We are now entering the fourth week of the government shutdown. This is officially the second longest full shutdown in U.S. history, and we are beginning to see the impacts across the country.
With roughly 4,200 federal workers laid off and 10,000 more threatened, the strain on nonprofits to continue existing work (without funding, in some cases) and provide community support is becoming increasingly evident.
The following chart highlights the effects of the shutdown on various types of nonprofit organizations, focusing on how they are coping with increased demand and disruptions to federal funding and services.
| Type of Nonprofit |
Impact of Shutdown |
| Food Assistance (Food Banks and Pantries) |
- SNAP assistance has been approved through October 31, but if a deal cannot be reached there is potential for November benefits to be delayed. The USDA could tap into multi-year contingency funds that can cover administrative expenses and/or pay benefits directly.
- WIC benefits have not been renewed, and while some states are able to bridge the gap in funding, not all are.
- Surge in demand as furloughed federal workers turn to food banks.
- Emergency Food Assistance Program and Commodity Senior Food Program, which rely on USDA provided food or direct funding, can continue normal operations but could see a disruption or halt if the shutdown continues.
|
| Housing and Homelessness Services |
- Federal housing vouchers will continue but could be delayed.
- Many providers have or are halting new client intakes (leaving people unhoused or unstably housed for longer).
- Housing inspections and new housing assistance applications are paused until the government reopens.
- The Low-Income Home Energy Assistance Program (LIHEAP) is impacted but the effect will vary by state. States will not receive new grants to assist families with electric and gas bills. Some states may have leftover funds to bridge the gaps while others may not.
|
Health and Social Service Nonprofits
(e.g., community clinics, mental health, job training programs) |
- While Medicare and Medicaid are funded separately from the annual budget, there could be disruption in eligibility verification and claims processing from reduced staffing.
- Federal grants have been canceled or delayed, forcing cutbacks in programs (e.g., mental health counseling, job training).
- Operational site visits and other monitoring and oversight activities have been suspended.
- Clinical trials operated by the National Institutes of Health are stalled.
|
Childcare and Education Programs
(e.g., Head Start operators,
childcare centers) |
- According to the National Head Start Association (NHSA), Head Start programs will remain operational during the shutdown.
- If the shutdown continues beyond November 1, there will be approximately 140 Head Start programs operating without federal funding, affecting service to roughly 65,000 students.
- The shutdown is likely to affect various educational programs, with potential delays in funding disbursement to vulnerable schools.
- Title I and Individuals with Disabilities Education Act (IDEA) recipients are expected to continue to receive support, but new grant-making activities have halted.
- Civil rights investigations and other regulatory actions are paused.
- Schools that receive Impact Aid will be immediately affected, as they often depend on federal funding for their operational budget and no payments are being processed during the shutdown.
- Schools on military bases or Native American Reservations are likely to feel the impact of the shutdown quicker and more acutely, as these schools rely on Impact Aid to bridge the gap in operational budgets created by no property tax collection on federal land.
- Student aid will likely be disrupted, including processing of FAFSA applications and disbursing of Pell Grants and student loans.
|
| National Parks, Museums, and Government-Run Buildings |
- It is up to the individual park to determine if it can remain open.
- Much of the National Park Service workforce is furloughed during the government shutdown.
- Maintenance, law enforcement, and risk management become even more difficult during a shutdown.
- Smithsonian museums, research centers, and the National Zoo are all temporarily closed.
- All tours of the U.S. Capitol, White House, FBI Headquarters, the Supreme Court, the Library of Congress, and U.S. Botanic Garden have been suspended.
|
How CLA can help
During this period of uncertainty, CLA can provide critical support to nonprofits by helping organizations maintain strong grant compliance and develop robust cash-flow planning and projections.
By meeting grant obligations and making sure reporting remains accurate and timely, nonprofits can position themselves to retain crucial funding streams even as government processes stall.
In addition, proactive cash-flow forecasting allows organizations to anticipate shortfalls, prioritize essential services, and identify opportunities for bridging gaps in funding. CLA’s experience in these areas empowers nonprofits to navigate financial disruptions, sustain operations, and continue serving their communities effectively despite the ongoing government shutdown.
This blog contains general information and does not constitute the rendering of legal, accounting, investment, tax, or other professional services. Consult with your advisors regarding the applicability of this content to your specific circumstances.
