Statement from National Council of Nonprofits on OMB Grant Reforms

Statement from National Council of Nonprofits on OMB Grant Reforms

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Tim Delaney, President and CEO of the National Council of Nonprofits, made the following statement in response to today's release for public inspection by the federal Office of Management and Budget (OMB) of "Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards" to streamline federal grants rules and procedures:

“The new guidance from OMB makes one point perfectly clear: that governments should pay the actual costs of the work performed under written agreements on their behalf. Once the new OMB grants guidance goes into effect, governments at all levels will be required to pay the indirect costs incurred by charitable nonprofits for services provided in communities when federal funds are involved.

The new guidance means that nonprofits should be able to focus more on their missions and should be under less pressure to raise additional funds to essentially subsidize governments. In turn, charities with no government contracts or grants could see less competition for scarce philanthropic dollars. This is a major win for the entire charitable nonprofit community.

“At issue is the clear requirement in the guidance that pass-through entities (typically state and local governments) reimburse their nonprofit contractors and grantees for their reasonable indirect costs, sometimes called administrative or overhead expenses. A nationwide study published December 5th by the Urban Institute found that governments arbitrarily limit indirect costs for necessary program and organizational expenses; one in four nonprofits (24 percent) reported that governments refuse to pay any indirect costs of the organization, and half (49 percent) reported that they were limited to 7 percent or less. This will no longer be tolerated when federal funds are involved.

“Other parts of the new guidance will allow nonprofits to focus more on delivering services in their communities, and spend less money on wasteful paperwork by raising the Single Audit threshold to $750,000, eliminating duplicative and unnecessary audit criteria, and clarifying cost allocation rules.

“The leaders at OMB are to be commended for acting on the concerns expressed during the regulatory process by charitable nonprofits contractors and grantees that are providing services in local communities across the country on behalf of governments. We look forward to continuing to work with OMB and governments at all levels to ensure fair treatment for nonprofit contractors and grantees, which will result in more efficient delivery of services.”

For more information on indirect costs and government contracting, see the National Council of Nonprofits' report, Investing for Impact: Indirect Costs Are Essential for Success, or visit our webpage on OMB grant reforms


​The National Council of Nonprofits is a trusted resource and advocate for America’s charitable nonprofits. Through our powerful network of State Associations and 25,000-plus members – the nation’s largest network of nonprofits – we serve as a central coordinator and mobilizer to help nonprofits achieve greater collective impact in local communities across the country. We identify emerging trends, share proven practices, and promote solutions that benefit charitable nonprofits and the communities they serve.

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