Resilience Prevails
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How Our Sector Thrived Amidst the Previous Government Shutdown

Our federal government is poised to shut down at the end of this month. By midnight on September 30th, Congress must either pass appropriations bills to keep the government funded or adopt a temporary solution to buy more time to pass those bills to avoid a government shutdown. Unfortunately, the expectation is that neither solution will emerge, and the government will shut down on October 1.

To help our members prepare for the shutdown, CEOs Ann Bischoff of Star House and Denise Robinson of Alvis shared incredible insights gleaned from their leadership experience during the longest government shutdown in American history from December 2019 through January 2019.

1) How did the 2018-19 federal government shutdown affect your agency? 

AB: Star House operates a 24/7 drop-in center for teens and young adults experiencing homelessness, offering immediate access to safety, basic needs and access to stabilizing resources. One of the most significant issues we experienced during the previous shutdown was our inability to complete required FBI background checks for new hires and volunteers since these are administered by the federal government. This prevented us from being able to keep our essential frontline fully staffed and caused significant overtime expenses and burnout risk.

The shutdown also delayed our guests’ receipt of government assistance and the process of obtaining Social Security cards, which are required for getting a job, signing a lease, and enrolling in school. As a result, young people experienced longer stints of homelessness. 

We also experienced delays in federal reimbursement funding. 

DR: We did not get paid for work performed according to our federal contract.

We were unable to hire new staff into facilities with federal clients, as background checks were not being performed by the federal contracting agency. 

We had recently submitted a proposal for a new, 10-year contract to perform services for the federal government. During the shutdown, the process to evaluate the proposal and negotiate a new contract stopped.  This resulted in a significant delay in the process and the federal government issued several contract extensions that used the rates from the last year of the prior 10-year contract instead of being able to transition to new rates that reflected the actual new costs to perform services. 

2) What should your fellow nonprofit leaders be prepared to do with another forthcoming shutdown? 

AB: If your mission requires FBI background checks, expect significant delays and ensure you have a system for staff substitutes on your frontline.

If you rely on federal funding and don’t want to dip into reserves, obtain a loan or line of credit. 

With a delay in obtaining Social Security cards and certain government benefits for clients, consider how this would affect your day-to-day service numbers. For example, a slowdown in issuing Social Security cards means longer stints of homelessness for more individuals who won’t be able to sign a lease without proper identification. There are many implications to consider here. 

DR: Leaders should try to ensure you have a line of credit, in case it is needed and try to develop contingency plans in the event it is not possible to provide all of the services the agency would normally provide. There could be discussions if it’s possible to consolidate some services with different agencies in order to stretch funding as much as possible. 

3) What do public officials need to be prepared to do for the health and human services nonprofit community, with another shutdown potentially forthcoming? 

AB: Institute an exception for reimbursement grants— provide funds upfront before the shutdown, rather than by reimbursement. Develop a program in collaboration with local governments, banks or foundations. The program would allow organizations awarded federal funds to quickly access an amount equivalent to their federal award without interest, helping them sustain crucial programs during the shutdown. Local governments, banks or foundations would be reimbursed when the shutdown concludes. 

DR: Public officials seem to take the nonprofit sector for granted and assume that because it is primarily comprised of caring people who are dedicated to the health and welfare of the community, nonprofits will continue to perform work regardless of their ability to be paid for performing the work. It is not a realistic expectation and nonprofits should not be taken for granted.

The nonprofit sector has already been rocked by the rapid escalation of wages since 2019 and, due to the nature of the work we perform, we are not able to increase the cost we charge for services in the same way a restaurant can increase their prices to cover the cost of higher wages. Many, if not most, nonprofits are experiencing significant staffing shortages in the current climate. Take away even more funding and the crisis will get worse. 

4) Please feel free to share anything else you’d want your peers or our elected officials to know. 

AB: If I can be of service, please reach out,

DR: There are human services agencies which are not as healthy as they were prior to the pandemic, and thus they are not as able to absorb price increases and/or increased demand in the way they did during the last government shutdown.

Pandemic protections, such as keeping everyone enrolled in Medicaid on Medicaid, eviction moratoriums, and providing enhanced SNAP benefits, ended earlier this year.  Individuals and families are facing increased housing costs, increased medical costs and increased food costs right now. It will only get worse if there is a government shutdown.

Nonprofits serve the most vulnerable constituents in the community who are least able to adapt to changing conditions.  We beg politicians to stop playing games. We need to support the organizations which are providing the services that form a social safety net – and the people who desperately need these services.