News and analysis
October 08, 2013

Updated: Government Shutdown: What It Means for Nonprofits

Corporation for National and Community Service

Big swaths of the federal government have closed shop because Congress failed to reach a deal to keep the money flowing. Following are some reports about how the shutdown is affecting nonprofits.

You can also share your story at the bottom of this page.


Social-Service Group Seeks to Arm Advocates

Nonprofits and foundations concerned about the impact of the federal shutdown on human services and other programs that help vulnerable people may want to listen to a special Webinar the Coalition on Human Needs will hold to arm charities to become strong advocates on Capitol Hill.

The session, which starts at 4 p.m. Eastern time on Tuesday, is designed to jump-start nonprofit activism on budget and spending issues.

The coalition has also started keeping a list of all the ways the needy—and the nonprofits that serve them—have been hurt by the shutdown so far. It says, for example, that states expecting money from the Social Services Block Grant program won’t get it, and several nutrition programs that help low-income families won’t receive any new aid or groceries.

Doug Donovan


Nonprofit's Housing Program Stalled Due to Government Shutdown

For many nonprofit organizations, the federal government isn’t just the provider of cash, it’s a source of expertise. As the government shutdown continues, some charities are missing a knowledgeable partner.

“The shutdown is taking the wind out of a lot of our communities’ sails,” said Jake Maguire, spokesman for Community Solutions’ 100,000 Homes campaign, an effort that spends $1.4-million annually in seeking to find housing for veterans and the chronically homeless.

As part of the campaign, local nonprofits attend “boot camps” with members of the federal government, including the U.S. Departments of Housing and Urban Development and Veterans Affairs and the U.S. Interagency Council on Homelessness.

The boot camps consist of a few days of face-to-face meetings in which participants brainstorm ideas to get needy people into housing faster. Over the next 100 days, the local organizations attempt to put the plan into action. After that, they go into another 100-day period during which they focus on how to make their programs sustainable and handle more stubborn cases.

During the two 100-day phases, federal officials provide information and advice, Mr. Maguire says.

Currently, seven communities are in the second phase of the program, focusing on the toughest cases: Houston and Harris County, Texas; Dallas/Fort Worth, Texas; Central Texas; Lee County, Fla.; Sarasota and Manatee, Fla.; Bay Pines and Pinellas County, Fla., and Tampa, Fla.
Because of the shutdown, teleconferences later this month with federal officials have been canceled.

Mr. Maguire said the calls were essential for the nonprofits to get advice on their work and for federal officials to give consent for any changes they make in delivering services.

But with the government closed, it’s impossible to reschedule. “Our federal partners aren’t allowed to respond to e-mails,” he said.

Alex Daniels


Criticizing Politicians Without Crossing the Line Into Partisanship

It’s clear that Democrats and Republicans blame each other for the shutdown of the federal government. But can charities blame either political party without crossing the line into banned partisan activity?

Yes, says Melissa Mikesell, West Coast director of Alliance for Justice, which promotes nonprofit advocacy.

She says charities should make sure their criticisms focus on “policy actions of legislative leaders of one party" rather than on specific election campaigns.

It also helps to have a track record of taking positions on such issues. So, as Ms. Mikesell writes on her organization’s blog: “Get a head start on that critical commentary!”

Doug Donovan


Nonprofit Jobs Threatened

Nonprofits are starting to warn some employees that their jobs are at risk if Congress does not pass a spending bill to end the government shutdown.

The Eastern Idaho Community Action Partnership, an antipoverty group in Idaho Falls, has told staff members whose salaries are covered by federal money that they should stay home on October 14 if the budget impasse is not resolved by then, says Russell Spain, the group’s executive director.

He says that directive will affect about 10 to 12 employees out of his staff of 120. His organization would have to close a shelter for women and children, stop delivering food to 15 food banks in eastern Idaho, and suspend a plan to open an energy-assistance program on November 1, he adds.

The salary money comes from the Community Development Block Grant Program, Low Income Home Energy Assistance Program, and the Emergency Food Assistance Program.

Mr. Spain says his group would also have to shut down its Head Start centers if Congress does not approve 2014 spending by October 31.

Suzanne Perry

How Nonprofit Leaders Are Responding

Nonprofit leaders are bemoaning the political dysfunction that led to the government shutdown, saying it has left the nation’s most vulnerable behind.

“We elect officials to govern, and when they fail in their obligations they get a failing grade from us,” said Diana Aviv, president of Independent Sector, a coalition of nonprofit and foundation leaders. “Shutting down government hurts communities, it hurts poor people, it hurts families. It’s time for them to get back to the business of governing.”

Speaking Monday at Independent Sector’s annual conference in New York, Ms. Aviv and Stephen Heintz, president of the Rockefeller Brothers Fund and chairman of Independent Sector’s board, asked nonprofits to unite to identify shared national priorities that they could cite to pressure elected officials to support policies aimed at easing the economic inequality in America that is adding to partisan rancor.

“There’s not much evidence of collective purpose or responsibility in Washington today,” Mr. Heintz said. “But outside of Washington, I find many, many reasons for hope.”

Rockefeller and other foundations plan to start a National Purpose Initiative that will draw up a set of national public-policy priorities after hosting online and in-person forums with millions of citizens. It aims to propose solutions by 2016 through a network of scholars, issue experts, and nonprofit, business, media, cultural, and religious leaders.

The citizen-driven process will demonstrate the flaws in the ways political and financial leaders allocate resources to favor special rather than national interests, Mr. Heintz said. “Ideologues will find it more difficult to derail the progress,” he said.

Doug Donovan

What’s in Store for Federal-Grant Recipients

The Corporation for National and Community Service, which distributes hundreds of millions of dollars in grants to nonprofits for national-service projects and the Social Innovation Fund, plans to operate with about 72 full-time employees out of its 610-member staff during the shutdown, the agency said in a contingency plan.

Those employees will support programs that are exempt from the budget impasse because payments are not contingent on annual appropriations, including the National Civilian Community Corps, Vista antipoverty work, and the new FEMA Corps, which assigns AmeriCorps members to help the Federal Emergency Management Agency respond to national disasters.

Nonprofits that have grants from the corporation to engage AmeriCorps or Senior Corps members, for example, will not be immediately affected, the agency says. “However, no new grants will be awarded during this period, and program and grants staff will not be available to provide assistance to grantees.”

The corporation says its plan is designed for a two-week shutdown. If the budget impasse survives longer than that, the agency “may determine that it is necessary to terminate some operations.”

Alex Daniels and Suzanne Perry

Tips for Coping

Dismas Locaria, a Washington lawyer who represents nonprofits, has a tip for groups that rely on federal grants and contracts: Keep a careful tally of how the shutdown adds to your costs and prepare to make a claim to recover those expenses post-shutdown.

Mr. Locaria says charities should have already learned whether their points of contact are deemed “essential” employees and exempt from a furlough—and those who work on a federal site need to check whether they will be permitted access.

Even if a nonprofit’s grant isn’t set to expire anytime soon, some of its work could come to a “screeching halt,” Mr. Locaria warns. That’s because federal approval is often needed for a contractor or grantee to re-allocate funds or to direct work to a subcontractor.

Mr. Locaria says some of his clients are convinced the shutdown will be a “flash in the pan. Others are scrambling.”

Alex Daniels

Share Your Experience

How is your nonprofit affected by the government shutdown? Share your story in the box below.