The Uniform Guidance (2 CFR 200): what nonprofits need to know

If you take federal grant money, whether straight from an agency or through your state, you're agreeing to follow the Uniform Guidance: Title 2 of the Code of Federal Regulations, Part 200. It covers how agencies run competitions, how you must manage and spend the money, what you can and can't charge, how you buy things, how you monitor partners, and when you need an audit.

It's long and it's dense, but for a nonprofit the essentials fit on a few pages. This guide covers those essentials, the April 2024 revisions that took effect October 1, 2024, and the 2025–2026 developments that may change the rules again. It reflects the regulations as of October 2026. Nothing here is legal or accounting advice. For specific questions, talk to your auditor or attorney.

How the Uniform Guidance is organized

Applicability: which awards, which version

The 2024 revisions apply to federal awards made on or after October 1, 2024. Agencies could apply them earlier to existing awards, and some did (EPA, for example, applied the revised termination provision to agreements awarded or amended to add funds on or after July 1, 2024). Awards made before the effective date generally stay under the rules in place when they were issued, unless an amendment changes that.

The 2024 revisions: before and after

OMB's final rule (published April 22, 2024; effective October 1, 2024) was the most extensive rewrite since the Uniform Guidance first took effect. The numeric changes most nonprofits feel:

The single audit threshold change applies to fiscal years beginning on or after October 1, 2024.

Other changes worth knowing:

• Plain-language NOFOs with a standard eight-section structure (200.204 and Appendix I).
• Internal controls must be documented and expressly include cybersecurity measures to protect sensitive information (200.303).
• Mandatory disclosures of credible evidence of certain violations go to the agency and its Inspector General (200.113).
• Termination terms must be clear. Agencies must "clearly and unambiguously" specify all termination provisions in the award terms (200.340).
• Subrecipients and contractors. Contractors under awards no longer need a UEI. Pass-through entity duties were clarified (200.332).
• Terminology. "Non-federal entity" is largely replaced by "recipient" and "subrecipient."

Procurement thresholds changed again in 2025

Your micro-purchase and simplified acquisition thresholds for federal awards are tied to the Federal Acquisition Regulation. A FAR inflation adjustment effective October 1, 2025 raised the micro-purchase threshold from $10,000 to $15,000 and the simplified acquisition threshold from $250,000 to $350,000. Those apply to procurements under federal awards, though your own policies, your state, or your pass-through entity may set lower thresholds. Update your procurement policy if you want to use the higher limits.

Cost principles: allowable, allocable, reasonable

Subpart E is where most audit findings start. The core test is in 200.403. To charge a cost to a federal award, it must:

1. Be necessary and reasonable for the award's performance, and allocable to it
2. Conform to any limits in the Uniform Guidance or the award
3. Be consistent with how you treat the same kind of cost on non-federal activities
4. Be treated consistently as direct or indirect (never both)
5. Be determined under generally accepted accounting principles
6. Not be used to meet cost sharing on another federal award
7. Be adequately documented

Reasonable (200.404) means a prudent person would have paid it under the circumstances. Did you follow your own policies? Was the price in line with the market? Would you defend it in a newspaper?

Allocable (200.405) means the cost benefits the award in proportion to what you charge. If a staff member spends 40 percent of her time on the grant, the grant gets 40 percent of her salary, backed up by time records (200.430).

Commonly unallowable costs

Specific cost items are covered in 200.420–200.476. A few that trip up nonprofits:

• Alcohol (200.423), entertainment (200.438), and fundraising (200.442)
• Lobbying (200.450)
• Fines and penalties (200.441) and bad debts (200.426)
• Contributions and donations you make to others (200.434)
• Costs outside the period of performance, unless pre-award costs were approved (200.458)
• Anything the NOFO or award terms specifically prohibit (food is a common one)

Indirect costs

You have three main options, covered in depth in our indirect costs guide:

• A negotiated indirect cost rate agreement (NICRA) with your cognizant federal agency. Federal agencies must accept it unless a statute, regulation, or approved exception requires otherwise (200.414(c)).
• The de minimis rate of up to 15 percent of MTDC (for awards under the 2024 rules), available if you don't have a negotiated rate. You choose the rate up to 15 percent, it needs no documentation, and federal agencies and pass-through entities may not make you use a lower rate unless required by statute or regulation. Once elected, you use it on all federal awards until you negotiate a rate.
• Charging everything direct, where costs can be consistently identified to each award.

MTDC (modified total direct costs) excludes things like equipment, rent, participant support costs, and the portion of each subaward above $50,000. Our indirect cost calculator does the math.

Financial management and internal controls

Your accounting system must be able to (200.302):

• Identify each federal award by its Assistance Listing, award number, and year
• Report expenditures accurately and on time
• Track funds authorized, obligated, spent, and remaining
• Compare actual spending to the approved budget
• Support every charge with source documentation

Internal controls (200.303) should follow recognized frameworks (the GAO "Green Book" or COSO), must be documented, and must protect sensitive information, including through cybersecurity measures. For a small nonprofit, that means written procedures for approvals, segregation of duties where you can (and compensating controls where you can't), monthly reconciliations, and documented review.

Budget revisions (200.308) and prior approvals (200.407): many changes, such as changing scope, key personnel, or adding subawards not in the approved budget, need written approval first. The award terms list which ones.

Procurement

When you buy goods or services with federal funds, Subpart D's procurement standards (200.317–200.327) apply. Requirements for nonprofits:

• Written procurement procedures (200.318) including a written conflict-of-interest standard for those involved in selecting contractors
• Full and open competition (200.319), with no unfair restrictions
• The right method for the size of the purchase (200.320):

• Contract provisions (Appendix II), such as termination clauses and debarment certifications, must be included where applicable
• Check SAM.gov exclusions before you contract
• Keep procurement records: the method, the selection rationale, contract type, and the basis for price

Equipment and supplies

Equipment is tangible property with a useful life over one year and a per-unit cost at or above the lesser of your capitalization level or $10,000 (2024 rule). For federally funded equipment you must (200.313):

• Keep property records (description, serial number, funding source, cost, location, use, condition)
• Do a physical inventory at least every two years
• Safeguard it against loss, damage, or theft
• Follow disposition instructions when you no longer need it

Supplies are everything below the equipment threshold. If you have unused supplies over $10,000 in aggregate at the end of an award, you may owe the government its share (200.314).

Subrecipient monitoring

If you pass federal money to another organization to carry out part of the program, you're a pass-through entity with real duties under 200.331–200.333: classifying the relationship as subrecipient or contractor, putting required information in the subaward, assessing risk, monitoring, and following up on audits. That's covered fully in subawards and pass-through funding.

Records and reporting

• Records retention (200.334): generally three years from the date you submit your final financial report, longer if there's litigation, an audit, or a claim, or if your award says so
• Financial reports (200.328) and performance reports (200.329): as specified in the award, typically annually or quarterly
• Closeout (200.344): final reports are generally due within 120 days after the end of the period of performance

Termination

Section 200.340 allows termination in several situations: if you fail to comply with the award terms; with your consent; by you, with written notice; or by the agency or pass-through entity "pursuant to the terms and conditions of the Federal award, including, to the extent authorized by law, if an award no longer effectuates the program goals or agency priorities." The 2024 revision added that agencies must clearly and unambiguously specify all termination provisions in the award.

This provision was cited in many of the grant terminations of 2025. For what happened and how courts have treated it, see the federal funding landscape. Practically: read the termination language in every award, and understand what costs you can recover after a termination (200.343 and 200.472 address closeout and termination costs).

Single audit

If your organization spends $1,000,000 or more in federal awards in a fiscal year beginning on or after October 1, 2024 ($750,000 under the prior rules), you need a single audit, due within 30 days after you receive the auditor's report or nine months after year-end, whichever is earlier (200.512). Details are in our single audit guide.

2025–2026: executive orders and the proposed rewrite

The Uniform Guidance in force as of October 2026 is still the 2024 version, as amended. But two developments may change it significantly.

Executive Order 14332 (August 7, 2025)

"Improving Oversight of Federal Grantmaking" (90 FR 38929) directs, among other things:

• Senior appointee review of funding opportunity announcements and discretionary awards, with announcements written in plain language
• Policy alignment: discretionary awards should demonstrably advance the President's policy priorities, and the order lists categories of activities agencies should not fund
• Preference for institutions with lower indirect cost rates, and a direction to OMB to limit facilities and administration costs
• Termination for convenience: OMB is to revise the Uniform Guidance so discretionary grants permit termination when they no longer advance agency priorities or the national interest, and agencies are to revise their award terms accordingly
• Drawdown controls: written justification for each drawdown request

Agencies have been implementing parts of the order through their own procedures and award terms. The Department of Energy, for example, issued funding-announcement review procedures in February 2026. Expect award terms on new discretionary awards to include termination-for-convenience language.

The May 2026 proposed rule

On May 29, 2026, OMB and federal agencies published a proposed rule (Federal Register document 2026-10817) to overhaul 2 CFR 200, with a target effective date of October 1, 2026. Comments closed July 13, 2026. According to legal summaries of the proposal, it would:

• Recast 2 CFR 200 as a binding "Uniform Grants Regulation"
• Require senior political appointee review of discretionary awards for alignment with agency and presidential priorities, with peer review advisory (200.205)
• Broaden termination authority when awards no longer serve program goals, agency priorities, or the national interest (200.340)
• Add national policy prohibitions, including on certain DEI-related practices and "gender ideology" as defined in EO 14168 (200.300)
• Require recipients and subrecipients to use E-Verify (200.303)
• Require written justifications for payment requests and Do Not Pay checks (200.305)
• Eliminate fixed amount awards unless authorized by statute (200.201)
• Make some costs newly unallowable or subject to prior approval, including certain advertising, conference attendance, memberships, and subscriptions
• Restrict collaborations with "covered foreign countries" (200.220)
• Leave indirect cost rate structures largely unchanged, citing FY2026 appropriations language on negotiated rates

Status as of October 2026

A continuing resolution signed September 2, 2026 funds the government through December 11, 2026. Section 157 of that law bars OMB from issuing or finalizing the proposed rule, or a substantially similar rule, through December 11, 2026. In other words, the planned October 1, 2026 effective date did not happen, and the current rules remain the baseline. What happens after December 11 depends on Congress and OMB.

What to do now:

• Keep complying with the current 2 CFR 200 and your award terms. Don't adopt proposed rules early.
• Read every new award's terms. Agency-specific terms implementing EO 14332 can apply regardless of the rulemaking.
• Watch for news in December 2026. Our federal funding landscape page tracks developments.
• Ask your auditor how any changes would affect your next single audit.

Your Uniform Guidance starter kit

If you're preparing for your first federal award, these written policies cover most of what auditors and agencies expect:

• Financial management and internal control procedures (200.302–200.303), including cybersecurity
• Procurement policy with conflict-of-interest standards and thresholds (200.318–200.320)
• Time and effort documentation for staff charged to awards (200.430)
• Cost allowability and cost allocation procedures (Subpart E)
• Equipment and property management (200.313)
• Subrecipient monitoring procedures, if you'll make subawards (200.332)
• Travel policy (200.475)
• Records retention (200.334)
• Mandatory disclosure and whistleblower procedures (200.113, 200.217)

For day-to-day management after award, see post-award compliance. For building compliant budgets up front, see grant budget and our budget builder.