Federally funded grant programs create meaningful impacts in the lives of individuals and communities. Many programs address acute local, national, or global concerns. Annually, the U.S. government funds thousands of programs with taxpayer funds.

Grant funds have historically been awarded to governmental entities, institutions of higher education, health care and research institutions, and other charitable nonprofits.

In recent years, a growing number of for-profit entities have become eligible to receive federal grant awards. For example, eligible agricultural employers were recently awarded grants under the Farm Labor Stabilization and Protection Pilot Program to help mitigate labor shortages, while promoting employers’ practice of fair labor standards.

While people may disagree about the dollar amounts that should be made available and the causes to which funds should be awarded, few dispute the importance of accountability and oversight in the administration of government grants.

Over the years, the executive branch of the United States has developed guidelines for the management and oversight of grant awards, both for recipients, and for pass-through entities tasked with administering funds to qualified subrecipients. Requirements for pass-through entities can be found in the Federal Register’s Guidance for Federal Financial Assistance, effective Oct. 1, 2024.

About the Uniform Guidance

Title 2 of the Code of Federal Regulations, also known as the Uniform Guidance, consists of Administrative Requirements, Cost Principles, and Audit Requirements for federal financial awards.

Initially issued by the White House Office of Management and Budget (OMB) on Dec. 26, 2013, the Uniform Guidance compiled previously separate OMB circulars that addressed administrative and financial requirements for specific entities, such as states and local governments, nonprofit organizations, institutions of higher education, and Tribal Nations. The Uniform Guidance was issued to improve program performance and mitigate the risk of improper use of funds.

The Uniform Guidance was updated on Aug. 13, 2020, notably with enhanced procurement and program standards, to “ensure that the American people are receiving value for funds spent” and to ensure “results-oriented accountability” (see OMB M-21-03).

In April 2024, after solicitation, receipt, and diligent review of public comments, OMB issued a final rule revising the Uniform Guidance, effective on Oct. 1, 2024. Federal agencies were given flexibility to initiate early implementation. The new title is Guidance for Federal Financial Assistance instead of the former Guidance for Grants and Agreements.

New Guidelines: Resources

A nine-page Memorandum, M24-11, issued on April 4, 2024, by the director of OMB, Executive Office of the President, for Heads of Executive Departments and Agencies, and titled, “Reducing Burden in the Administration of Federal Financial Assistance” lays out the rationale for the new guidelines.

Declaring that government must “work to deliver services more equitably and effectively, especially for those who have been historically underserved,” the memorandum describes goals for implementation of the revised Uniform Guidance and outlines the steps undertaken to solicit and respond to public feedback.

The memorandum also highlights guidance concerning engagement with Tribal Nations to promote funding consistent with their unique needs. It refers to recent Executive Orders related to Advancing Racial Equity and Support for Underserved Communities through the Federal Government.

Additionally, OMB created a reference guide, Uniform Grants Guidance 2024 Revision: Evaluation, to assist federal agencies and grants recipients with implementation of the new guidelines.

Statutory Authority

The U.S. Administrative Procedure Act in 5 U.S.C §§ 551-59 requires that U.S. executive agencies have proper statutory authority to issue rules.

The OMB director is authorized under 31 U.S.C. § 6307 to “issue supplementary interpretative guidelines to promote consistent and efficient use of … grant agreements and cooperative agreements.”

Under 31 U.S.C. 503(a)(2), the OMB Deputy Director for Management is authorized to provide “overall direction and leadership to the executive branch on financial management matters by establishing financial management policies and requirements.”

OMB also relies on nine additional statutes for implementation of sections of the Uniform Guidance.These are listed in OMB’s proposed rule issued Oct. 5, 2023.

Expanding Access to Historically Underserved Populations

While many of the Uniform Guidance revisions are focused on clarifying language that agencies and recipients found ambiguous or inconsistent, the following are among provisions in the Federal Register’s Guidance for Federal Financial Assistance that are intended to promote enhanced access to grant funding for historically underserved populations:

• § 200.202 Program planning and design: New language encourages federal agencies to develop programs in consultation with the communities that will benefit from or be impacted by a program, and to consider “all available data, evidence, and evaluation results from past programs and coordinate with other agencies during program planning and design.”

• § 200.313 Equipment: Increased flexibility for procurement and disposition of equipment with federal funds for all recipients. The fair market value threshold under which equipment may be disposed of without further obligation is $10,000 (increased from $5,000). This applies to all, but special provisions also exist for Tribal governments.

• § 200.407 Prior written approval (prior approval): Removed requirements for prior approval from the federal agency for nine categories of expenditures.

• § 200.414 Indirect (F&A) costs: For organizations that do not have a negotiated indirect cost rate agreement (NICRA), OMB raised the maximum rate that recipients may recover for administrative expenses. The de minimis rate for indirect cost recovery was raised from 10% to 15%.

• § 200.414(c)(2): Recipients and subrecipients can notify OMB of any disputes regarding a federal agency’s acceptance of a federally negotiated indirect cost rate.

• § 200.501 Audit requirements: Organizations that spend over $1 million must undergo an annual single audit for their programs. (The former threshold was $750,000).

• Appendix I to Part 200 – Full Text of Notice of Funding Opportunity: The Template for Notice of Funding Opportunity is revised to reduce applicants’ administrative burdens.

The sections above can also be found in 89 FR 30046.

A Noteworthy Update

OMB heightened the standard for Mandatory Disclosure of certain violations, as part of the revised Uniform Guidance, which may prompt questions from clients.

Section 200.113 Mandatory disclosures is revised as follows:

Recipients, subrecipients and applicants under a federal award must promptly disclose

credible evidence of the commission of a violation of federal criminal law involving fraud, conflict of interest, bribery, or gratuity violations found in Title 18 U.S.C. or a violation of the Civil False Claims Act. 31 U.S.C. 3729-3733

in connection with the federal award. The disclosure must be made in writing to the federal agency, the agency’s Office of Inspector General, and a pass-through entity (if applicable).

OMB did not define “credible evidence” in the revised rules. The agency states that it “intends to generally align the meaning of credible evidence … with the existing meaning under the FAR – see 73 FR 67064 (Nov. 12, 2008).”

Further Resources

Due to the complexity of federal grant award management, recipients’ fiscal employees are required to complete financial management training. The U.S. Department of Justice Office of Justice Programs trainings are available online. Other federal agencies also offer trainings to funded recipients.

Additional resources tailored for attorneys and accountants include:

• Wipfli LLC, a national organization, with headquarters in Wisconsin, offers accounting, tax, consulting services, and live, interactive trainings staffed by experts.

• Feldesman Training Solutions offers federal grants web-based trainings in English and Spanish that are created by attorneys affiliated with Feldesman Leifer, LLP, a national law firm with 50 years of experience.

An additional resource is the redlined copy of the revised guidelines (linked on the Uniform Guidance webpage on cfo.gov) which comprises the updates to 2 CFR Parts 1, 25, 170, 175, 180, 182, 183, 184, 200.

Advising Your Clients

The revised Uniform Guidance promotes access to federal grant funds for entities with smaller budgets who provide assistance to and seek to empower historically underserved populations. Attorneys who advise these entities should develop an understanding of the new guidelines, along with applicable grant terms and conditions provided by the applicable federal agency.

Recipients of federal grant awards are required to develop and implement internal policies that conform with the Uniform Guidance. Attorneys may be asked about related legal matters and should consider recommending the services of an experienced accountant when appropriate.

Advising clients with legal questions related to federal grant administration can be professionally and personally rewarding. The updated guidelines will no doubt generate inquiries from existing or prospective clients who wish to apply, or are already managing, federal grant awards.

This article was originally published on the State Bar of Wisconsin’s Public Interest Law Section Blog. Visit the State Bar sections or the Public Interest Law Section web pages to learn more about the benefits of section membership.