The Office of Management and Budget (OMB) on April 22 issued the 2024 final revisions to Title 2 of the Code of Federal Regulations — known as “Guidance for Federal Financial Assistance” — which includes the Uniform Guidance (2 C.F.R. Part 200). The revised guidance becomes effective for federal awards issued on or after Oct. 1, although federal agencies overseeing grant programs may opt to adopt the revised guidance for financial assistance awards as early as June 21.

OMB’s changes to Title 2 include not only the Uniform Guidance, but also revisions to other parts within Title 2, subtitle A, which are: 

• Part 25, Universal Identifier and System for Award Management; 
• Part 170, Reporting Subaward and Executive Compensation Information; 
• Part 175, Award Term for Trafficking in Persons;
• Part 180, OMB Guidelines to Agencies on Governmentwide Debarment and Suspension (Nonprocurement); 
• Part 182, Governmentwide Requirements for Drug-Free Workplace (Financial Assistance);
• Part 183, Never Contract with the Enemy; and
• Part 184, Buy America Preferences for Infrastructure Projects.

Simultaneously, OMB, working with the Council on Federal Financial Assistance, included a discussion about the Title 2 revisions within a newly issued governmentwide implementation plan that aims to reduce burdens when administering federal financial assistance (OMB Memorandum M-24-11). M-24-11 discusses both pre-award and post-award actions that federal agencies can take to promote transparency and equity. 

“These revisions will improve stewardship of federal funds, promote equitable access to programs and services, reduce administrative burden for agencies, applicants and recipients, and facilitate streamlined and effective oversight and implementation of federal programs,” OMB states in M-24-11. “Among other things, the revisions eliminate several prior approval requirements, increase multiple thresholds that trigger additional requirements, and clarify requirements for agencies and recipients.”

One New Provision

OMB issued proposed revisions to Title 2 in October 2023 and received more than 6,000 comments in response. In revising the Uniform Guidance, OMB generally maintains the current numeric structure of the existing guidance (although numerous changes were made within individual provisions that affect current citation references). But it does add one new provision on whistleblower protections at §200.217, stating that

an employee of a recipient or subrecipient may not be discharged, demoted or otherwise discriminated against as a reprisal for disclosing to a person or body described in paragraph (a)(2) of 41 U.S.C. 4712 information that the employee reasonably believes is evidence of gross mismanagement of a federal contract or grant, a gross waste of federal funds, an abuse of authority relating to a federal contract or grant, a substantial and specific danger to public health or safety, or a violation of law, rule or regulation related to a federal contract (including the competition for or negotiation of a contract) or grant. The recipient and subrecipient must inform their employees in writing of employee whistleblower rights and protections under 41 U.S.C. 4712.

Major Changes

A key change within the 2024 guidance compared to the existing 2020 guidance is that OMB is increasing the single audit threshold — the amount of award expenses in a fiscal year that triggers a federal review — from $750,000 to $1 million (§200.501). 

Here are other key changes in the final guidance:

• Allows recipients and subrecipients that do not have a current federal negotiated indirect cost rate or provisional rate to elect to charge a de minimis rate of up to 15%, raised from the current 10% limit (§200.414(d)), to “allow for a more reasonable and realistic recovery of indirect costs, particularly for new or inexperienced organizations that may not have the capacity to undergo a formal rate negotiation, but still deserve to be fully compensated for their overhead costs.” Federal agencies and pass-through entities may not require recipients and subrecipients to use a de minimis rate lower than the negotiated indirect cost rate or unless required by federal statute or regulation.
• Removes language that OMB had included in the proposed revisions stating that governmental agencies and departments receiving more than $35 million addressed in Appendix VII.D.1.b are not allowed to use the de minimis rate, stating that Appendix VII.D.1.b already explains that a governmental department or agency receiving more than $35 million in direct federal funding during its fiscal year must submit its indirect cost rate proposal to its cognizant agency for indirect costs.
• Changes the equipment (§200.313) and supply (§200.314) thresholds from $5,000 to $10,000 in light of current economic data.
• No longer requires prior federal agency written approval for nine types of costs, a measure to reduce federal agency and recipient burden. Prior approval will be required under the following costs: cost sharing (§200.306); program income (§200.307); revision of budget and program plans (§200.308); fixed amount subawards (§200.333); personal services compensation (§200.430(h)); fringe benefits compensation (§200.431); equipment and other capital expenditures (§200.439); exchange rates (§200.440); fines, penalties, damages and other settlements (§200.441); fundraising and investment management costs (§200.442); goods or services for personal use (§200.445); insurance and indemnification (§200.447); organization costs (§200.455); pre-award costs (§200.458); rearrangement and reconversion costs (§200.462); and travel costs (§200.475). Among these, OMB added “exchange rates” in the final version, as it was not included in the proposed version.
• No longer requires prior approval for use of grant agreements (§200.201); real property (§200.311); equipment (§200.311); direct costs (§200.413(c)); entertainment costs (§200.438); memberships, subscriptions and professional activity costs (§200.454(c)); participant support costs (§200.456); selling and marketing costs (§200.467); and taxes (including value added tax; §200.470).
• Makes major revisions to Appendix I, Full Text of Notice of Funding Opportunity (NOFO), as well as §200.204, essentially creating a NOFO template for federal agencies to follow for their programs to simplify and clarify the grant application process; and provides for federal agencies to include an executive summary of less than 500 words in NOFOs.

Considering a federal grant? Here’s what associations need to know

Federal grants — a portion of what is known as federal financial assistance — stem from money appropriated by Congress through various laws and statutes. Federal agencies that receive this funding (such as the departments of Health and Human Services, Education and Commerce) award grants, as well as cooperative agreements, loans and other forms of financial assistance, to different types of recipients to support the aims of their federal programs. 

Important changes are coming to grant rules, including some that ease the burden on smaller organizations.

While most recipients of federal financial assistance are state and local governments, federal funding also goes to institutions of higher education, hospitals, schools and nonprofit organizations, which can include associations. 

Associations should be wary about applying for federal grants simply to get the money. There are numerous requirements and responsibilities involved in applying for and managing a federal award. Associations should ensure that they have a team with the financial and organizational skills to manage the responsibilities of administering an award. Before applying for an award, the association must determine if the grant opportunity truly meets the mission of the association.

If an association is awarded federal funding, it must carefully review the award terms and conditions to determine what will be expected under their award. The association also must develop internal policies and procedures, such as a travel policy, to align with federal grant requirements. 

Federal grant requirements are developed by the Office of Management and Budget (OMB), which issues guidance to agencies covering the full grant lifecycle, from pre-award to post-award and closeout, to single audits. Guidance for federal financial assistance is found in Title 2 of the Code of Federal Regulations (C.F.R.). The general grant requirements are found in 2 C.F.R. Part 200, which is commonly known as the Uniform Grant Guidance or Uniform Guidance. Also within Title 2 are corresponding agency adoptions of the Uniform Guidance, and any specific agency exceptions, as well as OMB guidance on other applicable aspects of financial assistance (i.e., debarment and suspension). 

Federal agencies often also have other regulations governing specific agency programs under other titles of the C.F.R. Recipients should be aware of these other titles and take note of any awarding agency policies and guidance affecting their particular programs.

Prior to the Uniform Guidance, OMB maintained separate administrative requirements for state and local governments, for institutions of higher education and for nonprofit organizations. The Uniform Guidance, which initially became effective in 2014, brought together all the requirements for these recipients under one document. OMB made widespread revisions to the Uniform Guidance in August 2020, which became effective for awards issued on or after Nov. 12, 2020. This is the current version of the guidance.

The Uniform Guidance is divided into subparts, which include definitions in subpart A and general provisions in subpart B. Subpart C addresses pre-award responsibility, subpart D discusses post-award requirements, subpart E addresses the cost principles and subpart F discusses single audits. There are also 12 appendices. Associations seeking to apply for a federal award, and those that have received awards, should ensure that they are knowledgeable on all the provisions within the Uniform Guidance and the various key topics within, including procurements, subrecipient monitoring, time and effort reporting, cost allowability and single audit requirements.

Associated costs and audits

Of particular note for associations are specific discussions related to nonprofits’ direct (§200.413) and indirect costs (§200.414). Direct costs are those that are assigned to specific expenses that meet the purpose of the grant; indirect costs are other associated expenses (e.g., electricity, snow removal). 

To receive federal compensation for these indirect costs, recipients generally negotiate with the federal agency on a negotiated indirect cost rate agreement. However, because this process can often be long and complex, OMB allows recipients (particularly smaller ones) to request a de minimis indirect cost rate. The de minimis rate currently is 10%. However, OMB has recently revised the Uniform Guidance, effective for awards received on or after Oct. 1, to increase the de minimis indirect cost rate to as much as 15%. This can be of great assistance to smaller organizations receiving grant funding. (For more upcoming changes to grant rules, see companion story on page 6).

Subpart E of the Uniform Guidance also discusses nonprofits’ employee pay (§200.430), lobbying (§200.450) and reimbursement for taxes (§200.470). These subjects also are addressed in Appendix IV. Associations should take special note of these sections. 

In addition, recipients that expend $750,000 in a fiscal year are required to undergo a single audit (§200.501), which has its own set of requirements. To ease the burden on smaller recipients, OMB has raised this threshold to $1 million. Associations that are currently required to undergo a single audit may want to assess their annual spending amount to determine if they will no longer be required to have an audit.

For more grants news and updates, subscribe to Thompson Grants, a division of CBIS. Thompson Grants products and services cover the entire grant lifecycle from pre-award through closeout and will help you find the funding opportunities you need while making sense of the confusing and complicated task of complying with the Uniform Guidance.

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