New Federal Grant Certifications Create Real Risk for Nonprofits –

If your organization applies for or receives federal funding, even occasionally, you should be paying close attention to a proposed change quietly moving through the federal rulemaking process.

On January 28, 2026, the General Services Administration (GSA) proposed new federal grant certifications to the System for Award Management (SAM). SAM is the registration portal nonprofits must use to do business with the federal government. These proposed new federal grant certifications would apply broadly to nonprofits, state and local governments, tribes, and other entities that receive federal financial assistance, including grants, cooperative agreements, loans, and direct appropriations.

The short version is this. The proposal would require nonprofit leaders to sign new, expansive certifications under penalty of civil and criminal law. The certifications are vague, legally risky, and likely to deter nonprofits from seeking or continuing federal funding if finalized.

Why This Matters to CEOs and CFOs

Under the proposal, applicants and recipients of federal financial assistance would be required to certify compliance with new standards tied to federal executive actions and Department of Justice guidance addressing so‑called “illegal” diversity, equity, and inclusion practices, undocumented immigration, and terrorism‑related provisions.

These new federal grant certifications are not narrowly drafted. They are broad, ambiguous, and untethered from clear statutory definitions. For nonprofit executives and finance leaders, that creates several immediate problems.

First, there is personal and organizational risk. Certifications would be signed under penalty of law, exposing organizations and potentially their officers to enforcement actions if the government later takes a different view of what compliance means.

Second, there is no clear compliance roadmap. The proposal does not explain how a nonprofit is supposed to assess compliance across complex programs, affiliates, subrecipients, contractors, or community partners.

Third, there is a chilling effect on federal funding. Faced with uncertainty and enforcement risk, many nonprofits may reasonably decide that federal funding is no longer worth it, particularly smaller organizations without in‑house counsel or compliance teams.

Finally, there is direct harm to communities. When nonprofits walk away from federal funding, the impact is not theoretical. Housing, health care, education, food access, disaster recovery, and community development programs are the first to feel it.

This is not a paperwork issue. It is a governance, risk‑management, and mission‑delivery issue.

Vague Rules Plus Aggressive Enforcement Create Real Exposure

One of the most troubling aspects of the proposed new federal grant certifications is how little guidance it provides while simultaneously raising the stakes for getting it wrong. History shows that nonprofits can be accused of wrongdoing without evidence and still be forced to spend enormous time and resources responding to audits, investigations, or litigation.

Even when an organization ultimately prevails, the cost in staff time, legal fees, and disruption to services is substantial. For many nonprofits, particularly those serving vulnerable populations, that cost is simply not sustainable.

You Can and Should Submit a Comment

The good news is that this proposal is not final. The public comment period is open through March 30, 2026, and federal agencies are required to review and respond to substantive comments.

Comments do not need to be long or technical to be effective. In fact, the most persuasive comments are often those that explain how your organization actually operates, describe how federal funding supports real services in real communities, identify why the proposed certifications are unclear, unworkable, or risky, and explain how the proposal would change your organization’s behavior, including whether you would stop applying for federal funds.

It is important that comments be personalized. Identical or near‑identical submissions are easier for agencies to discount.

You can submit comments in one of two ways.

Via the Federal Register:

Via Regulations.gov by searching for OMB Control Number 3090‑0290.

Be sure your comment references “3090‑0290, System for Award Management Registration Requirements for Financial Assistance Recipients.”

Comments must be submitted by March 30, 2026. The government will not accept comments by email or fax, and late comments will not be considered.

Final Thought

Nonprofit leaders spend a lot of time managing risk quietly so programs can keep running and communities can keep being served. This proposal shifts that risk in a way that is neither clear nor reasonable.

If you rely on federal funding, or if your community relies on you, now is the time to speak up. Thoughtful, experience‑based comments can and often do shape final outcomes.

Take a breath. Say what this would mean for your organization. And press send.

Ellis Carter is a nonprofit lawyer with Caritas Law Group, P.C. licensed to practice in Washington and Arizona. Ellis advises nonprofit and socially responsible businesses on federal tax and fundraising regulations nationwide. Ellis also advises donors concerning major gifts. To schedule a consultation with Ellis, call 602-456-0071 or email us through our contact form.