Washington Update
June 05, 2026

Proposed OMB Rules Would Have Wide-Ranging Effects on Federal Grantmaking

In a major policy shift that will have significant implications for all federal grantees, the Office of Management and Budget (OMB) issued proposed rules that would formally enshrine many of the Trump Administration’s policy priorities into federal regulation. Specifically, the rules would change guidance under the “Uniform Administrative Requirements, Cost Principles and Audit Requirements for Federal Awards” (Uniform Guidance) to a government-wide regulation entitled “Uniform Grants Regulation.”

The shift from guidance to regulations is significant for several reasons. Under the Uniform Guidance, which is not legally binding, agencies have discretion to interpret federal grant-making policies to meet agency-specific needs. By turning the guidance into regulations, which are legally binding, the OMB rules would remove that discretion from agencies and apply a fixed set of regulations to all government agencies and all federal funding. Additionally, because any future regulatory changes must adhere to time-consuming federal rulemaking procedures, the shift away from guidance will make it more difficult for future administrations to update the rules.

The new proposed regulations will have broad implications for institutions of higher education applying for grants, cooperative agreements, and other forms of assistance from the federal government.

According to the draft regulations’ preamble, the purpose of the proposed regulations is to improve transparency, accountability, and oversight for federal grants to ensure “American tax dollars are not wasted or misused, activities performed under federal awards are consistent with law and policy, and recipients are held accountable when they fail to meet relevant standards.” OMB states that it “aims to ensure that basic American principles of equality and equal opportunity are upheld throughout all stages of the award making process and that unlawful discrimination is no longer permitted.”

Notable changes relevant to institutions of higher education include:

  • Section 200.201 Eliminate the use of fixed amount awards. To ensure federal funding is provided only to cover actual incurred costs, fixed amount awards would be eliminated.
  • Section 200.202 Program planning and design. Agencies would be required to develop programs, activities, and awards that ensure federal funding is used for public purposes and not for political activities. This section would also restrict nonprofit entity eligibility by specific IRS Code designation, prohibit federal funds for research and development grants with foreign entities unless specifically required, and specify that research grants are for basic, applied, or experimental development research.
  • Section 200.204 Notice of Funding Opportunities (NOFO). NOFOs would be posted on Grants.gov in plain language to reduce barriers to participation in federal grants and to ensure all applicants can “reasonably compete against institutions that have historically received consecutive awards in prior years” without employing legal or technical experts.
  • Section 200.205 Merit Review of Proposals. Each agency would be required to establish a new pre-issuance review process conducted by senior political appointees to ensure grants advance the president’s priorities, prohibit discrimination, award institutions with lower indirect cost rates, award to a broad range of recipients, prioritize rigorous scholarship over historical reputation or prestige, and demonstrate a commitment to Gold Standard Science. Peer review would be advisory. Agencies would not be required to issue awards if there are not worthy applicants.
  • Section 200.206 Review of Risk. The list of risk factors to evaluate would be expanded beyond basic financials to include prior performance in a funding opportunity, including any negative outcomes, a history of “questionable practices,” compliance with Higher Education Act Section 117 Foreign Gift Reporting, and an institution’s affiliation with organizations engaged in subversive activities.
  • Section 200.218 Prohibition of using federal awards to promote or support theories of disparate-impact liability. This provision would instruct federal agencies to eliminate the use of theories of disparate impact liability when administering federal grants. Unlike disparate treatment, which requires evidence of an intent to discriminate, disparate impact liability occurs when a neutral policy unintentionally impacts a protected group.
  • Section 200.219 Prohibition of discriminatory event services. Public entities that receive federal funds would be prohibited from discriminating on the basis of viewpoint, content, or subject matter of speech when providing services for events, meetings, or other expressive activities. Non-public entities receiving federal funds would be prohibited from discriminating on these grounds to the extent that an event is within the scope of the federal award.
  • Section 200.220 Prohibition on using federal funds for covered foreign collaborations. Grant recipients would be prohibited from using federal funds to support a bilateral or multilateral collaboration with a covered foreign country or entity.
  • Section 200.300 Statutory and national policy requirements. This section would prohibit discrimination for or against faith-based organizations and would specify that federal funds could not be used to support:
    • Diversity, equity, or inclusion (DEI) or diversity, equity, inclusion, or accessibility (DEIA) policies that violate federal antidiscrimination laws;
    • Gender ideology; or
    • Transition of a child under age 19
  • Section 200.340 Termination and Suspension. Grant termination authority would be expanded to allow agencies, at their discretion, to end an award when it no longer advances the administration’s priorities or national interest.
  • Section 200.450 Lobbying. Grantees would be prohibited from using federal awards to engage in voter registration campaigns, issue advocacy, or any public messaging unrelated to the award.
  • Section 200.454 Memberships, Subscriptions, and Professional Activities. Federal awards could not cover the costs of subscriptions to business, professional, academic, and technical periodicals; memberships in country clubs, social, or dining clubs; or memberships in organizations whose primary purpose is lobbying or issue advocacy. Memberships in professional, civic, business, and technical organizations would be allowable if necessary to fulfill the grant requirements and if pre-approved by the agency.
  • Section 200.461 Publication and Printing Costs; Federal awards would not be permitted to cover publication costs unless the costs were required by the grant and pre-approved by the agency.

The OMB regulatory package, which is set to take effect October 1, 2026, thus permitting the new policy to apply to Fiscal Year 2027 funding, has been highly anticipated since the administration proposed implementing a 15% cap on reimbursement for indirect costs in research grants. However, because Congress included legislative and report language blocking such a cap in the FY 2026 appropriations bills, this regulation would make no changes to the negotiated indirect cost system.

The proposed regulation incorporates concepts introduced in Executive Orders and other administrative action since the beginning of the Trump Administration, including:

In anticipation of potential legal challenges, the proposed regulation includes a severability clause, meaning that if a court determined that one provision is invalid, all other provisions would remain in effect.

Institutions that wish to weigh in on the proposed rules may submit comments to OMB at regulations.gov. Comments are due July 13, 2026.


For more information, please contact:
Stephanie Giesecke

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