Office of Management and Budget’s (OMB) Proposal on Uniform Guidance for Federal Financial Assistance

Susie Han, Vice President, Regulatory Affairs, Public Policy, OFN

July 9, 2026 – 

OMB’s sweeping government-wide proposal increases oversight and compliance for federal financial assistance awardees. OFN will submit a comment letter to oppose the most burdensome changes and encourages CDFIs to submit their own as well.

Read time: 5 minutes

Overview of OMB’s Proposed Uniform Guidance

On May 29, 2026, the Office of Management and Budget (OMB) published a government-wide proposed rule revising guidance for federal financial assistance that covers policies and requirements related to the management of grants, cooperative agreements, and other forms of assistance. The rule spans across federal agencies, including the Department of Treasury, Small Business Administration (SBA), and Department of Housing and Urban Development (HUD).

In alignment with recent White House executive orders, the Uniform Guidance (“Guidance”) cites the need for more transparency and oversight of federal assistance programs to prevent unaligned DEI activities and/or other activities deemed wasteful spending.

The Guidance targets the prevention of what OMB considers unlawful discrimination, misalignment with core statutory purposes, divisive ideology, and lack of routine monitoring of actual costs incurred by the recipient or subrecipient. OMB purports that federal funding for such activities has led to waste and mistrust of government.

It aims to:

• Clarify that the Guidance carries regulatory enforcement status.
• Prohibit federal awards and subawards from being used “to fund, promote, encourage, subsidize or facilitate” DEI principles, policies or practices, gender ideology, sex transitions for minors. The Guidance also prohibits discrimination against faith-based organizations.
• Give federal agencies stronger authority to terminate grants, disallow costs, or recover funds for broader categories of noncompliance, including activities viewed as inconsistent with federal policy priorities.
• Tighten standards for allowable costs and require a clearer connection between federally funded activities and explicit statutory purposes, which could increase scrutiny of DEI, advocacy, or immigrant-serving activities.
• Increase compliance, certification, internal control, and subrecipient monitoring expectations for grant recipients and pass-through entities.
• Prohibit fixed amount awards and subawards that provide a specific amount of funding without regard to the actual costs incurred.

Impact on CDFIs

While much of the proposal is framed around improving accountability and reducing waste, several provisions could increase administrative burden and compliance risk for CDFIs that receive federal grants, cooperative agreements, or awards. Because the proposal explicitly elevates the Guidance to the status of a binding government-wide regulation rather than administrative guidance, the proposed changes would result in greater enforcement authority for federal agencies and heightened consequences for violations or audit findings.

The proposed regulations also stipulate that in the event of a conflict between the OMB government-wide regulations and an individual agency’s regulations, the government-wide regulations would apply to the greatest extent permissible by law. This change would allow OMB regulations to preempt individual agency practices, centralizing more federal grantmaking powers with OMB.

Many of the major provisions may affect CDFI operations and administrative capacity, including increased compliance obligations, reporting requirements, and greater funding uncertainty for CDFIs that receive federal funding.

OMB Proposal Raises Significant Concerns

OFN shares the Administration’s interest in ensuring that federal funds are deployed in compliance with applicable law and supports the objectives of the proposal to promote transparency, accountability, and integrity in federal financial assistance.

However, several major provisions in the proposed rule could substantially increase administrative burden, reduce funding certainty, and give federal agencies broad discretionary authority. These changes could undermine the effectiveness of federal programs without producing corresponding improvements in program integrity.

OFN’s primary concerns are that the proposal would:

• Significantly increase compliance costs without commensurate gains in program integrity;
• Introduce broad, subjective agency discretion that undermines predictability;
• Rely on vague and undefined standards that increase legal and operational risk; and
• Apply a one-size-fits-all framework across diverse federal programs, rather than agency- and program-specific solutions that build on existing accountability frameworks, such as the CDFI certification process.

Taken together, these provisions could create legal and operational uncertainty for CDFIs and other federal funding recipients. Vague standards, disproportionate compliance requirements, and overly broad review and monitoring authority could have unintended consequences for capital access and economic activity in the communities that federal programs are intended to serve. As written, the proposed rule may also allow OMB to exercise preemptive authority over individual agencies, limiting agencies’ ability to administer programs in ways that reflect statutory purpose, program design, and community needs.

A balanced oversight framework is possible. A framework that reduces taxpayer-funded waste while reinforcing strong programmatic outcomes should also preserve the ability of the federal government’s partners to advance the Administration’s priorities on the ground, including financing affordable housing, supporting small businesses, and expanding investment in rural communities. Federal financial assistance programs are most effective when recipients operate under clear, predictable, and consistent rules. Instead of top-down blanket solutions, tailored programmatic solutions, such as supporting the CDFI certification process for CDFIs, can better address OMB’s accountability concerns.

The full comment letter can be read here.

How You Can Take Action

OFN is submitting comments to OMB and encourages CDFIs to submit their own letter. Public comments are due July 13, 2026. OMB proposes to issue a final rule that is effective by October 1, 2026. Please feel free to reach out to [email protected] for assistance.

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