The 2018–2019 government shutdown—the longest in history at 35 days—had significant impacts for many sectors. Not-for-profit organizations in particular, including institutions of higher education, experienced acute financial uncertainty because they heavily depend on government funds and services.
Not-for-profit organizations can mitigate the effects of future shutdowns by taking a proactive approach. To prepare for any future periods of financial uncertainty, organizations can review the financial impacts the 2018–2019 shutdown had on the not-for-profit sector and learn key preparation and response strategies.
Impacts of the Shutdown
Some of the services impacted by the 2018–2019 shutdown include the following:
Social Security and Medicare
The Social Security Administration couldn’t verify benefits for the public and suspended applications for benefits.
Health and Human Services
The National Institute of Health couldn’t accept new patients or process grant applications.
The Temporary Assistance for Needy Families cash welfare program wasn’t funded, resulting in eligible low-income families no longer receiving necessary aid.
The IRS couldn’t perform income verification for loans, including student loans. As a result, mortgages couldn’t be completed and refund processing was delayed.
The public saw heavy delays in air travel because many Department of Transportation employees who were ordered to work without pay called in sick.
The Environmental Protection Agency halted inspections and work.
Food Oversight and Aid
The Food and Drug Administration halted food inspections and production goods and services.
The Department of Agriculture was unable to fund food stamp programs.
State and Municipal Programs
States and cities suspended programs and stopped issuing IOU vouchers.
While not-for-profits have little control over when and if a shutdown occurs, there are steps they can take to help reduce the consequences should their federal funding be suspended or cut. These include the following:
- Maintain an operating cash reserve of at least three months
- Budget each year for an operating cash reserve
- Make temporary funding available through a line of credit or an equivalent
- Accelerate services, such as income verifications and applications, if a budget shutdown seems likely
- Prepare to modify budgets and operations to first fund mission-critical programs
We’re Here to Help
If you have questions or would like to learn more about how to prepare your not-for-profit for periods of financial uncertainty, please contact your Moss Adams professional.