Three Federal Rules Are Quietly Rewriting the Fine Print on Every Grant You Hold in 2026

Most grant seekers spend their time thinking about winning awards. The organizations that get into trouble are usually the ones that did not spend enough time thinking about keeping them.

Three overlapping federal policy changes took effect between late 2024 and early 2026, and together they represent the most significant restructuring of federal grantmaking rules since the original 2 CFR 200 Uniform Guidance was consolidated in 2013. Each change individually would warrant attention from anyone managing federal awards. The combination is reshaping the compliance environment in ways that affect everything from how auditors review your books to whether an agency can terminate your grant mid-project with limited recourse.

The 2 CFR 200 Overhaul: Stricter Documentation, Higher Thresholds

The revised 2 CFR 200 Uniform Guidance — the federal framework governing administrative requirements, cost principles, and audit requirements for all federal awards — took effect October 1, 2024. It is now the baseline for virtually every federal grant competition open in 2026.

The revisions are the most substantial since 2013, and they cut in two directions at once. On one side, some thresholds increased in ways that reduce administrative burden for smaller organizations: the procurement simplified acquisition threshold rose, equipment and supply purchase thresholds were adjusted upward, and Single Audit requirements were recalibrated to pull more small grantees out of the full-audit requirement.

On the other side, the documentation and internal control expectations tightened considerably. The revised guidance introduces "expanded expectations for documentation, subrecipient monitoring, and internal controls" — language from the 2025 OMB Compliance Supplement that translates, in practice, to more granular record-keeping requirements for recipient organizations at every tier.

For subrecipients — organizations that receive federal funds passed through a primary grantee — the monitoring burden on the primary recipient increased significantly. Pass-through entities are now required to conduct more structured risk assessments of their subrecipients, document monitoring activities with greater specificity, and retain records in ways that can withstand an audit of the entire award chain. Organizations that routinely receive funds through university pass-throughs or state agency pass-throughs should expect their primary recipients to ask for more documentation than they required in previous grant cycles.

Executive Order 14332: Political Oversight Enters the Award Process

Executive Order 14332, signed August 7, 2025, introduced a mechanism with no direct predecessor in federal grantmaking history: a formal requirement for senior political appointees to review funding opportunity announcements and discretionary awards for "consistency with agency priorities and the national interest."

The practical implications are still being worked out agency by agency, but several consequences are already visible. Grant program officers — career civil servants who have historically had substantial discretion in the review and award process — now operate with a layer of appointee review above them. For research-intensive agencies like NIH, NSF, and USDA, this has added timeline uncertainty to award notifications.

The order also directed the Office of Management and Budget to revise the Uniform Guidance to give federal agencies a clearer basis for prioritizing grant applicants who propose lower indirect cost rates. Under pre-2026 rules, negotiated indirect cost rates (NICRAs) set by universities and research institutions were treated as established facts in the budgeting process. The direction to give "priority" to applicants with lower indirect costs — even within competitions where all eligible applicants have negotiated their rates through the standard federal process — introduces a new competitive dimension that particularly affects smaller and mid-sized institutions whose negotiated rates may be higher relative to those of larger institutions with more administrative infrastructure.

The most consequential piece of EO 14332 for active grantees may be the direction to add an express regulatory basis for terminating federal awards "for convenience, including when the award no longer advances agency priorities or the national interest." Prior to this order, federal termination-for-convenience authority existed but was applied narrowly and required specific justification. The new language — and the implementing revisions now being incorporated into updated Notices of Funding Opportunities — creates a broader contractual basis for agencies to exit awards mid-period without the traditional level of procedural constraint.

The 2025 OMB Compliance Supplement: Auditors Are Looking at New Things

The 2025 OMB Compliance Supplement, effective November 25, 2025, governs how independent auditors conduct Single Audits for organizations that spend $1 million or more in federal funds annually. It is the auditor's operational manual, specifying what compliance requirements apply to each federal program and how auditors should test for compliance.

For organizations already familiar with the Single Audit process, the 2025 Supplement introduces several refined compliance requirements that reflect both the EO 14332 priorities and the revised 2 CFR 200 framework. The supplement places new emphasis on "outcome-driven performance reporting" — meaning auditors will now test not just whether organizations spent money as described, but whether they documented the performance outcomes their awards required.

Subrecipient monitoring is a specific audit focus area in the 2025 Supplement in ways it was not treated with the same intensity in prior years. Organizations that pass federal funds to community partners, local subcontractors, or fiscal agents should ensure their monitoring documentation meets the new standard before their next audit cycle.

The Supplement is currently effective for audits of fiscal years beginning after June 30, 2024 — which means most calendar-year organizations are already in their first audit period under the new requirements.

What Organizations Need to Do Before Their Next Application

The convergence of these three policy changes has a concrete implication for organizations preparing federal grant applications in early 2026: the compliance commitments in your next award letter will be materially different from those in awards signed two years ago.

Review your indirect cost rate strategy. If your organization has a NICRA, confirm that it is current and that you understand how your rate compares to peer applicants in the competitions you are entering. For smaller nonprofits without a federally negotiated rate, the de minimis rate of 10 percent remains available — and may now be strategically advantageous in some competitions given the EO's pressure on agencies to favor lower indirect costs.

Audit your subrecipient monitoring records. If you manage subawards, your monitoring documentation needs to be specific, retained consistently, and sufficient to withstand a formal review. A spreadsheet tracking payment dates is not sufficient. Document what you are monitoring, how you are monitoring it, and what you did when something looked off.

Read the termination clause in your new award letters carefully. Awards issued in 2026 under updated agency terms may include termination-for-convenience language that is broader than what your organization has seen before. Understand the notice requirements, the allowable costs during wind-down, and what documentation you would need to support a closeout.

Build a federal policy monitoring function. The pace of regulatory change since August 2025 has made reactive compliance — reading new requirements when an audit finding arrives — an untenable strategy. Someone in your organization, or your grants management consultant, needs to be tracking OMB memoranda, updated NOFOs, and agency implementation notices on a rolling basis.

The federal grants environment in 2026 rewards organizations that treat compliance infrastructure as a competitive asset rather than an administrative burden. Grantees that understand the new rules and can demonstrate that understanding in their applications — accurate budgets, credible indirect cost proposals, documented subrecipient management systems — are better positioned in review processes that now have more layers of scrutiny than they did three years ago.

For organizations trying to identify which federal programs match their work given the shifting landscape, Granted tracks funding opportunities across 144 federal, state, and foundation sources — a practical starting point for building a grant portfolio that is calibrated to where the money is actually going.