Nonprofits Brace for Fallout From Government Shutdown

The impact of the shutdown of the federal government on the nonprofit sector — ranging from belt-tightening to staff furloughs and the suspension of services — will depend on how long the impasse continues, the NonProfit Times reports.

"It all depends: is it two days, two weeks, two months? If it's two days, everyone presumes life will go on," said David L. Thompson, vice president of public policy at the National Council of Nonprofits. "When government backs out and government offices close, people turn to nonprofits. Churches and frontline nonprofits are going to gear up, alert staff and volunteers that the load going to increase....[N]onprofits will keep going as long as they can."

Russell Spain, executive director of the Eastern Idaho Community Action Partnership, an anti-poverty group, told the Chronicle of Philanthropy that if the budget impasse is not resolved by October 14, ten to twelve staff members whose salaries are covered by federal grants will be furloughed and the organization will have to close a shelter for women and children, stop delivering food to fifteen food banks, and suspend a plan to launch an energy assistance program.

Catholic Charities of Wichita has decided to cover the costs of lost federal funding to keep its shelters and other programs open, the Wichita Eagle reports. "The services provided by the agency in central and southeast Kansas are too vital to the thousands of clients it serves, accompanies, and defends, and the staffs of these programs are too essential to furlough its employees or cancel scheduled programming," the agency's executive director, Michael Burrus, said in a memo to staff. "Instead, Catholic Charities will assume financial responsibility [for keeping] its doors open and its programs and staffs in place for the foreseeable future." The agency noted, however, that "[a] prolonged government shutdown would force a reconsideration of the initial decision to carry on the services normally provided by the agency."

According to a contingency plan posted on its Web site, the Corporation for National and Community Service is operating with enough staff to support programs not contingent on annual appropriations. The plan only covers a two-week shutdown, however, and if the impasse lasts longer, the agency "may determine that it is necessary to terminate some operations."

Even if a deal on a continuing resolution is reached soon, a more serious and potentially harmful showdown looms over the debt ceiling in mid-October. According to a survey (summary, 21 pages, PDF) released earlier this year by the Nonprofit Finance Fund, 56 percent of charities have three months of cash reserves or less. "Those are ones that most likely don't have lines of credit or 'fat-cat' donors who can give in a pinch," NCN's Thompson told the NonProfit Times. "Those are the ones most likely to furlough."

Diana Aviv, president and CEO of Independent Sector, a coalition of nonprofit and foundation leaders, addressed the issue during the organization's national conference in New York City this week. "We elect officials to govern, and when they fail in their obligations they get a failing grade from us," said Aviv. "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."

Roy Wenzl. "Catholic Charities to Cover Federal Funds for Programs Itself, for Now." Wichita Eagle 10/01/2013. Mark Hrywna. "Charities Brace for Government Shutdown." NonProfit Times 10/01/2013. Doug Donovan. "Government Shutdown: What It Means for Nonprofits." Chronicle of Philanthropy 10/01/2013.