Get ahead of Form 990 and Uniform Guidance changes that could reshape reporting, oversight, and grant compliance.
A broad range of tax-exempt entities and state and local governments will see changes coming in two different compliance areas over the coming year.
Form 990 updates will impact all exempt organizations: traditional nonprofits as well as nonprofit health care and higher education organizations.
Uniform guidance changes will impact all organizations receiving federal funding — which also expands to state and local governments, and for-profit entities that receive federal grants.
In both cases, changes have not yet been finalized but are underway.
How Form 990 changes may impact your organization
In April 2026, the U.S. Department of the Treasury announced IRS plans to revise Form 990 to provide clearer, more transparent reporting of government grants and contracts and fiscal sponsorships. The IRS will be interested in knowing who controls these funds and where they’re spent.
The Treasury’s press release says that the purpose is “to detect misconduct and hold wrongdoers accountable.”
Tax-exempt organizations are required under Internal Revenue Code 6033 to file Form 990 in the form and manner prescribed by the IRS, including answering all required questions and providing requested disclosures.
This recent announcement indicates that organizations receiving government funding or having fiscal sponsorships will be expected to provide more information to the IRS and the public.
The next step is for Treasury and the IRS to issue a Notice of Proposed Rulemaking (proposed regulations) likely to define fiscal sponsorships and other technical concepts and introduce additional reporting requirements. Then the public will have an opportunity to comment before any changes to the regulations and form are finalized. This process could take time — from several months to a few years.
With this gift of time, we recommend that all exempt organizations, boards, and management review and improve, as necessary, any governance, administration, and record-keeping processes — and plan to pay more attention to your Form 990 as compliance expectations are clearly increasing. Work with your advisors to review your situation and prepare for additional accountability and scrutiny.
Proposed updates to the Uniform Guidance
On May 29, 2026, the Office of Management and Budget (OMB) proposed sweeping revisions to the federal government’s Uniform Guidance (2 CFR Part 200), which governs how federal grants and cooperative agreements are awarded and managed.
The proposal would affect nearly all recipients of federal funding — including nonprofits, states, local governments, Tribes, universities, hospitals, and private companies — and could significantly impact broadband, digital equity, research, and community development programs.
Key changes include:
- Making OMB’s grant rules legally binding regulations
- Imposing new restrictions on DEI-related activities
- Gender identity programs
- Certain anti-discrimination approaches based on disparate-impact theory
- Requiring grant recipients to use E-Verify and comply with new national security restrictions on foreign collaborations
The proposal reflects the current administration’s policy priorities and would apply broadly across federal agencies. This would greatly expand their authority to suspend or terminate discretionary grants if they no longer align with agency priorities, the national interest, or changing policy objectives, even after awards have been made.
Additional provisions would:
- Increase political oversight of grant awards
- Broaden applicant risk reviews
- Prohibit certain advocacy activities
- Make publication costs generally unallowable
- Strengthen subaward reporting requirements
- Introduce new accountability standards for recipients and subrecipients
While some programs, such as the BEAD broadband program, are exempt from the new discretionary termination authority, they would still be subject to many of the other requirements.
The proposed changes have major implications for grant-funded organizations because it:
- Centralizes authority within OMB
- Accelerates the implementation of future grant policy changes
- Embeds political and ideological considerations more directly into federal grant administration
Public comments are due by July 13, 2026, with implementation proposed for October 1, 2026.
Potential impacts on associations and their members
While the proposed rule touches nearly every aspect of grant administration for all types of nonprofits, several provisions have direct and meaningful implications for associations and their members — particularly those receiving or managing federal funding.
Membership dues and subscriptions
Dues may only be allowable under federal awards if necessary for the award and approved in advance by the agency. Subscriptions to professional and technical publications would no longer be allowable.
Conferences, meetings, and professional development
These costs may only be allowable under federal awards if explicitly approved and included in the grant terms and conditions.
These implications may influence how organizations engage with members, structure programs, and demonstrate the direct relevance of activities to federally funded work.
How CLA can help with the impact of policy changes
CLA’s public sector teams specialize in serving organizations impacted by these changes. CLA prepares more Form 990s than any firm in the country, and CLA’s assurance teams conduct more single audits than any other firm.
This breadth and depth of experience means we’re paying close attention to these changes and working to help our clients navigate them. We’ll continue to monitor developments and provide updates as the rulemaking process evolves.