Nonprofits Pinched as Gov’t Shutdown Continues

The government shutdown is well into its second week and nonprofit organizations around the United States have been feeling its effects. More programs like Meals on Wheels and Head Start, which in some areas had to stop operations immediately, will run out of funds with each day that passes.

The organizations with a federal government grant or contract  with an Oct. 1 renewal aren’t receiving the money they need to provide services to people, according to Rick Cohen, director of communications and operations at the National Council of Nonprofits.

“The shutdown is most harmful to smaller nonprofits, ones that have already been stretched thin by the recession, by the arbitrary sequestration cuts, and by the dramatically increased demand for services over the last few years,” Cohen says.

There are 1.4 million tax-exempt charities and nonprofits that rely on government funding. Just as the D.C. government has been tapping an emergency fund to continue running during the shutdown, many nonprofits are doing the same and about 56 percent of nonprofits have three months of cash reserved, according to data from Nonprofit Finance Fund.

“There are thousands of federal employees across the country that have been furloughed and countless more people who are dependent on other government programs that have been closed that are turning to nonprofits for assistance,” says Cohen.

Although there are a large number of organizations that will be directly hurt by the lack of government funding, organizations that are not funded by the government are also being negatively affected. The demand for their help has been increased while their resources are limited.

While it is impossible to provide an exact number of people affected, Cohen says that the number would increase each day the shutdown continues.

“While this type of situation isn’t one to be anticipated,” he says, “most nonprofits were as prepared as they could have been. Unfortunately, with the rising demand and falling resources of the past few years, any reserve funds that nonprofits have built up are being depleted very quickly.”