OMB Proposes Sweeping Changes to Federal Grantmaking Rules

September 30, Update: Block OMB’s Proposed Regulation on Grantmaking: Help Make It Permanent

What happened: Congress enacted bipartisan legislation in September to temporarily block the administration from finalizing and implementing a government-wide proposal from the U.S. Office of Management and Budget (OMB) to overhaul and politicize federal grantmaking. The block rides on the Continuing Resolution that funds the federal government through December 11. Congress enacted the temporary delay after nearly 500,000 public comments were submitted, the majority of which were in opposition to the proposal. For more details, see NCN’s chart of the proposed major provisions.

Why it matters: This is a real win, but a temporary one. When Congress returns to Washington after the November 3 midterm elections, it will have four legislative weeks to decide whether to continue to block the OMB proposed rule. If the block lapses, the proposal could move forward again — including provisions that let agencies terminate grants without cause, change terms mid-award, and weigh a grantee’s affiliations or its civil rights, DEI, or immigration-related work. Between 2016 and 2024, Pennsylvania nonprofits brought in $40 billion in federal dollars; the services that funding supports depend on a stable, criteria-based grant process.

What nonprofits can do – three actions:

1. Sign a National Letter to urge Congress to permanently block the proposed changes to federal grants, joining nearly 2,000 organizations nationwide.
2. Call or Email your Members of Congress — both Republicans and Democrats — and urge them to block the proposed changes and protect our communities. Short on time? Start with Pennsylvania’s two U.S. Senators, John Fetterman (D) and Dave McCormick (R).
3. Mark your calendar for November 10. Join advocates across the nation for a National Day of Action by contacting your members of Congress and posting on social media. November 10 is also PANO’s Community Action Summit — a chance to connect with Pennsylvania nonprofit leaders in person on the same day the sector is calling on Congress to act. PANO will share ways to take part in both. Feel free to use NCN’s shared strategy document, including talking points, a list of congressional targets, and other resources.

Where things stand: The temporary block is in effect for as long as the current Continuing Resolution runs (through December 11). The decision on a longer-term block will come during the short post-election session. PANO will share Day of Action details and Pennsylvania-specific talking points ahead of November 10.

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September 10, Update: Congress Delays OMB Proposed Regulation on Federal Grantmaking

What happened:
The House and Senate voted with broad, bipartisan support to enact a Continuing Resolution (CR) keeping the federal government funded through December 11. The CR was signed into law by President Trump last week and includes bipartisan legislative language that temporarily delays implementation of OMB’s proposed overhaul of federal grantmaking rules — the Uniform Guidance changes PANO has been tracking since June.

Why it matters:
The National Council of Nonprofits (NCN) credits nonprofit advocacy nationwide for building the bipartisan support behind this delay — organizations that contacted their members of Congress to raise concerns about the OMB proposal helped secure this outcome. It’s a real, if temporary, win: the underlying proposal would still grant an administration unprecedented discretion to withhold, suspend, or terminate grants and to determine awards based on partisan ideology rather than objective criteria, and economists have warned it could damage state and local credit ratings by making the federal government a less reliable funding partner. Nonprofits should keep engaging their members of Congress over the coming months using NCN’s talking points and other key resources to build support for a permanent block.

Where things stand:
With the CR signed, congressional leaders are expected to push off major legislative decisions — including a possible third tax reconciliation bill and a bipartisan tax administration bill — until after the November midterms. With Congress largely quiet on this issue until then, continued outreach from nonprofits is what will keep the pressure on for a permanent fix rather than just a temporary delay.

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Where Things Stand
On May 29, 2026, the U.S. Office of Management and Budget (OMB) proposed sweeping changes to the Uniform Guidance — the set of rules governing federal grants, cooperative agreements, and other monetary awards to nonprofits, state and local governments, and other grantees (Docket ID OMB-2026-0034). The public comment period closed on July 13. Thanks to the effective advocacy of nonprofits nationwide, nearly 500,000 public comments were submitted opposing the proposal — one of the largest responses to a federal grantmaking rule in recent memory. 

The fight isn’t over. OMB must now review the full comment record before issuing a final rule, and Pennsylvania’s congressional delegation still has a role to play in pressing OMB to reverse course. PANO is joining the National Council of Nonprofits (NCN) and organizations across the country for a National OMB Call-In Day on Wednesday, July 29, and there are additional ways to keep this issue in front of legislators through the August congressional recess. 

What the Proposal Would Do
If finalized as proposed, the rule would fundamentally change the terms under which nonprofits receive and retain federal funding: 

• Grant the executive branch broad discretion to add terms and conditions to federal grants beyond what Congress has authorized — including some already blocked by federal courts. 
• Allow federal agencies to terminate or suspend discretionary grants without cause, or change grant terms mid-performance, with no administrative hearing or appeals process available to grantees. 
• Permit agencies to withhold discretionary grants indefinitely if they determine a grant does not “advance the president’s policy priorities” — introducing partisan considerations into what has been an objective, criteria-based process. 
• Create a pre-approval process allowing political appointees to exclude grant proposals inconsistent with “federal agency priorities and the national interest,” with no explanation provided and no right to challenge the decision. 
• Direct agencies to weigh a grantee’s affiliations and its work related to civil rights, DEI, or immigration services — provisions that could be used to disqualify grantees for lawful work an administration simply disfavors. 

Why It Matters for Pennsylvania
Between 2016 and 2024, Pennsylvania nonprofits brought in $40 billion in federal dollars. The Commonwealth is home to nearly 49,000 501(c)(3) organizations that touch the life of nearly every Pennsylvanian, employ 15.7% of the state’s workforce, and drive $140 billion of the state’s economy. Replacing objective funding criteria with political considerations puts that investment — and the essential services it funds, including housing, health care, food access, disaster recovery, and community development — at direct risk. Even organizations that don’t receive federal dollars directly are likely to feel the effects through community partners and the people they serve. 

PANO’s Comments to OMB
PANO submitted formal comments to OMB opposing the proposed rule, detailing the scale of Pennsylvania’s reliance on federal funding and the disruption the changes would cause to service delivery statewide. Read PANO and NCN’s full comment letter. 

Take Action: National OMB Call-In Day — Wednesday, July 29
It’s not too late to add your nonprofit’s voice to the noise. On July 29, PANO is joining NCN and nonprofits nationwide for a National Call-In Day. Here’s how to take part: 

• Email your reps via PANO’s advocacy platform, Ujoin.
  • Not only is the email template ready to go and easy to tailor to your own organization, Ujoin also makes it easy to ensure your message gets to the right people.
• Call your representatives in Pennsylvania’s congressional delegation using PANO’s sample phone script
  • The script is free to edit and make your own.
  • Short on time? Limit your calls to Pennsylvania’s two U.S. Senators (John Fetterman, D | Dave McCormick, R). 

Beyond July 29: Take Action During the August Recess (July 24 – September 14)
Congress’s August recess is another window to keep this issue in front of Pennsylvania’s delegation:

• Schedule in-district meetings with your members of Congress.
• Attend their public town halls or other events and ask them to block the proposed changes.
• Publish an op-ed or letter to the editor in your local newspaper.
• Educate community members about how this proposal could harm seniors, families, and individuals in your community.

Use NCN’s August Recess Checklist for more ideas and guidance. 

What to Watch Next
OMB must review the full public comment record before it can issue a final rule; no timeline has been announced. PANO will continue to monitor developments and share updates as the rulemaking process moves forward. 

Resources 

• NCN comment guide on the OMB proposal 
• Chart of key proposed changes to the Uniform Guidance