In April 2023, I was learning all I could about Uniform Guidance for Federal Awards, or 2 CFR Part 200, which is a framework of rules and regulations for the granting of federal funds. As a part of this effort, I attended the National Grant Management Association’s (NGMA) 2023 AGT.
If you were there too, you might remember one moment as vividly as I do. Deidre Harrison, deputy controller of the Office of Management and Budget (OMB) walks on stage and drops a bombshell: OMB is working on an impending update to Uniform Guidance.
Harrison’s news is met with a collective groan.
Literally—I can hear grants professionals all around me deflate. Grant managers dedicate years to mastering Uniform Guidance, often undergoing rigorous certification processes. Any change to this guidance means a lot of work for a lot of people.
As the months went by, we started to get a clearer picture of what would change. In September 2023, OMB published some of the first documentation of the upcoming changes to Uniform Guidance. And then at the 2024 Annual Grants Training (AGT), we got a deep dive.
Finally, in April 2024 the updates were finalized, with an October 1, 2024 effective date. To help grant managers understand what the changes mean for their work, we invited David Clark, managing director of industry special services at BDO, to walk through the details. With over a decade of experience in compliance, he adds helpful context and nuance to the rule changes. Watch the full presentation.
Why Uniform Guidance changed
Prior to the recent update, the OMB was required to review Uniform Guidance every five years. These reviews allow the agency to understand how requirements shape programs and outcomes. Plus it’s a chance to clear up any inconsistencies or lack of clarity.
The latest updates all map back to a set of clear goals:
- Improve stewardship of Federal funds
- Promote equitable access to programs and services
- Reduce administrative burden for agencies, applicants, and recipients
- Facilitate streamlined and effective oversight and implementation of Federal programs
Harrison has also introduced the newly formed Council of Federal Financial Assistance (COFFA), which was announced last fall and is tasked with: “ensuring that Federal agencies have the tools they need to deliver Federal financial assistance programs in an efficient, effective, and equitable manner, while also reducing administrative burdens on Federal financial assistance applicants and recipients.”
As a part of this goal, COFFA will start to standardize training and processes in Uniform Guidance. To understand how, we need to understand what has changed.
Thresholds have increased
At 2024 AGT, the room cheered when Harrison announced the proposal to increase the de minimis for indirect and direct costs. Those increases are now official, along with a couple others.
- For indirect cost rate, the new de minimis is 15% (up from 10%).
- For direct costs, the new de minimis is $50k for each subrecipient (up from $25k).
- The equipment threshold in now $10k per unit (up from $5k) and the supplies threshold is now $10k (up from $5k)
- The allowable threshold for fixed amount subawards is now $500k (up from $250k)
In addition, the proposed threshold for single audits is $1M (up from $750k). This change seems like a welcome one, as it’s likely to lower the administrative burden on many grantmakers. We’ll have to wait and see if it affects the total number of audits needed.
Language is simpler and clearer
Andrew Victor, Esq for USAID, got a laugh at the closing session of the 2024 AGT when he said, “Maybe you don’t need to go to your lawyer just to have [Uniform Guidance] explained to you.” To this end, OMB has simplified some of the language in the Uniform Guidance to make it clearer and easier to read.
For example, using “recipient” or “subrecipient” instead of “non-Federal entity” and the actual name of a given government system (such as SAM.gov) versus the previously vague “OPB designated government-wide system.”
Expectations are more consistent
OMB now requires granting agencies to standardize the Notice of Funding Opportunities (NOFO), which is a notice that a Federal institution has funds available for granting.
Previously, NOFOs could be hundreds of pages long, filled with Uniform Guidance language that doesn’t need to be in there. And each agency’s NOFO looked different. Now, they are expected to have a consistent look, feel, and structure. The aim is to make NOFOs easy to follow and provide clear expectations to the organizations and departments who are seeking out Federal funds.
Clark highlights that OMB has also created consistency in the financial reporting expectations for grant recipients. Financial reports (SF-425) may now only require OMB-approved government-wide data elements. “Any financial reporting you’re required to do on your awards should now all look and feel the same,” Clark says.
If you receive requests for additional financial reporting, you can point to Uniform Guidance to explain that you are not required to provide anything beyond those specific, OMB-approved data elements.
Mandatory disclosures now include a “credible evidence” standard
Understandably, transparency and fraud reduction are hugely important to OMB. So, they’ve changed the timelines for mandatory disclosures, which are notifications of investigations into fraud.
Practically, these changes are small wording tweaks that end up having a large impact on the timing of mandatory disclosures. Previously, the interpretation was that applicants, recipients, and subrecipients would need to disclose potential fraudulent activity once they were sure it was fraudulent. Now, these people need to disclose the investigation is happening as soon as they have credible evidence.
Clark sees this credible evidence standard aligning more closely with the Federal Acquisition Regulation (FAR) requirements around fraud. “Now as soon as you have credible evidence, that is the point when you should notify the government,” he says. “They don’t want you waiting until you have done a full and complete investigation internally…they want to know and be able to be involved in that work.”
These new disclosure rules, while small on the surface, are a big change, so consult legal counsel if you have questions about how the rules apply to specific situations.
The simple version can still be complex
Throughout his presentation, Clark digs into the details of the Uniform Guidance updates. It’s clear that, although the OMB has made a concerted effort to simplify the regulations, it’s still a complex document. And it needs to be.
I am so appreciative of our grant managers who work tirelessly to stay in compliance and understand these rules inside and out. That’s only one part of their job. Still, they are educating and training each other and their sub-recipients, NPOs, and all the good people doing the good work. It’s no small task.
If you’re looking for a grant management software to help you disburse funds securely and within compliance, I encourage you to schedule a demo with Submittable. If you’re looking for consultants to help you think through compliance, get in touch with our friends at BDO.
Disclaimer: The content of this blog serves general informational purposes only and should not be construed as legal advice. Readers are encouraged to seek guidance from their own legal counsel or advisor before making decisions based on the information herein. We bear no liability for actions taken or not taken based on this article.
Go deep on the Uniform Guidance updates
Watch David Clark’s on-demand webinar.
Stacey Sveum is a senior product marketer at Submittable who ensures products and features brough to market exceed the needs of grantmakers in the public sector. She meticulously reads and evaluates Grant Management Software RFPs (so many RFPs) to understand customer requirements and stay on top of industry trends.