Local Nonprofits Dependent On Federal Funds Affected By Government Shutdown

Jan 17, 2019

Mountainlands mutual self-help program participants
Credit housinghelp.org

The current government shutdown has evoked images of overflowing trash cans at national parks and long security lines at airports, but how is federal inaction affecting local nonprofit organizations? KPCW’s Emily Means has more.

After nearly a month-long stalemate between Congress and President Donald Trump, the federal government has been shut down for its longest period in U.S. history. Congress’ inability to pass a budget has wide-ranging effects, not only for the hundreds of thousands of federal employees going without paychecks, but also for the non-profit organizations that rely on federal funding to provide services to their clients.

A recent survey sent by the Utah Nonprofits Association to its member organizations indicates 55% of respondents receive some funding from the federal government, and 38% of respondents said federal funding makes up a quarter of their budgets. Utah Nonprofits Association CEO Kate Rubalcava says a lack of cash has some organizations in limbo.

“Some of the nonprofits are concerned because their nonprofits can’t do the work that they need to do without the funding," Rubalcava said.

A number of programs at Mountainlands Community Housing Trust receive funding from the federal government, and Mountainlands Executive Director Scott Loomis estimates about 30% of the operating budget comes from federal funds. Rural Development loans from the U.S. Dept. of Agriculture help fund two programs: the rental assistance program, in which qualifying renters put 30% of their income towards rent and federal money covers the rest; and the mutual self-help program, where participants can become homeowners by partially building their own homes. Loomis says he’s encouraging homebuilders in the self-help program to call their congress members so they can continue construction on their homes, and in the meantime, Mountainlands will dip into reserve funds and rely on financial assistance from outside parties to make up the difference.  

"The affordable housing community is pretty resilient—we’ve actually had another non-profit organization that’s offering short-term loans to cover these, if rural development doesn’t fund them—so i’m not overly concerned about it," Loomis said. "But it’s obviously going to be an issue and create a lot of extra work on everybody’s plate at this point, and we’re going to have to dig deep to find resources to keep things going if it goes much longer."

The indefinite nature of this particular shutdown is certainly challenging to non-profits that rely on federal funding, but Rubalcava contends that receiving delayed funding is common for nonprofits, which are typically reimbursed for services after providing them. Rubalcava says it’s not a bad idea for organizations to plan ahead for future payment delays to support the basic infrastructure of services.

“The biggest piece of advice I'm giving, and I've been talking to a handful of executive directors at nonprofits, and I’ve been providing this basic statement, and I continue to talk about it throughout the year," Rubalcava said. "Have conversations with your board about the true cost of being able to do business; about creating a rainy-day fund, in the event that you run into a cash-flow problem; and about reducing the stigma around non-profit organizations having to get a line of credit in order to pay for salaries, so that they have the ability to keep up their operations, as we as a community begin to figure out how we’re going to adjust to the federal government being shut down."

According to the Utah Nonprofits Association’s survey, one organization responded that it will need to close its doors if the impasse in Congress continues.