OMB Proposes Sweeping Changes to Federal Grantmaking Rules

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