![What does a government shutdown mean for your nonprofit? [Updated October 2025]](https://www.nonprofitnav.com/wp-content/uploads/2023/09/Government-1.png)
This article was originally written and published in September of 2023, when a government shutdown was looming large, but ultimately did not happen. It again became relevant in December 2024. Today, we’re reposting it with updated resource links due to the October 1, 2025 shutdown that recently took effect.
While the government shutdown might seem like something that only happens once in a blue moon or only impacts government employees, nothing could be further from reality. Even if your organization’s only interaction with the federal government is your federal filings, chances are those you serve will be impacted. Here’s a breakdown of what the government shutdown means for nonprofits:
Overview
This is not the first time this has happened, and it is not likely to be the last. Previous shutdowns occurred in 2013 for 16 days (Clinton Administration) and 2018 for 25 days (Obama Administration). As with past shutdowns, services deemed non-essential will cease operation, and the federal employees handling those non-essential services will be furloughed. Examples of “essential” services include the postal service, military, and congress (hmmm…). This website has the latest information on contingency plans and how agencies may operate during the shutdown.
What does the government shutdown mean for nonprofit organizations?
Your Nonprofit Status is Not Considered Essential
Sad, but true. If you are pursuing tax-exempt status from the federal government, your wait may be extended beyond the typical 1-3 months for the short form and 3-6 months for the long form.
Existing Federal Grants are Honored
If you were awarded a federal grant before the shutdown, you will still receive funding; however, if you are in the approval process or seeking to apply for a federal grant opportunity, the process will be delayed as long as the shutdown is in place.
Delays (or halts) in Federal Grant/Contract Reimbursements and New Award Processing
The most immediate impact of a government shutdown on nonprofits comes through federal grants and contracts. Because so many federal awards are structured as reimbursements, nonprofits that have already spent money on staff or programming can find themselves waiting weeks for payment. New grants or renewals are also held up, as program officers and review panels are unavailable to process applications or awards. Even existing grants may stall if agency oversight or approvals are required.
Beyond grants, nonprofits that hold direct federal contracts may face suspensions, delayed renewals, or a slowdown in invoice approvals. This is especially problematic for organizations whose work is deeply intertwined with federal programs or state–federal partnerships, where the federal contribution is suddenly frozen.
Increased demand for services
Community needs tend to rise during a shutdown. Families affected by delayed government benefits may turn to local charities and service providers for assistance with food, housing, or other essential needs. Some organizations may already experience this increase in demand for services in anticipation of a government shutdown. That surge in demand puts added pressure on nonprofits just as their funding becomes less certain. This becomes a double-whammy in the case of nonprofit programs that serve vulnerable populations and rely heavily on government funding, such as Federally Qualified Health Centers (FQHCs).
Project delays, cost escalations, and uncertainty
The ripple effects show up in project timelines and costs. Initiatives that depend on federal approvals or cooperative work with government staff are pushed back, sometimes triggering higher costs, contractual penalties, or postponed expansions. For many nonprofits, the uncertainty around federal support makes long-term planning far more difficult.
What does the government shutdown mean for those your nonprofit serves?
If your organization serves vulnerable populations, this is where you will feel the most significant impact as critical services like Medicare, Medicaid, and family aid programs are affected.
Health and Human Services
• Medicare payments are expected to continue; however, new enrollees may be delayed after a shutdown until furloughed employees return to work.
• Medicaid will continue as it has open-ended federal funding; however, similar to Medicare, delays due to furloughed employees may occur.
• An estimated 10,000 children immediately lose access to Head Start programs since new grants cannot be initiated during this time.
USDA
• Some contingency funds are available for the Supplemental Nutrition Assistance Program (SNAP) and Women Infants and Children (WIC) to continue for at least one month into the shutdown phase.
• There is concern over WIC program vouchers; some states have limited funds to continue the program, so persons trying to redeem these vouchers may be turned away from retail counters within days as funds are exhausted.
HUD
• The HUD program will continue until reserves are exhausted.
• No new applications can be accepted during a shutdown.
• Monthly assistance programs, including Section 8 Housing Choice vouchers, public housing, and multi-family assistance contracts, can continue as long as funding is available.
• FHA housing work will continue, although processing of new or closing of loans in progress may be delayed until staffing is available.
Social Security
• Social Security payments will continue as scheduled.
• New applications for survivor benefits, retirement benefits, SSDI, and SSI will continue. Hearings will continue as scheduled.
• A few non-essential processes will be suspended during the shutdown, such as benefit verifications.
Helpful Resources for Nonprofits During a Government Shutdown
The National Council of Nonprofits does a great job of staying ahead of public policy changes. We highly recommend following their content, including this recent article, which outlines specific recommendations for nonprofits that receive federal funding.
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