A glimpse at the future of Uniform Guidance is emerging, but if you didn’t attend the 2024 Annual Grants Training (AGT), you might’ve missed it. In short, we’ll likely see an increase in audit and spending thresholds, less jargon, and faster fraud detection. Let’s dig in.
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.
Author’s note: This article was written before the announcement that the new Uniform Guidance rules will launch Thursday, April 4. You can register for the launch webinar here. We will update this piece with what we learn.
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 go by, we start to get a clearer picture of what will change. In September 2023, OMB published some of the first documentation of the upcoming changes to Uniform Guidance. This was very helpful, but what we all needed was a deep dive as a part of the AGT event.
2024’s AGT provided this deep dive and much more. This year, Harrison gave us specifics, and I took a lot of notes. Here’s what we know so far.
Why Uniform Guidance is changing
When Harrison came out on stage this year, the room was abuzz, waiting to hear more about what she and her team have planned. With changes to Uniform Guidance, OMB seeks to:
- Align with administration priorities by incorporating statutory requirements.
- Reduce burden through streamlined processes for both agencies and recipients.
- Clarify and standardize ambiguous sections to ensure consistent interpretation.
- Rewrite sections in plain language, improving flow, and addressing inconsistencies.
Harrison 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 is changing.
Thresholds will increase
The room cheered when Harrison announced the proposal to increase the de minimis for indirect and direct costs.
- For indirect cost rate, the proposed new de minimis is 15% (up from 10%).
- For direct costs, the proposed new de minimis is $50k (up from $25k).
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 will be 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 aims to make the new Uniform Guidance clearer and easier to read in order to avoid multiple interpretations of the same language.
For example, using “Recipient” 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.” OMB provided a document that shows an example of the edits.
OMB also aims to standardize the Notice of Funding Opportunities (NOFO), which is a notice that a Federal institution has funds available for granting. Currently, NOFOs can be 100s of pages long, filled with Uniform Guidance language that doesn’t need to be in there. Going forward, OMB aims to slim NOFOs down in tandem with simpler Uniform Guidance language.
Mandatory disclosures can happen as soon as you have evidence
Understandably, transparency and fraud reduction are hugely important to OMB. So, they’re changing 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. Melissa Prusock, Esq Greenberg Traurig, LLP, stated that she felt this terminology shift is the biggest change she’s seeing from the new proposed compliance rules. She explained, “With the proposed rule, it is any criminal [activity]. This is a significant expansion. It puts you in the same boat as contractors. It also says you have to ‘be prompt’ with your disclosure, whereas before it said ‘timely.’”
Previously, the interpretation was that applicants, recipients, and subrecipients will need to disclose potential fraudulent activity once they were sure it was fraudulent. With the proposed changes, these people would need to disclose the investigation is happening as soon as you have credible evidence.
At the 2024 AGT, David Clark, managing director of industry special services at BDO USA, explained that, “As soon as you have credible evidence, you need to let them know. It is no longer you have to have finished your investigation. If you have a tip and believe it is real, you need to disclose it.”
These new disclosure rules, while small on the surface, are a big change, so keep an eye out for more on them and consult legal counsel.
Change is going to take a little while
Finally, the biggest thing I learned is that these changes likely aren’t going into effect any time soon. When the final updates to Uniform Guidance do come out, Harrison assured us that there will be plenty of time to prepare before implementation.
So, for now I recommend you keep focused on the Uniform Guidance that we have today and keep your eyes open to what changes are peeking over the horizon.
Grant management is tough work
I am so appreciative of our grant managers because they work tirelessly to stay in compliance and understand these rules inside and out. 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.
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.