August 2026 

It continues to be an incredibly challenging time for nonprofits — and their advisors — as organizations with values not aligned with the Trump administration grapple with how to carry out their missions and lead with their values in the wake of the ever-evolving landscape of diversity, equity, and inclusion (DEI) developments. With all that is going on — court decisions, litigation settlements, frozen federal funding for projects and initiatives, State Attorney General actions challenging DEI practices and policies, and new proposed federal grant certification requirements (discussed below) on the horizon — it’s no wonder that nonprofit organizations are confused and concerned about the legality of their DEI initiatives and how to navigate these unique challenges.  

The bottom line is that, although some approaches to DEI are no longer permitted (i.e., very targeted litigation efforts have chipped away at affirmative action and have chilled certain grant and scholarship programs), the law is still in flux, and the public policy debate is very much alive.  DEI is not illegal, and is 100% aligned with this country’s history of legal jurisprudence and our federal anti-discrimination laws. With that said, if your nonprofit is heavily reliant on federal funding, this is not an easy time to navigate.   

In this update: 

  • Looming federal grant certification requirements 
  • Serious implications 
  • What GSA proposed 
  • Key compliance concerns 
  • Practical steps for federal funding recipients 
  • What is the False Claims Act? 
  • Bottom line on proposed new certification requirements 
Looming federal grant certification requirements

One significant issue currently on the minds of nonprofit leaders is the proposed set of updates to certification requirements for federal funding recipients in the System for Award Management, commonly known as SAM. In January 2026, the General Services Administration (GSA) proposed updates to the Federal Financial Assistance General Representations and Certifications, which add new attestations about DEI compliance, immigration-related conduct, and terrorism-related concerns, and create a centralized certification framework across federal financial assistance programs, rather than leaving agencies to implement related requirements in a more piecemeal fashion.  The final version of the proposed new certification language was issued on February 18, 2026, and public comments were due by March 30, 2026.  Final language has not been issued. 

Serious implications

While these proposed changes may be designed to discourage certain nonprofits from seeking federal funding, some organizations simply do not have the option as they rely heavily on federal funding to carry out their services. Federal grant certifications require nonprofit leaders to sign under penalty of civil and criminal law, and the consequences are very real, as nonprofit lawyer Ellis Carter, the founder of Caritas Law Group based in Tempe, Arizona, and publisher of the CharityLawyer Blog, explains in her post dated March 16, 2026: 

These new federal grant certifications . . . 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 [see enforcement under the False Claims Act, discussed below] 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. 

For nonprofits and other recipients of federal financial assistance, the proposed updates raise practical questions about how to certify compliance with vague requirements while legal standards and agency expectations continue to evolve. In other words, how to stay in compliance with shifting, opaque, and possibly arbitrary expectations?  

What GSA proposed

GSA’s proposal would amend SAM’s financial assistance certifications to align with Executive Order 14173, Ending Illegal Discrimination and Restoring Merit-Based Opportunity, and Department of Justice guidance issued by Attorney General Pamela Bondi in July 2025 (the “Bondi Memo”) regarding unlawful discrimination by federal funding recipients.   

The proposed certification language would require organizations to certify compliance with the U.S. Constitution, federal laws, and relevant executive orders prohibiting unlawful discrimination on the basis of race or color in the administration of federally funded programs. The draft language also references programs or initiatives labeled as diversity, equity, and inclusion, or DEI, and identifies examples that GSA suggests may present compliance concerns. These include race-based scholarships or programs, preferential hiring or promotion practices, access to facilities or resources based on race or ethnicity, segregation in programs or resources, and retaliation against individuals who oppose practices they reasonably believe violate federal antidiscrimination laws. 

The proposal would also add certifications that an organization will not knowingly bring, transport, conceal, harbor, shield, hire, or recruit for a fee an illegal alien, and will not fund, subsidize, or facilitate violence, terrorism, or other illegal activities that threaten public safety or national security. 

Key compliance concerns

The proposed certifications create uncertainty for federal funding recipients, including nonprofit organizations, in several ways. First, the certification language references executive orders and agency guidance that reflects the Trump administration’s interpretation of unlawful discrimination, even where courts have not yet resolved the scope of particular practices – i.e., organizations would be required to comply with the administration’s interpretation of illegality, not with the definition of illegality defined by the law (legislation and the courts’ interpretation of legislation). Organizations may therefore face pressure to certify compliance with concepts that are still being tested through litigation and agency implementation. 

Second, the proposed SAM certification language for contracts and grants is drafted a bit differently than the certification language required by EO 14173. In particular, the proposed SAM certification language does not include an express reference to the certifications being “material” for False Claims Act purposes (as did EO 14173), although organizations should not assume that the absence of express materiality language eliminates False Claims Act risk.  More on this below. 

The proposed certifications also include language stating that unlawful discrimination is prohibited “in the administration of federally funded programs,” which, because it focuses on federally funded programs, is more limited in scope than EO 14173’s broader language requiring an organization to certify that it does not “operate any programs promoting DEI that violate any applicable Federal antidiscrimination laws.”  

Third, the wording of the proposed certifications includes language stating that to the extent any of the certifications are the subject of an active court order or injunction that is legally binding on a particular organization (and the awarding agency) and prohibits enforcement of such certification requirements, the relevant certifications will be deemed inapplicable to that organization. This carve-out is important, especially for the organizations that brought the relevant lawsuits, but it does not fully resolve how non-parties to litigation should assess the effect of injunctions or other court decisions on their certification obligations.  Unless courts or federal agencies provide clearer guidance, organizations may need to make difficult, case-specific judgments about whether particular certification requirements apply. 

Practical steps for federal funding recipients

Nonprofits that rely on federal funding should consider a practical compliance review focused on certifications and contract/grant conditions. This does not need to be unnecessarily burdensome, but it should be intentional and documented. 

  • Identify all federal funding streams, including direct grants, sub-awards, contracts, and pass-through funding. 
  • Review federally funded programs for eligibility criteria, selection practices, scholarships, training programs, hiring or promotion practices, vendor requirements, and participant access rules that may be affected by the proposed language. 
  • Review publicly accessible websites, job postings, program descriptions, and media reporting for compliance purposes. 
  • Document legitimate, nondiscriminatory rationales for program design, selection criteria, and funding decisions, especially where programs use criteria that could be characterized as proxies for DEI.  
  • Review the certifications and assurances attached to each award, including nondiscrimination, immigration-related, program eligibility, reporting, and financial requirements. 
  • Confirm who within the organization is authorized to make certifications and submit claims or reports to the government and train program, finance, human resources, and grants-management staff on the importance of accuracy in federal submissions. 
  • Maintain records showing how the organization evaluated compliance before making certifications. 
  • Escalate uncertainty early, especially where a certification involves evolving federal policy or unclear legal standards, reaching out to legal counsel when appropriate or necessary. 
  • Track litigation, agency guidance, and final GSA action before assuming that proposed certification language is either fully enforceable or inapplicable.  There are likely to be court challenges once the certifications are implemented.  
  • Join (or create) associations of similarly situated organizations. National, state, and local associations that track developments can help keep you apprised efficiently.  
  • Work collaboratively with peer organizations you connect with to support efforts to bring (and strengthen) any litigation challenges and to ensure that the scope of organizations that benefit from any court rulings is appropriately defined, and broad enough to address concerns in the sector.  
What is the False Claims Act? 

The False Claims Act (FCA) provides that any person who knowingly submits, or causes to submit, false claims to the government is liable for three times the government’s damages plus a penalty that is linked to inflation.  In addition to allowing the United States to pursue perpetrators of fraud on its own, the FCA allows private citizens to file suits on behalf of the federal government (called “qui tam” suits) against those who have defrauded the government.  Private citizens who successfully bring qui tam actions may receive a portion of the government’s recovery.   

Nonprofit organizations that receive federal grants, contracts, or other federal financial assistance should pay close attention to the FCA. While the law has long been associated with billing fraud, overcharging, and misuse of government funds, current enforcement priorities may expand the practical risk for nonprofits that certify compliance with federal requirements as a condition of receiving funds. 

Why this matters for nonprofits now

The FCA is a powerful enforcement tool, and its potential use in connection with federal certifications creates a heightened risk environment for nonprofits.  

Historically, False Claims Act claims have generally involved the following types of situations: 

  • government contractors overcharging the government for work performed; 
  • improper receipt of federal funds (for example, a company receiving funds through the Paycheck Protection Program to which it was not entitled); and 
  • fraudulent billing and/or unnecessary procedures in government-funded health care services. 

The Trump administration seeks to use the False Claims Act as a tool to enforce this administration’s public policy positions on issues such as DEI and immigration.  

  • This is a major shift in application of the False Claims Act. 
  • The risk of potential False Claims Act liability will have a chilling effect on the activities of nonprofit organizations. 
  • There is a financial incentive (the qui tam provisions) for persons disgruntled with a nonprofit organization to file claims under the False Claims Act. 
Bottom line on proposed new certification requirements

GSA’s proposed SAM certification requirements may reshape how recipients of federal funding assess anti-discrimination compliance, DEI-related programming, and certification risk across federally funded activities. For nonprofit boards and executives, the key takeaway is not panic but governance. Organizations should understand what they are certifying, document how they monitor compliance, and make sure program staff, finance teams, and leadership (executive teams and the organization’s board) are aligned before submitting claims, reports, or certifications tied to federal funding.  However, until the final language is issued and courts provide more clarity, recipients should prepare for continued uncertainty and ensure that any SAM certification is supported by careful internal review.