Key points covered in this article:

• The revised Uniform Guidance creates several meaningful opportunities for federal award recipients, including a higher $1 million Single Audit threshold, a 15% de minimis indirect cost rate, a higher $10,000 equipment threshold, and expanded subaward flexibility. These changes can reduce administrative burden and improve cost recovery for many nonprofits.
• Timing is one of the most important considerations because different awards may follow different versions of the rules depending on when they were issued, renewed, or amended. At the same time, the new Single Audit threshold is based on the organization’s fiscal year start date rather than the timing of individual awards.
• Even when organizations fall below the Single Audit threshold, core compliance responsibilities still remain. Nonprofits should review award terms carefully, monitor federal expenditures throughout the year, and align budgets, internal controls, and grant planning with the rules that apply to each award.

The federal government revised the Uniform Guidance in April 2024. Most changes took effect October 1, 2024, and nearly two years later, the effects are showing up in audits, grant budgets, and compliance planning across the nonprofit sector. Nonprofits that understand the changes stand to benefit, through a higher Single Audit threshold, better cost recovery, and more flexibility in managing federal awards. 

The catch is timing. Different awards can operate under different rules depending on when they were issued, renewed, or amended, so a nonprofit may be managing several sets of requirements at once. Sorting out which rules apply to which award is the key to capturing the benefits. 

Single Audit Threshold Rises to $1 Million

The threshold for requiring a Single Audit increased from $750,000 to $1 million in federal expenditures, applying to fiscal years beginning on or after October 1, 2024. For organizations that spend between $750,000 and $1 million in federal funds, this change could eliminate the Single Audit requirement entirely. 

A Single Audit involves extensive documentation, testing of internal controls, and compliance verification across all federal programs. That work gives funders, boards, and the public assurance that federal dollars are managed properly, and for organizations still meeting the threshold, that assurance remains valuable. Organizations falling below the new threshold will likely see lower audit fees and less staff time devoted to the audit engagement, freeing up resources for program delivery. 

Falling below the threshold doesn’t erase the underlying compliance obligations. Internal controls, documentation, and procedures to ensure costs are allowable under federal rules are still required. What changes is the formal testing and reporting that comes with a Single Audit itself. 

Nonprofits spending close to the $1 million mark should watch that number all year. A new program or a late grant award can unexpectedly push total federal expenditures over the line. Organizations should work with auditors during FY 2027 planning to project whether they’ll exceed the threshold and plan accordingly. 

De Minimis Rate Increases From 10% to 15%

The de minimis indirect cost rate increased from 10% to 15% of modified total direct costs (MTDC). Many nonprofits don’t have negotiated indirect cost rate agreements with the federal government. For these organizations, the de minimis rate offers a simple way to recover administrative and overhead costs such as finance, human resources, and information technology. 

Organizations still using the 10% rate should verify whether the 15% rate is available for their active awards and incorporate it into new grant applications and fiscal year 2027 budgets. Many nonprofits have historically struggled to recover their true administrative costs, so the higher rate can be a meaningful gain in administrative recovery for the year. 

Equipment Threshold Doubles to $10,000

The equipment definition threshold also increased, from $5,000 to $10,000 per unit. Under federal rules, “equipment” means tangible property with a useful life of more than a year and a cost above that threshold, which comes with ongoing obligations like tagging, tracking in a property inventory, and accounting for the item at disposal. Property below the threshold is expensed with no intensive tracking required. 

With the higher threshold, fewer purchases meet the equipment definition, so less property is tied up in that tracking. One caveat, the federal threshold doesn’t override an organization’s own capitalization policy.  A nonprofit capitalizing assets at $5,000 internally should still follow that policy unless it updates it to match. 

Subaward Limits Rise to $500,000

The revised guidance also gives nonprofits acting as pass-through entities more room to work with. The amount eligible for fixed amount subawards increased from $250,000 to $500,000, which gives nonprofits more flexibility when structuring programs and managing subrecipients. 

A related change increases how much of each subaward counts toward indirect cost recovery. Organizations can now apply their indirect cost rate to the first $50,000 of a subaward, up from $25,000. For nonprofits administering grants with numerous subrecipients, this change can increase recoverable overhead. 

Cybersecurity Costs Now Allowed as Direct Charges

Perhaps most timely is the expanded recognition of technology and cybersecurity costs as allowable direct expenses. The revised guidance now names cybersecurity, integrated data systems, asset management systems, performance management, and program evaluation as costs that may be charged directly when specifically identified with a federal award, rather than absorbed as general overhead. 

Given rising cybersecurity expectations from funders, regulators, and insurers, this change is especially relevant. Nonprofits preparing new grant applications should consider whether these costs are necessary to the program and appropriately allocable to the award. 

Award and Fiscal Year Timing Determines Which Rules Apply

Knowing which rules apply to which awards matters as much as knowing what changed. The Single Audit threshold and the revised Uniform Guidance follow different timing rules, so a nonprofit may have multiple awards operating under different versions of the regulations at the same time. 

 The revised Uniform Guidance generally applies to new awards, renewals, and amendments issued on or after October 1, 2024. A no-cost extension alone generally doesn’t trigger the new rules. Federal agencies also had the option to adopt the changes early, so the terms of individual awards must be reviewed to verify what applies. 

The $1 million Single Audit threshold works differently. It’s based on when the organization’s fiscal year begins, applying only to fiscal years starting on or after October 1, 2024, regardless of when individual awards were issued. 

For example, consider a nonprofit with a June 30, 2025 year end. Its fiscal year began July 1, 2024, before the October 1 cutoff, so the $750,000 Single Audit threshold still applies for that year. Meanwhile, its individual grants follow their own timing: 

• Grant A, awarded July 2024, stays under the prior Uniform Guidance
• Grant B, renewed November 2024, follows the revised Uniform Guidance

This same pattern plays out across a nonprofit’s full portfolio of federal awards, some grants operating under prior requirements, others under revised ones, with internal controls that need to accommodate both during the transition. Organizations are encouraged to work with advisors to review the specific terms of each award. 

Looking Ahead

The revised Uniform Guidance creates real opportunities to reduce administrative burden and improve cost recovery, but those opportunities don’t apply automatically or uniformly across every grant. Proactive audit and budget planning works to align compliance practices with current guidance and helps nonprofits capitalize on the potential benefits available. For more information, contact PBMares Not-for-Profit Partner Bo Garner.