Stay Informed of Key Changes Proposed to Uniform Guidance Impacting Nonprofits and Higher Education

The Office of Management and Budget (OMB) is proposing revisions to OMB Guidance for Grants and Agreements. These revisions would be good news for nonprofit and higher education recipients of federal financial assistance because they would reduce administrative burdens and streamline processes. The proposed revisions include changes to various parts of the Code of Federal Regulations (CFR), including Part 1, Part 25, Part 170, Part 175, Part 180, Part 182, Part 183, and Part 200.

The proposed changes focus in five main areas which are to incorporate statutory requirements, increase thresholds (e.g., monetary), clarify areas of misinterpretation, add specific measures to reduce burden and use plain language principles to improve accessibility. Keep in mind the proposed revisions do not directly change the scope of applicability of the guidance itself.

Key changes for recipients based on these areas include:

1. Incorporating statutory requirements: The proposed revisions aim to ensure that the guidance aligns with underlying statutes. For example, OMB proposes to revise Parts 25, 170, and 175 to ensure its guidance properly aligns with underlying statutes, as amended.
2. Increasing thresholds: OMB proposes increasing the single audit threshold from $750,000 to $1,000,000, the de minimis threshold from 10% to 15%, the Modified Total Direct Cost (MTDC) exclusion for subawards raised to over $50,000 and the per-unit threshold value for equipment from $5,000 to $10,000. The overall intent of these changes is to allow recipients to focus their resources on more significant expenditures while still maintaining accountability and compliance with federal regulations.
3. Clarifying areas of misinterpretation: The proposed revisions aim to address sections of the guidance that have been interpreted differently by recipients or agencies. For example, OMB clarifies that Federal agencies approve costs requiring prior approval when the Federal award is issued if the costs were included in the recipient's proposal and do not require subsequent approval prior to expenditure. Another example is that it provides allowability for charging close-out costs to the award where previously it was not clear how recipients would cover these costs.
4. Adding specific measures to reduce burden: Additional flexibilities for Federal agencies to waive System for Award Management (SAM) and/or Unique Entity Identifier (UEI) requirements for foreign recipients and sub-recipients up to $250,000 (previously $25,000), UEI requirement to not apply to second tier subrecipients, eliminating the current Simplified Acquisition Threshold limit for fixed amount subawards and removing the prior written approval requirements for ten Cost Principles. The proposed rule-making also eliminates the requirement for institutions of higher education to maintain and submit a disclosure statement (DS-2) if receiving over $50M in Federal awards.
5. Using plain language principles: The proposed revisions use plain language principles to improve accessibility. For example, OMB proposes to replace the general term "OMB designated government-wide systems" with more specific terms to reduce ambiguity for those unfamiliar with the Uniform Guidance. In this proposed revision, OMB specifically mentions the appropriate system, such as gov, USASpending.gov, the Contractor Performance Assessment Reporting System (CPARS), or Grants.gov.
6. Proposed revisions to the OMB Guidance for Grants and Agreements offer new opportunities and benefits to nonprofit and higher education organizations. OMB’s intent is for these recipients to experience streamlined processes and reduced reporting requirements. The use of plain language principles improves accessibility for newer or limited resource recipients of federal funding, allowing for nonprofits and higher education institutions to understand better and comply with the guidance. Overall, these revisions seek to enhance the efficiency, effectiveness, and accessibility of federal financial assistance for nonprofit organizations and higher education institutions.

These revisions were officially published in the Federal Register on October 5, 2023 and are open for comment until December 4, 2023.