GuideStar Blog

Government Shutdown Hurting Nonprofits

The House of Representatives voted unanimously in favor of paying all furloughed government workers back pay when the shutdown ends. Congressman Michael Turner, R-Ohio, told the Christian Science Monitor that federal workers shouldn't suffer consequences due to the government stalemate. While the weekend legislation was great news for 800,000 federal workers, it didn't extend to the 1.4 million tax-exempt charities and nonprofits that also rely on government funding.

Nonprofits paid nearly 10 percent of all U.S. wages in 2010, according to the National Center For Charitable Statistics. This means at least 10 million people will not be paid, and millions more who rely on nonprofit programs will be left in the dark (some literally). Popular sentiment is that the shutdown cannot extend past October 17, the date Treasury Secretary Jack Lew said the U.S. coffers would run out of money. Nonprofits have already felt the effects.

Shut Down Government Photo by Flickr user KAZVorpal

Direct Impact On American Families

The shutdown is now entering its second week, and nonprofits all across the country are bracing for the worst. One report on Boston.com speaks of food and fuel assistance programs, along with housing programs that help people find apartments for rent, all being stretched to their absolute limits. Quincy Community Action Programs provided fuel assistance to approximately 3,600 area homes last year, according to the report. The organization's director said the state's Department of Housing and Urban Development has enough money to commence the program for the winter months but will not be able to sustain it without federal funding. Interfaith Social Services, another Massachusetts nonprofit, said that its own employees are now using its emergency food services due to being furloughed pending the shutdown. The organization also said it's receiving panicked phone calls from families that rely on their food assistance programs.

The pinch is also being felt in Midwestern states. Michigan's Ypsilanti Meals on Wheels program told Michigan Live that it can function normally for about a month before seriously cutting back on its program. The organization provides 1,000 meals per week to low-income families and less fortunate individuals. Meals on Wheels receives its money through funds the federal government gives the county to disperse among various organizations. The programs gets half of its $500,000 annual budget from these county funds. The shutdown means government nutrition assistance programs (food stamps) stop, which puts more pressure on nonprofits like Meals on Wheels to provide food to families. Mary Jo Callan, the Director of the Washtenaw County Office of Community and Economic Development, said the funds will remain available as long as the shutdown does not extend beyond a few weeks.

Steps Nonprofits Can Take

Nonprofits have grown somewhat accustomed to Congressional bickering, and many have been proactive in anticipation of interruptions and shutdowns. Diana Léon-Taylor, president and CEO of the Nonprofit Roundtable of Greater Washington, told AssociationsNow.com that shutdowns and cuts are "the new normal" and nonprofits must plan for this. The most difficult, immediate decision nonprofits must make is to furlough or lay off employees. Léon-Taylor said all nonprofits should first review their employment contracts and make certain they don't do anything to interfere with different employees' exempt and non-exempt statuses. Nonprofits also need to determine the impact layoffs or furloughs mean on medical benefits for those affected.

The U.S. Office of Management and Budget (OMB) sent every White House agency a memorandum in early September that outlined its recommendations for operation during a potential shutdown. The OMB says every department should have a contingency plan in the event of a government shutdown. It continued, saying that the only operations that absolutely should remain active are those in which there is a statutory requirement to do so.

Nonprofits can and should apply this advice to their operations as well. It is best to go directly to the source when determining your options in different areas. Nonprofit Quarterly, an online community activism journal, recommends nonprofit administrators speak directly to the officer who handles your contracts to get organization-specific guidance on financial issues.

Latest On The Shutdown

The government shutdown does not appear to be coming to an end anytime soon. House Republicans have indicated they will not budge on their desire to defund or delay the full implementation of the Affordable Care Act, a.k.a. Obamacare. But this stance may start to soften as the GOP is losing support from its constituents. A Washington Post-ABC Poll released on October 7, found that 52 percent of self-identified Republicans supports the House's stance. This is down from 56 percent one week earlier.

No matter what happens, I hope that you and your nonprofit are surviving during this turbulent time. Please let me know how it's going for you in the comments below.

The preceding is a guest post by Alana Bender. After receiving her Computer Science degree in NorCal, Alana’s interest in writing about technology took over when she began freelancing for various blogs and publications. Aside from writing, Alana has a special love for the beach and anything Apple.

Topics: Nonprofit Programs