The federal grant rules, known as the Uniform Guidance, were last updated in October 2024. That update raised the single audit threshold to $1 million and raised the flat indirect cost rate from 10% to 15%. A much larger rewrite was proposed in May 2026. It isn't final, and under the stopgap funding law signed September 2, it can't be finalized before December 12, 2026.
Why it matters
If your organization receives federal funding—either directly or through a state or local agency—the Uniform Guidance sets rules for what you can charge to an award, when a single audit is required, and what happens if an award ends early. You don't need to memorize the regulation, but you do need to know which version applies to each award. That affects what you can charge and how you manage the funds.
What changed in 2024, and applies now
Changes that took effect October 1, 2024 include:
| Rule | Before | Since October 2024 |
|---|---|---|
| Federal spending that triggers a single audit | $750,000 per year | $1,000,000 per year |
| De minimis indirect cost rate | 10% | Up to 15% |
| Cost at which an item counts as equipment | $5,000 | $10,000 |
The de minimis rate is available to organizations that don't have a negotiated indirect cost rate. It allows them to charge up to 15% of modified total direct costs for indirect expenses such as rent, finance, and administration, without negotiating a rate with the federal government. Pass-through entities must accept the rate as well. Small organizations can miss out on this recovery simply because they haven't included it in their grant budgets.
What's been proposed, and isn't final
On May 29, 2026, the Office of Management and Budget (OMB) and dozens of federal agencies proposed a broad rewrite of the rules. Comments closed on July 13, 2026. The proposal includes several changes that could matter to small and midsize nonprofits:
- Agencies could end a discretionary award when doing so is "in the interest of the Federal agency," including when it no longer fits agency priorities, and those terminations wouldn't get an administrative appeal. Pass-through entities, such as the state agency that passes federal money to you, would get the same power.
- Grant funds could cover professional memberships only with written approval from the agency, and conference costs only when the agency expressly approves them.
- Recipients and subrecipients would need to use E-Verify for employees and contractors working under a federal award.
- When agencies choose between similar applicants for discretionary awards, they would be told to favor the one with the lower indirect cost rate.
The agencies had planned for the rewrite to take effect on October 1, 2026. However, the stopgap funding bill signed September 2 bars OMB from finalizing it through December 11, 2026. The timeline could change if Congress extends funding again, and the final rule may differ from the proposal. For now, the current rules remain in effect.
What to do now
- Check each award's date and terms. Start with the award agreement to identify which rules apply.
- Use the 15% rate where it applies. If your organization doesn't have a negotiated rate, consider including the 15% rate in your next proposal budget when eligible.
- Confirm whether you need a single audit. With the $1 million threshold, some organizations that needed one before no longer do.
- Plan for an award ending early. Review your agreement's terms for termination and closeout costs, and consider how much unrestricted cash you would need to manage a funding gap. That preparation is useful whether or not the proposed rewrite is adopted.
We'll update this article when the final rule is published.
What to ask
- Which of our awards were made after October 1, 2024, and are we using the rules that apply to each one?
- Are we recovering the indirect costs we're allowed to charge?
- If our largest federal award ended next month, how many months could we keep the program running?
This article is general information, not accounting, tax or legal advice for your organization's situation.