agencies should ensure that federal awards comply with law and policy and that unlawful discrimination is not permitted.

Nonprofit and research organizations have raised different concerns. The National Council of Nonprofits says the proposal could create uncertainty for recipients and give administrations broader discretion over withholding, suspending or terminating awards. The American Physical Society has described the delay as significant for research organizations.

Those are views from affected organizations, not findings established by the enacted law. The proposal remains under consideration, and its final form could change.

What to watch before Dec. 11

Organizations should monitor three tracks: agency guidance on current awards, any further action by OMB and Congress’s work on longer-term fiscal year 2027 appropriations.

December 11 is both the funding deadline in the continuing resolution and the end of the statutory pause on the specified rule. It is not necessarily the date on which OMB could immediately make a rule effective. Any later action would depend on further regulatory and procedural steps, including whatever happens with the proposal and congressional funding legislation.

For now, grant recipients should preserve current compliance practices, track award-specific communications and prepare for possible changes without assuming that the proposed rule will take effect. The law provides temporary planning certainty, but not a final answer about how federal grants will be awarded and overseen.

Sources

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