The Lowdown on Shutdowns

The recent government shutdown began shortly before Christmas and stretched through January 25. It was the longest shutdown in U.S. history.

But the difficulties might not be over. The government was recently reopened for only three weeks, and there is a chance it may shut down again at the close of that period. The president himself put the odds of the government remaining open at “less than 50-50.”

While government employees, contractors, and those relying on government services felt the brunt of the shutdown’s impact, its effects reached far, including into the nonprofit sector. How did the shutdown affect nonprofit agencies? What lessons can be learned? And how can those lessons be applied if it happens again?

While some agencies, such as the Department of Energy and the National Institutes of Health (NIH), have previously received appropriations and will remain open in the case of another shutdown, a wide range of agencies, including many grantmaking agencies, will have to shutter much of their operations. 

The shutdown led to the delay or withholding of numerous dollars in federal grant funding. At the National Science Foundation (NSF) alone, that number reached nearly $140 million.

The NSF offers a helpful description of what happens for grantees and those with proposals. Most of the processes in effect at NSF will be similar at other agencies. Their guidance includes the following points:

• no new funding opportunities (program descriptions, announcements, or solicitations) will be issued;
• FastLane and Research.gov proposal preparation and submission will be available; however, proposals will not be processed until normal operations resume;
• Grants.gov proposal preparation and submission will likely be available; however, proposals will not be processed until normal operations resume; and,
• responses to any inquiries received regarding upcoming deadlines, including proposal preparation, will be deferred until normal operations resume.

So although some of the automated systems would remain up and running during a shutdown, grantseekers likely wouldn't be able to get in touch with an actual person or receive responses or updates until after the shutdown ended. Of course, agencies would have to deal with a large backlog of inquiries, so even after operations resumed, there would be a delay before an applicant would actually receive a response to an inquiry. 

How should you plan your government grant application strategy in the face of a shutdown? If your program is dependent on receiving funding soon and requires a very strict schedule, you should consider looking for funding from non-government sources. But since a shutdown could conceivably end at any time, you could take a chance and apply. However, the risk is that you won't have any idea what the ultimate decision-making and payment schedules will look like until after the government resumes operations.

In the case of another shutdown, your organization may want to reach out to donors and potential donors to help fill the funding gap. In the same way that many nonprofits stepped up to provide services to help mitigate the effects of the shutdown, donors may be willing to step up and help address funding shortfalls. Your organization may also want to incorporate the shutdown into your post-shutdown donations campaign. Donors may be willing to help your organizations build a buffer in case another shutdown occurs.

What about federal grants that have been awarded before a shutdown but have not been paid by the time a shutdown goes into effect? While recipients should eventually receive their awarded funds, the delays could have consequences. For example, many federal grants support graduate students conducting research at universities. Without assured funding for the coming academic year, lab directors might not be able to accept graduate students to their labs. Shutdowns can still be felt well after the government standoff ends. Keith L. Seitter, Executive Director of the  American Meteorological Society, told Axios that the recent shutdown “delays a lot of innovative technologies" and "impedes research progress." Slate further examined the effects of the shutdown on science: "When the U.S. government shuts down, much of the science that it supports is not spared. And there is no magic light switch that can be flipped to reverse the impact." 

Many government-funded projects, science-based or not, feature lots of interacting parts. In some cases, a few components of an effort may remain funded while others get cut. Imagine a pair of researchers with funding from different sources: one from the NIH, which is funded for the year, and one from the Food and Drug Administration, whose funding has been halted due to a shutdown. Or imagine a program by a nonprofit organization that provides educational after-school activities for kids along with a nutritious snack. But now there are no snacks, because just that part of the program was supported through a federal grant. 

Along with the NSF, several other agencies offer webpages giving information on how their funding and grants will be affected by a government shutdown, including the Department of Agriculture and the Environmental Protection Agency. Since you likely won't be able to communicate directly with your funding agency during a shutdown, be sure to scour the agency's website for any guidance that might have been previously provided. It may be wise to download a copy of the information while the government is operational just in case the website is not available during a shutdown.  

If you or your organization has been affected by the shutdown, be sure to call your senators and representatives in Congress to let them know your story. By telling them how the shutdown has negatively impacted your good work, you might play a part, no matter how small, in preventing another shutdown in the future.