Office of Management and Budget's 2026 Proposed Rule Template Comment

[Month XX, 2026]

Office Management and Budget
Attention: Office of Federal Financial Management
Docket ID OMB-2026-0034
RIN 0348-AA31

RE: Regulation for Federal Financial Assistance

Greetings:

On behalf of [insert community foundation], we write to provide comments on the Office of Management and Budget’s (OMB) proposed revisions to the Guidance for Federal Financial Assistance. These comments are based on the practical implications of how the proposed changes would affect community foundations and our partners.

[insert a blurb detailing your mission, reach, and impact. You may also insert information on your or your grantees’ experience with the federal grantmaking process, and the impact of federal funding on your community]

We are concerned that the proposed changes will inhibit our organization and the nonprofits we work with from accessing federal financial assistance. Federal financial assistance supports a variety of services in our communities, which stand to lose access to critical programs, resources, and support provided by [insert community foundation] and other trusted partners.

[insert community foundation]’s comments include recommendations that address the following changes in the proposed revisions:

• Clarification of Regulatory Structure
• Changes to Eligibility and Merit Review
• Changes to Award and Subaward Structure and Pass-Through Entity Oversight
• Prohibition On the Use of Federal Awards to Promote or Support Unlawful Diversity, Equity, and Inclusion (DEI), "Gender Ideology," or Disparate-impact Liability
• Restriction on Federally Funded Lobbying and Related Activities and Programming
• Nondiscrimination and Viewpoint Neutrality Requirements
• Strengthening Federal Authority to Suspend or Terminate Discretionary Awards
• Using E-Verify for U.S.-Based Award Labor

Clarification of Regulatory Structure

[insert community foundation] agrees that the Uniform Guidance for federal grants is helpful as the range and types of federal financial assistance that supports our community spans across disaster relief, housing, education, [insert another example relevant to your community foundation], and countless other areas. Currently, federal agencies have discretion to interpret and apply the Uniform Guidance, allowing agencies to apply it in ways that reflect their legal requirements and priorities while still maintaining accountability for federal funds.

We are concerned about the change from Uniform Guidance to Uniform Grants Regulations (UGR). Under the proposed UGR, future changes would impact all federal agencies without allowing each one to have clear input or consider whether the UGR is appropriate for all federal financial assistance it provides. It would also limit public input by reducing the opportunities for the public to comment on changes to regulations. This could create confusion and legal ambiguity if federal agencies adopt supplemental regulations that are contradictory or in conflict with the proposed UGR.

We urge OMB to allow federal agencies to retain discretion in the proposed UGR to their federal financial assistance so it can be implemented in ways that reflect different programs, objectives, recipients, and award structures. 

Changes to Eligibility and Merit Review

Federal financial assistance works best when award decisions are grounded in program expertise, community need, and demonstrated organizational capacity and performance. Community foundations support a federal grantmaking system that relies on subject matter experts to evaluate proposals against clear, mission-aligned criteria. The proposed changes to eligibility screening and merit review would undermine this precedent, introducing layers of uncertainty and risk into the federal grantmaking process.

§ 200.202 (d) – Program planning and design on restricting eligibility for federal funding among different types of nonprofit organizations

Allowing federal agencies to restrict eligibility “among different types of nonprofit organizations” could narrow the pool of partners available to agencies to carry out the objectives of federal awards. While we understand the intent to provide applicants with clearer eligibility guidance, this provision raises concerns for our foundation.

Many organizations operate as nonprofit corporations under various exemption designations. For example, charitable activities can be conducted by section 501(c)(3) organizations, as well as 501(c)(4) organizations, or governmental entities under section 115. Broad exclusions or limitations to a specific type of exempt organization based solely on tax designations risk unnecessarily and illegally excluding effective organizations or requiring them to incur costs to create affiliates that fit the created limitation.

If this provision is retained, we ask that OMB:  

• Clarify that eligibility restrictions based on nonprofit type must be grounded in statutory authority, not administrative preference;
• Require federal agencies to explain why an exemption designation restriction is warranted;  
• Strengthen the section 200.202(b) presumption that agencies should “make every effort to extend eligibility requirements to all potential applicants.”; and
• Confirm that the provision does not affect organizations acting as pass-through entities for eligible subrecipients.

§ 200.205 (a) and (b) – Federal agency merit review of proposals

Introducing a mandatory “pre-issuance review” conducted by senior political appointees to evaluate discretionary award proposals in accordance with an administration’s policy priorities is concerning, as these changes subordinate expert-driven merit review to political judgment in ways that are inconsistent with the nonpartisan history of the federal grantmaking process. This undermines the predictability and fairness that grant applicants – including community foundations – depend on. [insert example of a direct or pass-through grant or program that would be affected if senior appointees were to approve federal awards and how it could impact your community]. The proposed language is also undefined in ways likely to produce inconsistent outcomes across federal agencies.

We ask that OMB:

• Remove or substantially narrow the pre-issuance review criteria in the proposed § 200.205(b)(2). Terms such as “anti-American values” have no legal definition and grant federal agencies unchecked authority to exclude applicants based on factors unrelated to their merit or capacity.
• Preserve the integrity of peer review and not override expert panel recommendations. OMB should require that federal agencies document specific instances when a senior appointee departs from a peer review recommendation.
• Clarify that community foundations applying for federal awards will be evaluated on the same objective merit criteria as other applicants, and that a community foundation’s prior grantmaking activities or allowed activities outside of the scope of federal award will not be considered in the pre-issuance review.
• [consider inserting another recommendation on the senior appointee proposal or language in the provisions]

§ 200.206 — Federal agency review of risk posed by applicants

Expanding the factors federal agencies may consider when assessing applicant risk to include an applicant’s “history of questionable practices” and its “memberships or affiliations” with organizations linked to broadly defined concerns, as currently written, is broad and lacks the safeguards necessary to prevent misuse.

The “history of questionable practices” provision would permit federal agencies to penalize applicants for engaging in activities “inconsistent with Federal civil rights laws” or “religious liberty laws” based on publicly available information without defining those terms or requiring any formal adjudication. For federal financial assistance applicants whose programmatic work touches on lawful, charitable activities involving scientific research, education, and [insert area of work important to your community foundation], this provision creates uncertainty about eligibility.

Our community foundation routinely grants funds to and partners with [insert types of nonprofits and other organizations you grant to and partner with] to advance the greater good in [insert community]. Penalizing an applicant for its “affiliation” with other organizations, over which it exercises no influence, and where there has been no determination of illegal activity, would introduce significant uncertainty into the federal grantmaking process. [insert community foundation] is concerned that this proposal, as written, would harm the associational relationships that are fundamental to community philanthropy.

We ask that OMB remove this provision. If it is retained, we strongly recommend that OMB:

• Limit the “questionable practices” criterion to conduct that has been formally adjudicated by a court or federal agency and exclude prior lawful grantmaking or programmatic activity from its scope.
• Define “affiliation” clearly and confirm that providing a charitable grant to an organization does not constitute affiliation.
• Require agencies to provide written notice of any adverse risk under these provisions, including the specific information relied upon, and give applicants a meaningful opportunity to respond before a final award determination is made.
• Require that risk assessments under this section be limited to factors that are connected to an applicant’s ability to perform.
• [consider inserting another recommendation asking for a language in this provision to be clearly defined, or improve existing language]

Changes to Award and Subaward Structure and Pass-Through Entity Oversight

[Insert overview of your community foundation’s experience as a pass-through entity for federal funding, as well as what makes community foundations uniquely positioned for this role.
Example: Pass-through entities, including community foundations like ours, have a valuable role in the federal funding landscape. We bring community-based expertise, established relationships with local partners, and the ability to subaward federal dollars in a way that aligns with program objectives.]

[insert example of you or another organization, such as a grantee, supporting a federal funding program by acting as a pass-through entity (this includes the State and Local Fiscal Recovery Funds). Share how it extended the reach of the program by serving communities that would have been excluded otherwise].

While we understand OMB’s concerns about transparency, several of the proposed changes to pass-through entity requirements and federal award structure would complicate and, in some cases, deter this form of collaboration.

§ 200.201 (b) – Use of grants, cooperative agreements, and contracts
Prohibiting fixed amount awards unless expressly authorized by Federal statute, eliminating a flexible award mechanism that has been available since 2014, would impose significant operational burdens on community foundations and nonprofit grantees that rely on this structure to manage programs with well-defined, measurable deliverables.

Fixed amount awards have been particularly valuable for smaller nonprofits with limited infrastructure to track and report costs in real time. For these organizations, the shift to cost-reimbursement structures would require additional accounting systems, staff capacity, and administrative overhead — costs that divert resources from program delivery. [insert additional concern with the elimination of fixed amount awards you have or heard from nonprofits and other partners]. If the proposed UGR goes into effect as written, there should be a robust transition period and confirmation that this will not be retroactivity applied for existing awards.

We recommend that OMB reconsider the blanket elimination of fixed amount awards and instead strengthen standards to address concerns regarding oversight and transparency.

§ 200.332 (h) – Requirements for pass-through entities
Requiring pass-through entities to ensure that subrecipients do not take actions that “could significantly damage the reputation of the pass-through entity, the Federal agency making the award, or the Federal Government,” introduces a vague and burdensome compliance obligation. “Reputational harm” is undefined, subjective, and susceptible to being applied in ways that punish subrecipients for engaging in lawful activities. Organizations that routinely partner with advocacy-oriented nonprofits would face constant uncertainty about whether their subrecipients’ lawful speech could trigger an obligation to terminate the federal award solely based on an administration’s determination of reputational harm.

We are concerned that the proposed provision places community foundations and other nonprofits in an untenable position: they would have legal responsibility for monitoring the reputational impact of subrecipients’ activities on the Federal Government, a standard there is no practical means of meeting and no legal authority to enforce. This could strain relationships with trusted community partners and reduce program effectiveness. [insert additional concerns for potential legal responsibility of federal financial assistance subrecipients].

We strongly urge OMB to remove this provision and ensure that only conduct by subrecipients that constitutes a material breach of the subaward’s programmatic terms and conditions is considered grounds for termination.

§ 200.332 (i) – Requirements for pass-through entities
We are concerned with the proposed requirement for pass-through entities to make formal subrecipient or contractor determinations for all payments to affiliated, subsidiary, or otherwise related organizations. This could pose operational burdens for community foundations and nonprofits with multiple related legal entities that may collaborate or share services for federal awards.

Many community foundations and nonprofits operate through affiliations that collaborate on program delivery. [insert an example of an affiliation that applies to you or that you know of]. Requiring formal subrecipient determinations and all associated compliance documentation for every transfer of federal funds between controlled entities will increase administrative burden without a commensurate improvement in oversight, specifically the related entities are subject to consolidated governance and financial controls. Therefore, we ask that OMB remove this requirement with respect to controlled entities.

§ 200.202 (f) – Multi-Year awards
[insert community foundation] supports OMB’s proposal to encourage agencies to design programs using multi-year awards with budget periods longer than one year. This approach to federal awards can help meet long-term community goals federal programs aim to accomplish. [insert some federal programs that reach your community and would benefit from multi-year awards]. However, we recommend that sufficient flexibility be provided to federal agencies to determine when multi-year versus single year awards are most appropriate.

Prohibition On the Use of Federal Awards to Promote or Support Unlawful Diversity, Equity, and Inclusion (DEI), “Gender Ideology”, or Disparate-impact Liability

Community foundations serve a range of communities – rural and urban, large and small, across every state in the country. Effective program design requires attention and contextualization of communities. For instance, [insert a program in your community, the disparities it seeks to reduce, and other context considered when measuring effectiveness]. While we recognize that federal funding recipients must comply with applicable federal anti-discrimination laws, several of the proposed revisions go well beyond existing legal requirements in ways that introduce significant ambiguity and would impact community foundations’ ability to deliver effective, community-responsive programs.

§ 200.300 (b)(1) – Statutory and national policy requirements
Prohibiting the use of federal award funds to “fund, promote, encourage, subsidize, or facilitate” DEI or DEIA policies, principles, or practices that violate any applicable Federal anti-discrimination laws, should be revised to limit the prohibition to conduct that is unlawful under existing federal statute or controlling judicial precedent, rather than referencing the broad category of “DEI or DEIA policies, principles, or practices.”

Many activities, such as outreach to underrepresented communities and data collection on demographic outcomes are lawful and important to program effectiveness but could fall under this prohibition. The uncertainty of whether they are prohibited could harm legitimate programmatic work.

§ 200.300 (b)(2) – Statutory and national policy requirements
Prohibiting the use of federal award funds to “fund, promote, encourage, subsidize, or facilitate” gender ideology, as defined in Executive Order 14168, leaves community foundations operating in the areas of health, education, and [insert another area of work] with great uncertainty and legal risk. It is unclear as to what activities would be considered promotion or encouragement of gender ideology and nonprofits whose grants are wholly unrelated to these issues would need to expend time and resources to understand the limitations or restrictions on their actions.

If this provision is retained, we encourage OMB to clarify what activities are specifically prohibited based on clear, legal standards. OMB should also provide guidance on the interaction between this provision and applicable state laws that are in conflict with this policy position.

§ 200.218 – Prohibition of using Federal awards to promote or support theories of disparate-impact liability
Restricting the use of federal funding for disparate-impact studies, litigation, and award activities based on the assumed risk of disparate-impact liability poses risks for community foundations whose nonprofit partners use demographic data and analyses to identify and address service gaps. The proposed prohibition on activities “based on the assumed risk of disparate-impact liability” could encompass any program adjustment responsive to documented outcome disparities, and could put federal grantees at legal risk for failing to address disparities. [insert example of programs at risk in your community if outcome disparities cannot be measured]

We recommend that OMB:

• Remove the provision, or at least confirm that the provision does not prohibit recipients or subrecipients from complying with federal, state, or local laws that incorporate disparate-impact standards.
• Narrow the prohibition to exclude data collection that uses demographic information to assess program effectiveness or identify underserved populations. Such activities do not constitute the promotion of disparate-impact liability theory and are essential to responsible stewardship of federal funds.

§ 200.111 English language
Requiring that all federal financial assistance announcements, applications, and federal award information “must be” in the English language, removing the existing provision that permitted, federal agencies, recipients, and subrecipients to issue translations or translate documents into other languages raises concerns about program effectiveness for our community foundation. The 2024 Uniform Guidance revision specifically noted that agencies may translate funding announcements to languages which would increase the pool of applicants or participation by specific communities, while requiring that an official controlling English version always be maintained. [insert information about your community if there are federally-funded services mainly delivered in a language other than English].

We recommend that OMB retain the current provisions that permit translation of federal announcements and award documents, while maintaining the requirement for an official controlling English version. This approach balances the interest of clear, consistent federal communications with the practical need for accessibility in [insert community].

Restrictions on Federally Funded Lobbying and Related Activities and Programming

The proposed restrictions on these federally funded activities touch on many functions integral to how community foundations and nonprofits deliver effective programs and sustain our communities’ civic health. We recognize that federal financial assistance should be used for the purposes for which they are awarded, and that appropriate limits on political activity are well-established features of federal funding requirements. However, several of the proposed revisions are too broad and could capture activities clearly within the legitimate scope of nonprofit mission and operations. They could also create compliance uncertainty and deter effective community foundations and nonprofits from participating in federal programs.

§ 200.450 (iii), (iv) and (v) – Lobbying
Prohibiting the use of federal funds for voter registration activities; issue advocacy or public messaging on social, political, or policy matters unrelated to the performance requirements of the award; and attempts to influence state executive branch agencies on matters unrelated to the award may disrupt lawful programs and activities. [insert community foundation] is unsure how these provisions will be interpreted and enforced, as various terms are undefined in the context of federal financial assistance. We ask OMB to clarify how public education campaigns, community outreach, and policy research would be affected in a final rule. The provision should also clarify that it only applies to the use of the federal funds and not the organization’s other resources.

§ 200.202 (a) and § 200.202 (c) – Program planning and design
While we support the longstanding principle that federal funds must be used for their authorized public purposes, the proposed changes to require that federal program goals and objectives “align with administration policies and priorities” and to add a prohibition on program funds from being used for “political activities or initiatives unrelated to authorized public purposes, such as political advocacy, lobbying, or any attempt to influence legislation, elections, or government officials” raise significant concerns about how they would be applied in practice.

Requiring program design to “align with administration policies and priorities” introduces a layer of political consideration into a process that has historically been grounded in statutory authority and evidence-based program design. This requirement could be used to deny funding to qualified community foundations and nonprofits whose programs are consistent with authorizing legislation but do not reflect current executive branch preferences.

The new § 200.202(c) prohibition on “political advocacy” and “attempts to influence” government officials, without a clear definition or limiting principle, risks sweeping in protected public education and community engagement activities that have never been treated as lobbying.

We ask that OMB remove this provision and ground program requirements in statutory authority rather than evolving administrative priorities.

§ 200.454 (a) and (d) – Memberships, subscriptions, and professional activity costs
[Insert community foundation] is concerned that the two significant changes to § 200.454 will harm our community foundation and other nonprofits. First, proposed (a) would make membership costs in professional, civic, business, and technical organizations allowable only “if necessary to fulfill the award requirements,” and would add a new requirement for prior written federal agency approval. Second, proposed (d) would expand the existing prohibition on membership costs for lobbying organizations to also cover organizations “whose primary purpose is” issue advocacy.

The prior approval requirement imposes administrative burdens across for community foundations and other nonprofits and could reduce the effectiveness of many programs. Professional memberships and subscriptions provide organizations and their staff with training, technical assistance, legal guidance, capacity building, and peer networks that directly support effective federal grant administration. It also provides the opportunity for sharing best practices. [insert additional benefits for your community foundation].

Requiring case-by-case federal agency approval for each membership would be time-consuming and administratively impractical. [insert example of how long it would take you, and other partners, to go through membership cycles - hypothetically – and consequences of potential prohibitions on your staff and work]. The expanded prohibition in proposed (d) compounds this concern by using the undefined term “issue advocacy” to exclude membership in a broad and indeterminate category of organizations.

We recommend:

• Removal of the prior written approval requirement. The existing standard, that membership costs must be reasonable and necessary, is sufficient to ensure appropriate use of federal funds without imposing a case-by-case approval burden on every professional membership maintained by every recipient.
• Remove the “issue advocacy” expansion. Without a clear legal definition, this provision would make unallowable membership costs for a broad and unpredictable range of organizations, including many that provide public education, professional development and technical assistance to nonprofits.

§ 200.461 – Publication and Printing Costs
Prohibiting the use of federal funds for publication costs, including journal article processing charges, open access fees, and peer-reviewed publication costs, unless expressly required by federal statute or approved by the agency on a case-by-case basis, would make it more difficult to share federally funded research with the public. The proposal also specifies that a general requirement to make results publicly available would not be enough to authorize these costs. This change would significantly hinder the ability of federally funded researchers and service providers to disseminate findings to communities, practitioners, and policymakers.

For organizations that fund federally supported research on health, housing, and [insert example of federally funded research your community foundation values], the ability to publish and share results is integral to program objectives. Restricting publication costs to a narrow statutory or case-by-case approval process will create delays and deter recipients from conducting activities that are necessary for scientific advancement. We ask OMB to remove this provision, as disseminating information to the communities, practitioners, and policymakers.

Nondiscrimination and Viewpoint Neutrality Requirements

The proposals on nondiscrimination on organizations based on their religious identity, affiliation, or practices and viewpoint neutrality requirements raise practical questions for pass-through entities, such as community foundations, that re-grant federal dollars.

§ 200.300 (c) – Statutory and national policy requirements
The proposal on nondiscrimination on organizations based on their religious identity, affiliation, or practices raises practical questions for pass-through entities that re-grant federal dollars. We encourage OMB to clarify how pass-through entities can document and apply neutral selection criteria while maintaining appropriate discretion to select nonprofit and community partners that are best positioned to carry out the federal award. Such clarification would help build trust among federal agencies, pass-through entities, our community foundation, and grant applicants, while reducing unnecessary disputes that could delay services to communities.

§ 200.219 — Prohibition of discriminatory event services
The effect of this provision on non-public entities is unclear, as there is no guidance on what activities are “relevant” to the scope of activities funded by a federal award. We recommend clarification that for non-public entities, the provision applies only when hosting a public forum or open event is an explicit requirement of the award.

Strengthening Federal Authority to Suspend or Terminate Discretionary Awards

Predictability is essential to effective federal grantmaking and ensuring there is a continuity of services for communities supported by federal financial assistance. When federal awards are suddenly suspended or terminated, the consequences extend beyond the recipient. Providers may be forced to pause services for disaster recovery, housing support, food access, [insert area of federally funded work in your community], and more; lay off staff; cancel contracts; or leave communities without expected support.

§ 200.340 (a)(1) and (2) – Termination and suspension
These proposals are particularly concerning to [insert community foundation], as they would give agencies broader authority to pause or end awards based on shifting agency priorities or program goals. The existing framework appropriately balances agency discretion with recipient interests. The proposed additions would allow agencies to terminate awards mid-performance for political or policy reasons unrelated to the recipient’s performance, with no requirement for administrative hearings or appeal rights for discretionary terminations. This fundamentally undermines the stability that community foundations, nonprofits, and the communities they serve depend on when undertaking federally funded programs.

We urge OMB to ensure that discretionary termination requires a meaningful standard of justification and establish a genuine right for recipients to contest a proposed termination or suspension before it takes effect. A notification-only process is insufficient for recipients whose operations, staff, and service recipients may depend entirely on a given award. Termination authority should also be limited to circumstances where a change in law, a material change in program authorization, or a demonstrable failure of the award to achieve its statutory objectives justifies termination, rather than allowing termination based solely on shifting agency priorities or political considerations.

Using E-Verify for U.S.-Based Award Labor

§ 200.303 (f) – Internal controls

Many of the community foundations and nonprofits that receive federal funding through foundation pass-through entities are small, community-based organizations with limited staff capacity. Requiring all recipients and subrecipients of federal funding to participate in the Department of Homeland Security’s E-Verify will impose a disproportionate administrative burden on the organizations that often lack the administrative infrastructure to manage a new mandatory federal employment verification program.

We recommend:

• Limiting the E-Verify requirement to recipients above a minimum award threshold or workforce size, consistent with the tiered approach used in other federal administrative requirements, and exempt small nonprofit organizations that lack the administrative capacity to implement the program without significant disruption to service delivery.
• Clarify that the E-Verify requirement applies only to employees and contractors who perform work specifically under the federal award, and does not extend to an organization’s entire workforce simply because the organization receives any federal funding.

Conclusion

[insert summary of the specific provisions that your community foundation is most concerned and why they would pose challenges for your work, nonprofit and government partners, and communities]

Thank you for the opportunity to comment. [insert community foundation] also welcomes the opportunity to discuss any of these matters with OMB if it would be helpful. Please contact me for additional information on these topics at [insert email].

Sincerely,

[insert signature]