MEMBER ALERT: Proposed Federal Grant Rule Changes Could Impact Nonprofit Funding
June 29, 2026The National Human Services Assembly (NHSA) is alerting its members, nonprofit human services providers, and sector partners about a proposed federal rule change that could significantly alter how grants are awarded, managed, modified, and terminated.
Why This Matters
The proposed rule would expand federal authority to terminate grants after they have been awarded, modify grant conditions during implementation, scrutinize nonprofit affiliations and partnerships, and restrict certain equity-related activities tied to disparate-impact frameworks.
Potential Impacts
• Increased risk of funding interruptions and early terminations.
• Greater uncertainty for multi-year programs and staffing.
• Additional compliance and reporting obligations.
• Expanded review of coalitions, networks, and subrecipient relationships.
• Challenges for organizations conducting equity-focused assessments and community
needs analyses.
What Organizations Can Do Now
1. Review your organization’s federal funding exposure.
2. Assess contingency plans for grant modifications or terminations.
3. Consult legal counsel regarding compliance and risk management.
4. Comments can be submitted during the federal comment period (Deadline: Monday, July 13, 2026, at 11:59 PM EDT) by clicking on “Comment” on the page.
5. Educate policymakers about the potential impact on communities and services. (Find your U.S. Representatives; Find your U.S. Senators)
6. Consider connecting/collaborating with other nonprofits in your networks to participate in their joint campaigns.
Bottom Line
These proposed changes could fundamentally alter the federal grant environment. Nonprofits should closely monitor developments and take steps prior to the July 13 deadline to help protect the stability of essential community services.