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Nonprofits, Are You Ready for the Changes to OMB’s Uniform Financial Guidance?

May 09, 2024

Attention nonprofits…prepare for extensive changes to OMB uniform financial guidance. Here’s a look at what’s changing effective October 1, 2024.

The Office of Management and Budget (OMB) has proposed changes to the uniform financial guidance…are you up to speed? The proposed changes will be effective for awards made on or after October 1, 2024, and instructs that federal agencies may elect to implement the updates sooner as long as at least 60 days have passed after publication of the Final Rule in the Federal Register. Here’s what you should know.

What is the uniform guidance?

The OMB Uniform Guidance is the common set of rules governing most federal grantmaking to charitable nonprofits, state, local, and Tribal governments, and others. The Uniform Guidance provides guidelines on various aspects of managing federal awards, including administrative requirements, cost principles and audit requirements.

Issue at hand

The Office of Management and Budget (OMB) has revised uniform guidance due to several lingering issues with the current guidance, including but not limited to:

  • Roadblocks in the government grants process that have diminished nonprofit effectiveness
  • Challenges for qualified organizations seeking and performing under federal grants
  • Lost money and time complying with complex reporting requirements

What is changing effective October 1, 2024?

Here’s a look at the key changes coming October 1:

  • Increased audit threshold from $750,000 to $1 million (this is expected to reduce the number of required audits each year)
  • Required reimbursement to nonprofits for the reasonable indirect costs incurred when performing services on behalf of governments
  • Increased guaranteed de minimis rate for indirect costs from 10% to 15%
  • Increased threshold for dollar value of equipment from $5,000 to $10,000 (i.e. when an organization purchases equipment costing $10,000 or under, they can expense it rather than capitalize it)
  • Fixed amount subawards (up to $500,000) can be awarded without written approval from the federal agency
  • Increased exclusion threshold for subawards (from $25,000 to $50,000)
  • Revised Notices of Funding Opportunities (NOFOs) (i.e. requests for proposals)- NOFOs will now use plain language and include basic information at the top of a grant announcement to help applicants decide whether or not to apply.
  • Recipients, subrecipients, and applicants under a federal award now required to promptly disclose “credible evidence of a violation of federal criminal law involving fraud, conflict of interest, bribery, or gratuity violations found in Title 18 of the United States Code or a violation of the civil False Claims Act (31 U.S.C. 3729-3733)” in connection with the federal award.
  • Increased cybersecurity and information security requirements- As part of their internal controls, recipients and subrecipients must implement security measures.

We will keep you posted on key action items as the implementation date approaches. Questions? Contact us.

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