2 CFR 200 Uniform Guidance for Grants: What Every Grantee Must Know

What Is 2 CFR 200 and Why Does It Matter?

The Code of Federal Regulations Title 2, Part 200, commonly known as the Uniform Guidance, is the single most important regulatory framework governing federal grant awards. Issued by the Office of Management and Budget and codified into law, it establishes the rules that every recipient of federal funds must follow. Whether you are a nonprofit, a state or local government, a tribal organization, or an institution of higher education, 2 CFR 200 defines how you must manage, spend, and account for federal dollars.

Before the Uniform Guidance was finalized in December 2014, federal grant recipients had to navigate a patchwork of eight separate OMB circulars, each applying to different types of organizations. The consolidation into a single regulation was intended to reduce administrative burden, strengthen oversight, and create consistent standards across all federal agencies. Understanding these provisions is not optional. Non-compliance can result in disallowed costs, funding clawbacks, or debarment from future federal awards. For a foundational overview of how federal cost principles interact with your budget, see our guide on federal cost principles and grant budgets.

Key Subparts of the Uniform Guidance

The Uniform Guidance is organized into several subparts, each addressing a distinct area of grant administration. Grantees must understand all of them, but several deserve particular attention.

Subpart A Through C: Definitions, General Provisions, and Pre-Award Requirements

These opening subparts establish the terminology, scope, and applicability of the regulation. They define critical terms such as "subaward," "period of performance," and "modified total direct costs." Subpart C addresses pre-federal award requirements, including risk assessments that federal agencies must conduct before issuing awards. Understanding how agencies evaluate risk helps you position your organization as a low-risk grantee, which can result in fewer compliance conditions attached to your award.

Subpart D: Post-Federal Award Requirements

Subpart D covers the operational requirements that take effect once you receive a federal award. Key provisions include:

• Financial management standards requiring accurate, current, and complete disclosure of financial results
• Internal controls that provide reasonable assurance that you are managing federal funds in compliance with applicable laws and regulations
• Procurement standards governing how you purchase goods and services with federal funds
• Property standards for managing equipment and real property acquired under federal awards
• Performance and financial reporting requirements, including timelines and formats for submitting reports to the federal awarding agency

For a deeper look at managing your grant after the award is made, our post-award compliance guide walks through each of these requirements in practical detail.

Subpart E: Cost Principles

Subpart E is where most grantees spend the majority of their compliance effort. It establishes the framework for determining whether a cost charged to a federal award is allowable, allocable, and reasonable. Every expenditure must satisfy all three criteria:

• Allowable: The cost must conform to any limitations in the federal award, applicable laws, and the specific cost provisions in 2 CFR 200.420 through 200.476.
• Allocable: The cost must be chargeable or assignable to the specific federal award based on the relative benefit received.
• Reasonable: A prudent person would have incurred the cost in similar circumstances, and the amount is consistent with market rates.

Subpart E also contains an extensive list of specific cost items, from advertising to travel, with detailed rules about when each type of expense is allowable. Grantees must review these provisions carefully before charging any cost to a federal award.

Subpart F: Audit Requirements

Subpart F establishes the single audit requirement for organizations that expend $750,000 or more in federal awards during a fiscal year. The single audit is a comprehensive examination of your financial statements and your compliance with federal requirements. It is one of the federal government's primary tools for detecting waste, fraud, and abuse. Organizations approaching the $750,000 threshold should begin preparing well in advance, as the audit process requires extensive documentation and internal preparation.

Common Compliance Pitfalls

Even experienced grantees encounter compliance challenges under the Uniform Guidance. The most frequent issues include:

• Inadequate time-and-effort documentation for personnel costs charged to federal awards
• Failure to follow procurement standards when purchasing goods and services, particularly the requirements for competition and documentation
• Charging unallowable costs such as entertainment, alcohol, fundraising expenses, or lobbying activities
• Insufficient subrecipient monitoring when passing federal funds through to other organizations
• Missing or incomplete financial reports submitted after the required deadlines

Building a Compliance Infrastructure

Compliance with 2 CFR 200 requires more than reading the regulation. It requires building organizational systems and processes that embed compliance into daily operations. This means establishing written policies for financial management, procurement, travel, and conflicts of interest. It means training staff who handle federal funds. And it means conducting internal reviews to identify and correct problems before external auditors find them.

Organizations that view compliance as a continuous process rather than a periodic audit preparation exercise consistently perform better in single audits and maintain stronger relationships with their federal awarding agencies. Understanding the federal grant application process from the outset helps you build these systems proactively rather than reactively.

Learn more about grant writing strategies at Subthesis.

Take Your Grant Compliance Knowledge Further

Mastering the Uniform Guidance is essential for every organization that receives federal funding. If you want a structured, expert-led program that covers 2 CFR 200 alongside every other critical aspect of grant writing and management, enroll in The Complete Grant Architect course today and build the compliance infrastructure your organization needs to thrive.