Why it matters: Congress is voting on a measure that could pause sweeping changes to federal grant rules. Tennessee nonprofits are encouraged to contact their representatives today to support this delay.
How to act: Scroll to the bottom of this update for a ready-to-use email template you can send directly to your U.S. Senators and Representatives.
1. Senate Proposes Temporary Delay on Federal Grant Rule Changes
The U.S. Senate released the text of a Continuing Resolution (CR) to keep the federal government funded through December 11.
A key part of the bill—Section 157—temporarily pauses the Office of Management and Budget (OMB) from finalizing a proposed overhaul of federal grant rules titled the “Regulation for Federal Financial Assistance.”
Background on the Grant Rules
On May 29, 2026, the OMB published proposed changes to the rules governing federal grants (commonly called the “Uniform Guidance”). Nonprofit leaders and federal grantees across the nation expressed concern that the proposed regulations could disrupt funding and impact local community services.
If passed, Section 157 would hold these proposed rule changes in check through December 11, 2026, allowing lawmakers and the public more time to evaluate the policy.
What Section 157 Means
Under Section 157 of the CR:
- Rule Pause: Federal agencies cannot issue or finalize the proposed grant regulations through December 11, 2026.
- Retroactive Protection: If the rules were finalized before this bill passes, they cannot take effect or be enforced during this delay period.
Next Steps in Congress
The Senate is scheduled to vote on the funding bill this week. If it passes, the bill moves to the House of Representatives for approval before going to the President. Congress must pass a funding bill by October 1 to avoid a partial government shutdown.
2. Senate Committee Approves Bipartisan Tax Bill
The Senate Finance Committee voted 26–1 to approve a bipartisan tax administration bill designed to update Internal Revenue Service (IRS) procedures.
Led by Senators James Lankford (R-OK) and Raphael Warnock (D-GA), the bill includes a provision that strengthens appeal rights for nonprofit organizations.
- The Current Rule: Nonprofits can currently request an administrative appeal if the IRS denies or revokes their tax-exempt status.
- The Proposed Law: This bill writes that right directly into federal law. Writing it into law prevents future regulatory changes from removing a nonprofit’s right to appeal.
The National Council of Nonprofits (NCN) expressed support for the measure, calling it a key step in protecting due process rights for community organizations. TNN will track the bill as it moves to the full Senate and House.
3. Monitoring Upcoming Changes to Bank Giving Regulations
Federal bank regulators are expected to propose new rules updating the Community Reinvestment Act (CRA).
The CRA was created to encourage banks to lend and invest in all parts of their local communities, particularly low- and moderate-income areas. National advocacy partners warn that the new proposal might:
- Exempt more banks from CRA requirements.
- Change which bank activities—such as grants to local nonprofits—qualify for CRA credit.
If approved, these changes could reduce bank donations and grants to nonprofits, especially in rural communities, and lower investment in affordable housing. TNN is monitoring these developments and will share details on how to submit public comments once the official text is released.
✉️ Email Template: Contact Your Members of Congress
Copy, paste, and customize the template below to send to your U.S. Senators and Representatives.
Subject: Please Support Section 157 in the Continuing Resolution to Delay OMB Grant Rules
Dear [Representative/Senator Last Name],
On behalf of [Organization Name] and the community members we serve in [Service Area/District], I am writing to ask for your support for Section 157 in the upcoming Continuing Resolution (CR). Section 157 provides a temporary delay on proposed federal grantmaking rule changes.
Our organization relies on predictable federal financial assistance to deliver essential services—such as [insert key services, e.g., youth programs, healthcare, housing, food assistance]—to your constituents.
While we support clear standards and fiscal accountability, the proposed federal regulations published on May 29, 2026, create significant administrative and financial challenges for local nonprofits and government agencies.
We ask Congress to pause these new rules for five primary reasons:
- Impacts Merit-Based Awards: It reduces objective criteria, giving executive agencies broader control over grant decisions.
- Risks Funding Mid-Project: Agencies could cancel funding for ongoing projects without a clear appeal process, risking local resources.
- Affects Congressional Authority: The U.S. Constitution assigns spending oversight to Congress. These regulations shift significant authority away from lawmakers.
- Increases Administrative Burden: The proposed requirements would require local organizations to spend more time and money on paperwork rather than direct services.
- Reduces Program Oversight: The proposed changes remove key safeguards designed to prevent waste and misuse of public funds.
We urge you to vote in favor of the Continuing Resolution with Section 157 included. Thank you for your leadership and service to the state of Tennessee.
Sincerely,
[Your Name]
[Your Title]
[Organization Name]
[Contact Information / City, TN]