Blog post from CLA:

October 1 signifies the beginning of the 2026 federal fiscal year; however, without an approved funding extension, the government is currently shut down until an agreement can be reached.

Nonprofit organizations, which often work closely with government agencies or rely on federal funding, may be significantly affected. Consider these snapshots and strategies that can help you proactively safeguard your organization’s mission, finances, and the communities you serve during uncertain times.

Government shutdown impacts on nonprofits Financial disruption, federal funding freeze During the government shutdown, federal grants, contracts, and reimbursements to nonprofits may be delayed or suspended. Many nonprofits may have to front the costs of their services (paying staff, rent, program expenses) knowing that their reimbursement may come at a much later time than expected.

Nonprofits operating on thin financial margins may want to consider how the funding freeze could affect their cash flow and consider other financing alternatives.

Potential increased demand for services Oftentimes during a government shut down, nonprofits may face greater demand for their services. The absence of federal services or benefits may result in individuals turning to local organizations for help they normally receive from a government-run program, such as the WIC nutrition or SNAP food assistance programs.

This increased demand for services without potential funding to cover the increased costs can put organizations in a financial bind.

Disrupted programs, staffing, and service delivery When cash flows from funding are delayed or frozen, nonprofits may have to make operational decisions and potentially limit or scale back activities. This can mean freezing new intakes, cutting service hours, furloughing staff, or closing programs or entire operations temporarily. Crucially, nonprofit staffing is deeply affected by these operational disruptions.

In a short shutdown (a few days), employees might endure a brief delay in paychecks; if the shutdown is protracted, nonprofits may need to consider layoffs or other staffing alternatives.

With reduced staffing, an organization’s capacity to deliver services may be impacted. With a potential for an increase in demand for services at the same time, it can become difficult for those organizations and staff still operational to provide critical resources. If your organization is in this position, consider alternative strategic plans for continued operations.

Strategies for nonprofits during a government shutdown Assess financial resilience Review cash flow and alternative funding sources to prepare for potential delays in federal payments.

Communicate with stakeholders Keep staff, clients, and partners informed about changes in service delivery and funding status.

Advocate for support Work with coalitions and associations to advocate for the needs of the nonprofit sector during and after the shutdown. Appeal to the private sector.

Document impacts Track the effects of the shutdown on programs and operations to inform future planning and advocacy efforts.

https://www.claconnect.com/en/resources/blogs/nonprofits/what-nonprofits-can-expect-with-a-government-shutdown?utm_medium=email&utm_term=N%2FA&utm_source=CIJ&utm_content=Nonprofit%20Blog%20Alert%2010%2F2%2F25#msdynmkt_trackingcontext=3d5a1afe-12a8-4aa8-b4e7-648fe1290200&msdynmkt_prefill=mktprf9a4c7830e8be412fbf2e6b9cf7392743eoprf