Government Affairs and Advocacy

Oct. 9 Federal Update: Empowering Nonprofits with Game-Changing Reforms Proposed for Federal Grants       

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October 9, 2023

The Biden-Harris Administration has proposed significant changes to the Office of Management and Budget’s (OMB) Uniform Grants Guidance aiming to benefit nonprofit organizations, particularly addressing concerns related to indirect costs. These reforms are set to streamline service delivery, enhance equity, and improve the administration of federal financial assistance. Key provisions include bolstering federal reimbursement for nonprofits’ indirect costs, simplifying the federal grant process, and advancing equity.

Bolstering Federal Reimbursement for Nonprofits’ Indirect Costs

The proposed OMB Uniform Grants Guidance seeks to increase reimbursement rates for indirect costs carried by nonprofit organizations, currently set at ten percent. The new plan raises the de minimis rate to 15 percent, providing better recovery of indirect costs, especially for newer organizations without formal rate negotiation capabilities.

  • De Minimis Rate Increase: The proposal aims to raise the guaranteed de minimis rate for indirect costs from ten percent to 15 percent, benefiting new or inexperienced nonprofits.
  • No Forced Lower Rates: Federal agencies cannot compel nonprofits to use rates lower than 15 percent unless required by law, preserving organizations’ autonomy.
  • Dispute Resolution: Nonprofits can notify OMB about disputes with federal agencies concerning indirect cost rates, seeking resolution and protection of their rights.
  • Stronger Mandate: Pass-through entities like state and local governments must adhere to federally negotiated indirect cost rates for subrecipients, ensuring consistency across agencies.

Making the Federal Grant Process Simpler and More Equitable

The OMB Grant Guidance proposes several changes to simplify and make the federal financial assistance management process more transparent and equitable:

  • Clear Communication: The proposal emphasizes clear and plain language in notices of funding opportunities, requiring executive summaries and comprehensive explanations of program requirements.
  • Eligibility Clarity: Agencies must specify eligibility criteria for each funding opportunity, facilitating access for new organizations.
  • Simplified Notices: Reforms aim to simplify and clarify Notices of Funding Opportunities, benefiting applicants with less experience and those from underserved communities.

Advancing Equity and Overcoming Barriers

The proposed revisions aim to reduce complexity and lower barriers for recipients of federal financial assistance, particularly those in underserved communities:

  • Multilingual Approach: The exclusive use of English in notices, applications, and reporting would not be required.
  • Diversity Consideration: Federal agencies should consider diversity when developing policies and procedures for merit review panels.
  • Community Engagement: Encouragement for agencies and recipients to engage, in both the planning and implementation stages, with community members benefiting from federal assistance programs.

Additional Significant Reforms

In addition to the above, the proposed reforms include:

  • Complete Revision of Notices of Funding Opportunities (NOFOs) for clarity and brevity.
  • Raising the Single Audit Threshold from $750,000 to $1 million.
  • Proposal to focus only on measuring relevant program performance metrics to eliminate unnecessary reporting.

These proposed reforms represent a significant shift towards a more accessible, equitable, and efficient federal grant process, mainly supporting nonprofit organizations and addressing longstanding concerns related to indirect costs. Public comments on these reforms are invited until Dec. 4, 2023, offering an opportunity for further input and refinement.


HHS Announces Major Step Forward for Kinship Caregivers

The Department of Health and Human Services released a new rule to help relatives become licensed or approved foster caregivers. Research has clearly demonstrated children are served better by living with kinship caregivers. Kinship families, however, have faced unnecessary barriers to becoming licensed, including requirements to participate in trainings that are geared toward non-relative foster parents. Under the new rule, grandparents, aunts, uncles, and other kin will have more expedient access to licensing or approval. They will also receive services and foster care maintenance payments equal to other foster families. The rule includes provisions to address other unique aspects of kinship caregiving, such as raising the age limit for kinship foster care providers and allowing foster children to share sleeping spaces with kin. HHS has pledged to work closely with states, tribes, community-based organizations, and families as they integrate these new policies.

HHS Introduces New Initiatives on Maternal Health Day of Action

On Sept. 27, the Department of Health and Human Services (HHS) Maternal Health Day of Action, Secretary Xavier Becerra announced $103 million in awards to address gaps in maternal health across the nation, as well as a new task force on the issue and a new national public education campaign called “Talking Postpartum Depression.” To combat the maternal mortality crisis, the secretary said at the announcement ceremony, “HHS is taking action to improve maternal care, help new moms, and ensure their children have the healthiest start in life.” The Human Resources and Services Administration will disperse the vast majority of the funds to efforts such as expanding the perinatal workforce, increasing access to maternal health in underprivileged and rural communities, funding wrap around services like OB/GYNs and midwives, and developing maternal health research. A newly announced task force on maternal mental health will convene experts and those with lived experience to identify best practices and evidence-based interventions to improve health equity and incorporate trauma-informed practices. Finally, the “Talking Postpartum Depression” campaign will exhibit personal stories from women who have experienced postpartum depression and increase awareness of symptoms and resources.

The House of Representatives Loses Its Speaker

Last week, for the first time in the country’s history, the Speaker of the House, Kevin McCarthy (R-Calif.), was toppled, leaving the House of Representatives without a leader and the federal budget negotiations in turmoil. McCarthy joined with moderate Republicans and the Democrats the week before to pass a continuing resolution, which would fund the government at current levels for forty-five days, buying more time for Congress to negotiate the budget. This caused backlash from far-right members of the GOP caucus, led by Rep. Matt Gaetz (R-Fl.), who initiated a motion to vacate the Speakership, ultimately overthrowing McCarthy.

It is unclear where the House goes from here. The first step is for the GOP to elect a new Speaker. So far, two members, Reps. Jim Jordan (R-OH) and Steve Scalise (R-La.), have thrown their hats in the ring of what will undoubtedly be a tendentious fight for leadership. The new Speaker, whoever it may be, will have to steer a challenging negotiation in the House over the federal budget, with two issues taking center stage: border security and Ukraine aid.

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