Learn how nonprofits can better handle funding delays, staffing issues, and rising service demand during a government shutdown.
October 1 signifies the beginning of the 2026 federal fiscal year; however, without an approved funding extension, the government is currently shut down until an agreement can be reached.
Nonprofit organizations, which often work closely with government agencies or rely on federal funding, may be significantly affected. Consider these snapshots and strategies that can help you proactively safeguard your organization’s mission, finances, and the communities you serve during uncertain times.
Government shutdown impacts on nonprofits
Financial disruption, federal funding freeze
During the government shutdown, federal grants, contracts, and reimbursements to nonprofits may be delayed or suspended. Many nonprofits may have to front the costs of their services (paying staff, rent, program expenses) knowing that their reimbursement may come at a much later time than expected.
Nonprofits operating on thin financial margins may want to consider how the funding freeze could affect their cash flow and consider other financing alternatives.
Potential increased demand for services
Oftentimes during a government shut down, nonprofits may face greater demand for their services. The absence of federal services or benefits may result in individuals turning to local organizations for help they normally receive from a government-run program, such as the WIC nutrition or SNAP food assistance programs.
This increased demand for services without potential funding to cover the increased costs can put organizations in a financial bind.
Disrupted programs, staffing, and service delivery
When cash flows from funding are delayed or frozen, nonprofits may have to make operational decisions and potentially limit or scale back activities. This can mean freezing new intakes, cutting service hours, furloughing staff, or closing programs or entire operations temporarily. Crucially, nonprofit staffing is deeply affected by these operational disruptions.
In a short shutdown (a few days), employees might endure a brief delay in paychecks; if the shutdown is protracted, nonprofits may need to consider layoffs or other staffing alternatives.
With reduced staffing, an organization’s capacity to deliver services may be impacted. With a potential for an increase in demand for services at the same time, it can become difficult for those organizations and staff still operational to provide critical resources. If your organization is in this position, consider alternative strategic plans for continued operations.
Strategies for nonprofits during a government shutdown
Assess financial resilience
Review cash flow and alternative funding sources to prepare for potential delays in federal payments.
Communicate with stakeholders
Keep staff, clients, and partners informed about changes in service delivery and funding status.
Advocate for support
Work with coalitions and associations to advocate for the needs of the nonprofit sector during and after the shutdown. Appeal to the private sector.
Document impacts
Track the effects of the shutdown on programs and operations to inform future planning and advocacy efforts.
How CLA can help with industry instability
A government shutdown can create significant operational and financial challenges for nonprofit organizations. CLA is here to help.
Our nonprofit industry professionals can help with contingency plans, guide you in financial planning and operational support decisions, and will continue to provide up-to-date information for you to better assist your organization.