fbpx

Untangling the New Uniform Grant Guidance

Jun 14, 2024News

Rachel Werner, CEO of RBW Strategy
It’s the news that all our grant enthusiasts and compliance champions have been waiting for
– the new Uniform Grant Guidance has been issued! While the updates won’t go into effect
until October 1st, it is important to know about these changes and how they impact your
organization.

We’ll start by discussing the “why” of these changes, why the Office of Management and
Budget (OMB) decided to make them now, and how they align with larger changes
happening in the federal government.

It’s also important to get into the details, so we’ll dive into the top 10 updates in the new
guidance and what it means for your organization.

1. What is OMB’s Intended Outcome?

Since the original Uniform Grant Guidance was issued in 2014, federal grant recipients,
subrecipients, and contractors have grumbled about the confusing jargon, lack of clarity,
and general “squishiness” about some of the guidance’s language and how it applies to all
recipients of federal funding.

This is a natural consequence when several different administrative requirements
documents and cost circulars are consolidated into one document, and meant to be
universally applied. This latest iteration is OMB’s attempt to simplify and reduce
administrative burdens for those who must comply with these requirements.

OMB requested public comments and feedback and received thousands of responses,
which is why the process of integrating feedback and making updates took over a year.
As such, OMB is seeking to accomplish four core objectives, which are detailed further in
the guidance itself:

(1) incorporating statutory requirements and administration priorities;

(2) reducing agency and recipient burden;

(3) clarifying sections that recipients or agencies have interpreted in different ways; and

(4) rewriting applicable sections in plain language, improving flow, and addressing inconsistent use of terms within the guidance.

  • Objective 1: Incorporating Statutory Requirements and Administrative Priorities:
    There were some inconsistencies between statutory authorities that were confusing
    and unclear. As stated in the guidance, OMB revised Parts 25 (Unique Entity
    Identifier & System for Award Management), 170 (Reporting Subaward & Executive
    Compensation Information), and 175 (Award Term for Trafficking in Persons) to
    ensure its guidance properly aligns with underlying statutes, as amended. These
    revisions further align OMB’s guidance with the authorizing statutes to ensure proper
    implementation. OMB also made several structural changes to individual parts within
    Chapter I to provide further structural consistency throughout OMB’s guidance.
  • Objective 2: Reducing Agency and Administrative Burden: As any federal grant
    recipient, subrecipient, or contractor knows, the recordkeeping, reporting, and
    management process for federal grants can be a huge undertaking. This has been a
    constant challenge, which is why OMB is seeking to reduce some of these burdens
    through increased capitalization threshold levels for equipment and supplies (thus
    reducing paperwork and recordkeeping), increasing the single audit threshold, and
    requiring federal agencies to prepare the Notices of Funding Opportunity (NOFO)
    consistently through a template.
  • Objective 3: Clarifying Sections that Recipients or Agencies have Interpreted in
    Different Ways: While this objective does not constitute specific policy or process
    changes, it does help to diminish confusion when questions are raised. This has led
    to a more robust definitions section and ensures a lack of ambiguity.
  • Objective 4: Rewriting Applicable Sections in Plan Language: For those who have
    read NOFOs, this can sometimes lead to additional questions and confusion, and
    another team member must review it to maintain a shared understanding of the
    guidance. This is the part that can excite people the most as there is a concerted
    effort to avoid the use of jargon and incorporate language in plain English that all
    (including those who are non-native English speakers) can clearly understand. This
    helps with the flow of information and transparency about the administrative
    requirements to which federal grant recipients, subrecipients, and contractors must
    adhere.

2. The Top 10 Uniform Grant Guidance Updates

Drum roll, please….. The moment you have been waiting for – what are the Top 10 Uniform
Grant Guidance Updates and how do they impact your organization?

Let’s examine each one. I co-led a session through MyFedTrainer in which we discussed
these topics more in-depth.

  1. De Minimis Indirect Cost Rate Increase (§200.414): For those recipients (and
    subrecipients) who do not have a negotiated indirect cost rate agreement in place,
    this is welcome news. As overhead and administrative costs grow, organizations
    often scramble to find ways to recoup this funding. The rate will increase from 10%
    to 15% which is a 50% increase.
    Plus, there’s more…. The new guidance states that cognizant federal agencies will
    uphold these indirect rates and pass-through entities (PTEs) must do the same. This
    will mean less pushback from PTEs and more funding for impactful programs. The
    National Council of Nonprofits wrote a great memo on this and the importance of this
    update for nonprofit organizations.
  2. Single Audit Threshold Increase (§200.501): The dreaded single audit can cause
    much upheaval and stress within organizations. Now that the threshold has
    increased to $1 Million versus $750,000 in federal funding obligated within an
    organization’s fiscal year, which serves as the trigger for a single audit, some
    organizations may not be required to have a single audit. This increase also
    coincides with the Consumer Price Index, as the last increase was in 2014.
  3. NOFO Template Language/Plain English (§200.204): With OMB’s focus on clarity
    and transparency, it’s no wonder that the NOFO template is a welcome change. The
    goal is to reduce confusion so applicants can understand the pre-award and
    post-award requirements, and the template will be similar across agencies. OMB has
    tasked federal agencies with a plan to incorporate this update by May 15th.
  4. Tribal Government Inclusion (OMB Memo M-24-11): Many Tribal government entities
    are removed from the Federal grant application process. To increase the
    accessibility, equity, flexibility, and utility of Federal funding and support programs for
    Tribal Nations, Federal agencies are directed to support these entities further.
    This requires that Federal agencies promote “compacting, contracting,
    co-management, co-stewardship, and other agreements with Tribal Nations” and
    identify funding programs that allow for Tribal set-asides or other benefit or resource
    programs.
  5. Unique Entity Identifier (UEI) and SAM.Gov registration (§25.105 (b)): There is
    confusion about the types of recipient entities (subrecipient, contractor) who must
    register in SAM.Gov to obtain a UEI. The long story short is that those who receive a
    subaward directly from a recipient, or PTE, must obtain a UEI. However, those who
    are second-tier subrecipients or contractors are not required to do so.
  6. Prior Approval for Eligible Costs (§200.407): Just when you thought you had a
    handle on your expenditures, there are budget modifications, and you might need to
    obtain prior approval before acquiring certain equipment, goods, or services. To ease
    the burdens a bit more for recipients, the prior approval requirements have been
    removed for such items as entertainment costs, memberships, subscriptions,
    professional activity costs, and participant support costs.
  7. Procurement and Modified Total Direct Cost (MTDC) Thresholds Increase
    (§200.313(e)(1), §200.314): Upon closeout of a federal grant award, recipients can
    retain, sell, or dispose of supplies and/or equipment at a threshold level of $10,000
    instead of $5,000. This allows for more flexibility at the end of a grant award period.
  8. Geographic Preferences (§200.319): If you work with contractors or subrecipients on
    a regular basis, this procurement update will impact your organization the most. The
    updated guidance states that recipients/PTEs can incorporate a scoring mechanism
    that rewards bidders that commit to specific numbers and types of U.S. jobs,
    minimum compensation, benefits, on-the-job training for employees making work
    products or providing services on a contract, and other worker protections. This
    allows for more domestic labor and promotes inclusivity in the procurement process.
  9. Build America Buy America Impacts (OMB Memo M-24-11): Since more construction
    projects require resources not readily found in the United States, there is updated
    guidance that Federal agencies should specify in the NOFO that some products
    might be more expensive and less accessible in the United States and require to be
    purchased from overseas contractors. As a component of this, Federal agencies can
    require recipients to identify the products for procurement unavailable in the United
    States and develop a plan to comply with domestic content requirements.
  10. Micropurchases Documentation (§200.320 (a)(1)(ii)): The recipient or subrecipient
    should distribute micro-purchases (purchases up to $50,000 if self-certified)
    equitably among qualified suppliers. A bonus is that micropurchases do not require
    an extensive procurement process as the solicitation of competitive price or rate
    quotations are not required, so long as the recipient or subrecipient considers the
    price reasonable based on research, experience, purchase history, or other
    information and maintains documents to demonstrate this approach.
  11. As you begin to think about operationalizing some of these changes (and there are
    more included in the updated guidance), remember that these will take effect on
    October 1st, so you have some time. The good news is that these changes will offer
    more clarity, and leniency, and reduce administrative burdens and confusion. Not
    sure where to begin? We’re happy to answer those burning questions.

Recent blog posts

Refreshing Your Nonprofit’s Image: When and How to Rebrand

Refreshing Your Nonprofit’s Image: When and How to Rebrand

In the dynamic landscape of nonprofit organizations, staying relevant and impactful requires more than just a clear mission—it demands a cohesive and compelling brand identity. Here’s a detailed look at when and how your nonprofit should consider refreshing its image....

read more
Four Signs Your Board Needs a Tune Up

Four Signs Your Board Needs a Tune Up

Ann Quinn, CEO Quinn Strategy Group Ann Quinn advises nonprofits and privately held companies that are facing the challenges of developing and implementing an organizational strategy, building organizational capacity, and navigating organizational transitions. Ann...

read more