Scientists Raise Alarm Over Proposed Rule to Overhaul the Federal Grantmaking Process
Proposed revisions to federal grantmaking guidelines would increase political influence over the process, ensuring that grants align with President Trump’s priorities.
Historically, agencies have managed their grantmaking processes largely independently, under general guidance from the Office of Management and Budget (OMB). These processes have been guided by career staff and subject-matter experts. A proposed rule issued by the OMB on May 29, 2026, could fundamentally change these processes.
Comments are due by July 13, 2026. The administration seeks to move quickly to finalize the rule. It plans to issue a final rule with an effective date of October 1, 2026, to ensure the new regulation applies to grants awarded in fiscal year 2027.
While the OMB describes the proposed rule as a reform of the grants management process, critics, including large swaths of the scientific community, have raised concerns that, under this rule, the OMB would politicize the process by prioritizing grants that align with the Trump Administration's priorities and deprioritizing expert opinion in grant reviews.
If finalized, the rule would affect an estimated $1 trillion in federal grants, including National Institutes of Health (NIH) grants and Medicaid grants awarded by the Centers for Medicare and Medicaid Services. Scientists across the country have raised concerns that the merits of their grants could now be decided by political appointees rather than by subject-matter experts.
This rule will apply to all federal grants, but it will disproportionately affect health and science grants. Medical specialty societies and other health organizations should review the proposed rule to assess its impact on their constituents and may wish to submit comments.
Key Provisions
Transitioning from OMB guidance for grantmaking to regulations is a meaningful change in itself. Guidance is a nonbinding interpretation or recommendation. In contrast, regulations are legally binding, mandatory rules. This change is also significant because while agencies currently have discretion in how they manage their grants, grant management would be centralized under the OMB-issued rule. Highlights of key provisions in the 400+-page proposed rule are as follows:
Final Review by Political Appointees (Section 200.205): The most significant change in this proposed rule is the elevation of political appointees over career scientists, program officers, and subject-matter experts. Senior political appointees would be required to conduct a “pre-issuance review” of every discretionary grant before it is awarded. In effect, they would have final authority to award or deny a grant.
The proposed rule states that discretionary grants should “advance the President’s policy priorities.” With this mandate, a political appointee could deny a grant that does not align with the current administration’s policy positions. This means that grants could be awarded based on administration priorities rather than on public need or scientific merit.
This requirement should be considered in light of how the president’s priorities are described in this rule, which labels climate science, public health research, and equity research as “divisive ideologies” – and the implications this could have for health-related awards. The proposed rule also states that “…peer review recommendations remain advisory and are not ministerially ratified, routinely deferred to, or otherwise treated as de facto binding.”
This entire approach would be a significant departure from the NIH’s current framework. The NIH website states, “NIH grants are evaluated for scientific and technical merit through a rigorous dual-peer-review system to ensure fairness and reduce reputational bias.”
Applicant’s Affiliations with Outside Organizations Considered (Section 200.206): The proposed rule allows agencies to consider an applicant's affiliations with organizations that violate federal law, undermine national security, or advocate the overthrow of the U.S. government. This has raised concerns that it could be biased against those affiliated with groups that do not align with presidential priorities, including affiliations with health organizations.
Multiple medical specialty societies have filed lawsuits against the Trump Administration over its policies on vaccines or other public health issues. Could this type of affiliation put a grant application at risk?
Prohibition of DEI Activities Could Impact Studies that Address Gender, Race, or Other Factors (Section 200.30): OMB proposes to prohibit the use of award funds to “fund, promote, encourage, subsidize, or facilitate” three categories of activities: DEI, Gender Ideology, and Protecting Children (e.g., the “transition” of a child under 19 years of age).
This could impact the types of studies funded. Questions have been raised about whether this could affect studies focused on certain populations.
Other Provisions of Note: Several proposals mark a significant shift from current policies and could have a detrimental impact on the grantmaking process.
Grant Termination: The proposed rule expands the authority to terminate a grant mid-award. Agencies are required to provide only a brief written rationale – they need not find noncompliance or fraud to terminate a grant. This leaves grantees, who may have invested in or committed resources for a multi-year grant, highly vulnerable.
Limitations on Non-Profit Categories Eligible to Apply for Grants: Under this proposed rule, agencies could explicitly restrict grant eligibility to specific IRS nonprofit categories (e.g., allowing 501(c)(3) organizations while excluding 501(c)(4) organizations). Advocacy-affiliated scientific organizations or civic society groups are often designated as 501(c)(4) organizations. This proposal could limit their access to federal grants.
Journal Costs: These are deemed unallowable. This ban on journal costs, which has previously come up under this administration in other contexts, is viewed as particularly concerning. It is not unusual for researchers to use grant funds to purchase journals needed for their studies.
Conference Costs: Conference attendance requires pre-approval.
Barriers to Foreign Collaborations: The rule proposes limitations on foreign collaborations. “When designing research and development programs, and evaluating applications,” the OMB states, “Federal agencies must apply a domestic-first framework, under which international elements may be included only if the Federal agency determines that such elements are justified, consistent with program objectives, and in the national interest of the United States.”
The rule also proposes a broad prohibition on international scientific collaboration. It applies to all countries designated on broad sanctions lists (including China) and covers travel, research activities, technical assistance, and indirect costs allocable to any such collaboration.
Issue Advocacy Prohibition: The proposed rule prohibits using federal grants for messaging that promotes or opposes a “particular social, political, or public policy position unrelated to the statutory objectives” of the grant. This raises questions about whether grantees could be limited in how they speak publicly about the implications of their findings on issues identified by this administration as politically sensitive (e.g., gender, health equity).
Elimination of Fixed-Amount Awards: OMB proposes eliminating fixed-amount awards and fixed-amount subawards unless otherwise authorized by Federal statute. This could increase the administrative burden associated with these awards. Fixed-amount awards allowed recipients to receive funding based on deliverables, without routine cost monitoring or financial reporting.
What Is Next
From any vantage point, the changes proposed in this rule are significant, whether you agree that it is a much-needed reform of the current process or believe it is an attempt by the administration to micromanage federal grantmaking and to codify into regulation executive orders that courts have previously struck down.
Comments on the proposed rule are due by July 13. A group of scientists is seeking to submit 1 million comments, which they say would be a record. If the OMB seeks to finalize the rule without significant changes, it will likely be challenged in court. We could also see advocates appealing to Congress to take action.
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For more information and questions, please contact:
Sheila Madhani
Madhani Healthcare Consulting
Email: smadhani@madhani-health.com
Tel: (202) 679-2977