GRF News

Several Articles Examine the Potential Impact of the Government Shutdown on Nonprofits

Oct 4, 2013

Gelman, Rosenberg & Freedman has identified several articles published over the past few days that contain information about the potential impact of the government shutdown on nonprofit organizations and USAID operations. We provide these links for informational purposes only.

Short summaries are provided below with links to the original articles.

Ms. Schoshinski says nonprofits that receive government funding or have government contracts should speak with appropriate contracting officers for specific guidance on their situation. She lists six considerations for nonprofit employers in terms of how the shutdown may affect staff. 1. Organizations face several options regarding staff—furlough, reduced pay, required employee leave or mandatory training. 2. Nonprofit employers should review employment contracts before reducing pay. 3. Nonprofit employers should understand differences between layoffs and furloughs. 4. Employers should be watchful of employment actions that may cause “disparate treatment.” 5. Nonprofit employers should not violate exempt status when requiring time off; the exempt classification under the Fair Labor Standards Act should be considered so employees don’t lose their exempt status. 6. Nonprofit employers should review the impact of different employment actions on benefits.

The blog post also includes a link complimentary Nonprofit HR white paper on the legal perspective on employment actions called Legal Considerations in Layoffs, Salary Reductions and Furloughs.

The article quotes a Washington Post article that explains how in Washington, DC, an estimated $200 million per day will be lost and 700,000 jobs could be affected by the shutdown. Delayed payments from the government could affect cash flow meaning nonprofits will be forced to make decisions that could result in layoffs or furloughs. The article stresses that employee contracts need to be reviewed as well as applicable laws including the Fair Labor Standards Act, which governs the exempt and non-exempt status of employees. The article points out that while nonprofits will be most affected due to funding concerns, they may also face additional demand for services. For example, food stamp cuts mean more people will seek other sources of food such as from food banks.  

This issue of Venable LLP’s monthly alert explains various scenarios under which nonprofit agencies may or may not incur additional obligations from government funding sources that have lapsed. The question & answer format addresses 10 potential possibilities the agencies face.

DevEx reports that the U.S. Agency for International Development has provided guidelines for contractors and grantees regarding the government shutdown. Items covered include funding impacts should no budget resolution be passed by Congress before October 31. USAID did state though that most grants and contracts are not dependent on additional appropriations. Read this article for additional information 

In an October 1 Maryland Money Matters publication, the institute highlights programs such as WIC and TANF that will not be funded until the end of the budget impasse. The alert also highlights potential financial impacts throughout the state of Maryland.