One of the questions we hear most often from nonprofits that receive federal funds right now is whether OMB’s proposed rewrite of the grant rules is still coming. The answer is that it is paused, but only until December 11. In this post we explain where the rule stands, what it would change, and what Congress has to do in the next five weeks.
Where the Rule Stands
On May 29, 2026, OMB proposed the largest revision to the Uniform Guidance since it was first published in 2013. The proposal would rename the rules the Uniform Grants Regulation, and it would apply to nearly every federal grant, cooperative agreement, and pass-through award. OMB received close to 500,000 comments before the period closed on July 13.
The September 2 Continuing Resolution that funds the government through December 11 includes Section 157, which bars OMB from finalizing or implementing the rule while the CR is in effect. That is a temporary pause. It does not withdraw the proposal, and it lapses on December 11 unless Congress extends it.
What the Rule Would Change
On costs, the proposal would treat a lower indirect cost rate as a competitive advantage in discretionary award decisions, and it would stop federal awards from paying for membership in civic or community organizations.
Groups opposing the rule describe a broader effect. The National Low Income Housing Coalition says the proposal would reshape how federal awards are made so that funds do not support programs that conflict with the administration’s policy positions, including programs involving disparate impact, diversity, equity, inclusion, and accessibility, or “gender ideology.” That is the opponents’ description, and anyone reading the proposal should check the text for themselves. It does match the certification issues we wrote about in March, when new federal grant certifications created False Claims Act risk for organizations that sign them.
What Congress Has to Do
Members return on November 9 and will have about five weeks in session before the 119th Congress ends. Full-year spending bills for fiscal year 2027 are stalled, so a second Continuing Resolution is likely. The National Council of Nonprofits is asking Congress to put language in that CR permanently blocking the OMB rule. It has scheduled a National Day of Action for Monday, November 10, with a sign-on letter, an email campaign, and a call script.
The election results do not change this timeline. The current Congress, not the one elected November 3, decides what goes into the next CR, and the new Congress will not be seated until January 3. If the pause lapses on December 11 and nothing replaces it, OMB is free to finalize the rule.
Practical Steps
Check which of your federal awards would be covered by the new rule and list the provisions most likely to affect you. These include your negotiated indirect rate, any award-funded memberships, and the certifications you sign with each application. Talk to your board about whether the organization will take a position, since the Day of Action is open to any organization. And if an agreement asks you to certify compliance with anything beyond the statute, have counsel look at it before you sign.
Conclusion
The pause is good news, but it is a short one. Unless Congress writes the block into the next funding bill, OMB can move forward after December 11, and organizations that depend on federal awards should plan as though it might.
Ellis Carter is a nonprofit lawyer with Caritas Law Group, P.C. licensed to practice in Washington and Arizona. Ellis advises nonprofit and socially responsible businesses on federal tax and fundraising regulations nationwide. Ellis also advises donors concerning major gifts. To schedule a consultation with Ellis, call 602-456-0071 or email us through our contact form. This post is for general informational purposes and does not constitute legal advice.