Proposed Federal Grant Portal Rules Raise Legal Risks for Nonprofits: What Applicants Need to Know

Hook: Major Changes to Federal Grant Portal Could Expose Nonprofits to Risk

The Trump Administration has proposed sweeping changes to the System for Award Management (SAM.gov)—the backbone portal for federal grant applications and management. At the center of this proposal lies a series of new certification requirements, tied to executive orders and vague policy directives, that could carry significant legal and financial risks for nonprofit organizations nationwide. With the public comment period ending on March 30, 2026, nonprofit leaders, researchers, and grant seekers are being urged to speak out or risk a fundamental shift in the landscape of federal grants.

Context: Why This Matters for Federal Grant Seekers

The federal grant portal—SAM.gov, along with other platforms like Grants.gov—serves as the gateway through which thousands of nonprofits, local governments, and small businesses access critical funding each year. Any change to how applicants certify their compliance, mission alignment, or legal standing has far-reaching implications.

The proposed rule would require all entities that receive grants, cooperative agreements, loans, or other federal assistance to sign new, legally binding certifications. These certifications reflect recent executive orders and Department of Justice guidance—such as those targeting “illegal” diversity, equity, and inclusion (DEI) programs and policies related to undocumented immigration and counterterrorism.

According to a detailed analysis by the National Council of Nonprofits, these requirements are both vague and far-reaching. As written, they risk:

• Forcing applicants to affirm compliance with unclear or legally ambiguous mandates under penalty of criminal and civil law.
• Subjecting organizations to audits, investigations, or debarment for perceived non-compliance.
• Requiring time- and resource-intensive legal reviews before submitting any federal grant application.

Impact: Who Is Affected and How?

Nonprofits and Community Organizations

Nonprofits of all sizes—but especially smaller organizations without in-house counsel or compliance teams—are potentially exposed to oversized legal and financial risks. Diane Yentel, President and CEO of the National Council of Nonprofits, warns that many organizations may opt not to pursue federal funds at all rather than risk "enormous financial and legal" exposure. This could disrupt services to millions of Americans dependent on nonprofits for food, shelter, job training, or senior care.

Researchers and Academic Institutions

Research universities and academic organizations frequently act as grant recipients and sub-recipients for federal funding. The new requirements could delay project starts, complicate renewals, and increase the cost and complexity of compliance—especially when grants are tied to sensitive topics like DEI, immigration, or public health. This could have a chilling effect on grant-seeking, particularly for early-career scholars, new investigators, and collaborative community-academic partnerships.

Small Businesses Seeking Federal Assistance

Small businesses—especially those pursuing grants or contracts through Small Business Innovation Research (SBIR) and other programs—will also face heightened compliance risks. The threat of penalties for certifications later found non-compliant could deter participation or force a reliance on outside legal counsel, adding to the cost of pursuing federal opportunities.

Action: What Grant Seekers Should Do Now

1. Read the Proposed Changes: Federal Register summary and regulatory comments page
2. Download the Nonprofit Advocacy Toolkit: The National Council of Nonprofits provides a step-by-step comment guide to help organizations draft effective public comments.
3. Submit Public Comments Before March 30: Engagement is critical. Nonprofits and others can influence the rulemaking process by offering specific feedback, requesting clarifications, sharing examples of potential harm, or advocating for delayed or revised implementation.
4. Consult Legal or Grants Professionals: If your organization receives—or plans to apply for—federal funds in 2026, start discussions with compliance or legal advisors to assess your exposure and develop a plan for future certifications.

Outlook: What to Watch Next

This is an evolving story. The outcome of the public comment period will shape whether, and how, these rules are implemented—potentially by late 2026 or early 2027. Watch for:

• Updates in the Federal Register on final rule publication and effective dates
• Litigation or advocacy led by nonprofit coalitions
• Clarifying guidance from federal agencies

Stay engaged—and consider subscribing to alerts from the National Council of Nonprofits, Council on Foundations, or other sector groups for the latest updates.

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