Gov. Affairs | Issue 34 | October 15, 2026
Published October 15, 2026 - This content will be updated as developments unfold.
Good News:
Agriculture Grant Termination Challenge Moves Forward - Environment Energy Leader
An October 6 ruling kept alive the central challenge to USDA’s grant terminations, including claims the agency canceled awards by keyword search without reviewing each one. The plaintiffs are 27 nonprofits and King County, Washington, and they allege staff searched files for terms like “equity,” “environmental justice,” and “underserved communities.” Important caveat: the injunctions restored only the plaintiffs’ own grants, not the hundreds of other canceled awards.
The Office of Management & Budget’s (OMB) proposed rewrite of the Uniform Guidance (renamed the “Uniform Grants Regulation”) was supposed to take effect October 1. Among other things, it would let agencies suspend or terminate a discretionary award at any time if it no longer aligns with current agency or administration priorities, and add funding restrictions tied to DEI-related activities, gender-identity programs, and disparate-impact-based strategies.
However, the stopgap funding law prevents OMB from issuing or finalizing that rule, or a substantially similar one, through December 11, 2026. Grant recipients should not expect it to apply on October 1 as originally planned, but it’s a pause, not a cancellation.
Other News:
Treasury Proposes New Rules That Will Impact Nonprofit Status of Colleges - Snell & Wilmer Law
Who it impacts now: Private schools, colleges & universities, as well as scholarship funds
On September 3, 2026, Treasury and the IRS issued a proposed regulation to end federal tax-exempt status for private schools that have policies or practices found to discriminate based on race. It covers private K-12 schools, colleges, and universities. The rule eliminates previous safe harbors and could affect scholarships, fellowships, and pipeline programs at schools nationwide. Treasury listed geographic, income, or first-generation status as permissible criteria, and if finalized, the rule would take effect after May 2027. Treasury estimates it would affect 18,000 private schools and is accepting comments for 60 days, so the comment window closes around early November.
Why it matters beyond schools: Law firms warn that the government appears to be developing new guidelines, and every tax-exempt entity, not just schools, may be affected as they evolve. Funders should also note that if a school loses exemption, donors can no longer deduct gifts to it, and some state tax exemptions depend on federal status. Foundations that fund scholarship or pipeline programs at private schools should review eligibility criteria now.
For Funders/DAF Holders:
Treasury’s 2026-2027 Guidance Watchlist for Private Foundations - O’Connor Davies Accountants & Advisors
Released September 29, the plan lists 121 guidance projects Treasury and the IRS will prioritize through September 2027. Items relevant to the sector include guidance on certain donor-advised fund arrangements and on exempt organization reporting, including fiscal sponsorship, plus planned final regulations on the private-schools racial discrimination rule. If you work with fiscal sponsors or DAF-heavy donors, this is worth watching.
Resource:
Federal Funding and the New Landscape of Risk and Compliance (Registration)
GA Center for Nonprofits (GCN) is providing three new opportunities for nonprofit leaders and stakeholders to understand what’s changing and how they can respond. GCN CEO Karen Beavor will be joined by Arnall Golden Gregory Partner Megan P. Mitchell for an overview of the changing requirements and ways nonprofits can assess, adapt, and maintain funding.
In less than an hour, you’ll gain a heightened awareness of your compliance obligations, your organization’s key risk areas, and information to help you create a plan to shore up your practices. Participants will receive a Compliance Risk Assessment Tool and Planning Guide to facilitate next steps.
This 45-minute virtual program is offered at no cost and is open to all nonprofits:
10/26 7:00pm
10/28 12:00pm
11/4 8:00am
