Sweeping Grant Changes Need a Second Look

For those who have read this column or are generally interested in the charitable sector, you may be familiar with the idea that America’s nonprofit entities have evolved gradually over the last 100+ years to be what they are today.

While many of us may think first of the important social benefits of charitable work in our communities, nonprofit businesses serve a place in our country’s governmental structure, too. I’ve argued in the past that the nonprofit federal tax exemption can be tied back to the fact that American nonprofits perform social good on behalf of government – functions which are often performed by governments in other countries rather than by private entities. Many times, nonprofits perform services on behalf of local, state and federal government agencies via contracts and grants, just like any other government contractor or grantee.

With all this in mind, any substantive changes to our nation’s grantmaking process are far-reaching and deserve an appropriate level of scrutiny.

In May of this year, the U.S. Office of Management and Budget proposed changes to overhaul the Uniform Guidance that serves as the common set of rules governing most federal grantmaking to charitable nonprofits, state, local, and Tribal governments, and others. This kicked off an official 45-day public comment period, during which time nearly 500,000 public comments were submitted, of which 86 percent opposed the proposal, per Bluestem Consulting.

OMB is expected to publish a final rule      as early as September 1. If implemented, the proposal is anticipated to create significant financial risk and instability for federal grantees, including but not limited to nonprofits, making it more difficult to provide vital services to communities.

The proposal attempts to grant unprecedented power to any administration to withhold, suspend, or terminate grants without notice and without cause, or to change terms and conditions mid-performance. From a business perspective, imagine how challenging that would be for any party to any contract.

The proposal could allow an administration to determine federal awards based on personal ideology, rather than objective criteria and community needs. Taken together, these changes would force grantees to face unpredictable financial, legal and reputational risks that increase the costs of accepting federal grants.

Many effective and qualified grantees and their boards may be unable to accept those risks—and even if they do, they could face their programs being cut without warning. This could lead to disruptions to essential services, including housing, community development, health, education, food, shelter, community services, disaster recovery, and more in local communities.

Further, there are anticipated economic impacts on local communities, as Moody’s Analytics has warned the proposal could negatively impact credit ratings for states and local governments.

If modifications are needed, then with such large-scale opposition and such sweeping impacts, this proposal needs more time and consideration.

Please join me in contacting Oklahoma‘s U.S. Senators to take action now to stop this proposal.

We are stronger together!