Post-Shutdown Planning for Not-for-Profits

When the federal government shut down for 43 days in 2025 — the longest shutdown in U.S. history — many not-for-profits felt the impact. It was a harsh reminder that economic pressures and political gridlock are no longer occasional disruptions but are part of the operating environment. The question isn’t just how to get through the next crisis, but how to build financial resilience so your organization can keep serving when the unexpected happens.

Below are practical lessons learned and strategies to carry forward.

How Shutdowns Hit Not-for-Profit Finances

Even in “normal” times, not-for-profits are juggling inflation, rising wages, and higher operating costs. Add a government shutdown, and you get a perfect storm.

Cash Flow Gets Squeezed Fast

When federal agencies stop processing payments, reimbursements and grant draws are paused. For organizations that depend on government grants and contracts (which can account for 28% of revenue on average and significantly more for some), this is not a minor delay. Many suddenly have to cover payroll, rent, and program expenses without the funding they were counting on. Reserves or lines of credit become lifelines.

Demand for Services Goes Up

Shutdowns often mean furloughed workers, delayed benefit payments, and interruptions or uncertainty around programs like WIC or SNAP. Community needs rise at the very moment not-for-profits are unsure when their next dollar will arrive. The result is a “double squeeze”: more people at the door, fewer resources to support them.

Tough Decisions Follow

Some organizations have to reduce program hours, pause initiatives, defer maintenance, or consider staff furloughs and layoffs. Even when leaders avoid cuts, they may have to slow expansion plans or delay investments in technology, facilities, or people. These choices have long-term implications for mission delivery and staff morale.

Strengthening Financial Management Before the Next Crisis

The most effective responses we saw during the shutdown did not start on day one of the furloughs. They began months or years earlier, with basic financial discipline.

Make cash flow forecasting a weekly (or daily) habit.

Short, simple cash flow forecasts — even in a spreadsheet — help leaders see when cash will run short and which levers they can pull. Update them regularly, not just at year-end or during grant season. Use them to:

• Prioritize mission-critical expenses like payroll, essential program costs, and key vendor relationships.
• Model “what if” scenarios, such as a delayed reimbursement or a temporary drop in contributions.

Treat reserves and credit as strategic tools, not last resorts.

Organizations that weathered the shutdown best had already:

• Built operating reserves, aiming for at least three to six months of expenses over time.
• Established a line of credit before they were in crisis, so they weren’t negotiating with lenders under pressure.

Even small contributions to a “rainy day fund” matter. Add reserve targets to board discussions and communicate to donors why reserves are part of responsible stewardship, not a sign that the organization “doesn’t need the money.”

Take a hard look at pledges, receivables, and grant terms.

Before the next disruption:

• Review grant and contract language for clauses related to delays, shutdowns, or funding interruptions.
• Ask grant officers what communication they expect if payments are delayed.
• Stay close to major donors and funders so you can explain how disruptions affect your work — and where they might help.

Not-for-profits that maintained open lines of communication with funders during the shutdown often found more flexibility and quicker problem-solving.

Diversify funding, even if government funding remains core.

The goal isn’t to abandon government grants. It’s to avoid becoming overly dependent on a single tap. Expanding private foundation support, corporate partnerships, and individual giving can provide more flexibility during shocks. Even modest diversification can soften the blow when a single revenue source pauses or shrinks.

Considering “Going Concern” in a Volatile Environment

Economic pressure and funding volatility make “going concern” assessments more critical and more challenging.

Management is responsible for evaluating whether the organization can continue operating for at least one year after the financial statements are issued. That means:

• Looking beyond the next payroll cycle and reviewing realistic financial projections.
• Identifying conditions that could raise substantial doubt, such as repeated operating losses, heavy reliance on unstable funding, or the potential loss of significant programs or staff.
• Documenting concrete plans to address these risks. For example, cost reductions, new funding initiatives, or contingency agreements with lenders.

The shutdown underscored that “hoping things work out” is not a plan. Auditors and boards will expect to see thoughtful, documented strategies.

How Auditors Fit into Resilience Conversation

Auditors are not just there to issue an opinion. During periods of stress, they’re also a critical sounding board.

They will:

• Evaluate management’s plans to address identified risks. Are the proposed cost cuts realistic? Is bridge financing actually obtainable? Have leaders thought through the operational impact of their mitigation strategies?
• Scrutinize projections to see whether assumptions about revenue, expenses, and timing are grounded in current economic conditions and known risks, including the real possibility of future shutdowns or delayed government payments.
• Assess whether “substantial doubt” exists about the organization’s ability to continue as a going concern and ensure the financial statements include clear, honest disclosures when necessary.
• Emphasize documentation. Carefully recording the impact of disruptions — missed payments, delayed grants, contingency steps taken — not only supports compliance with current grant and contract terms but also strengthens future planning and advocacy.

Engaging auditors early, rather than at year-end, allows not-for-profits to refine their plans and assumptions while there’s still time to adjust course.

Turning a Stress Test into a Strategy

The recent shutdown was a stress test for the not-for-profit sector. For some, it revealed dangerous vulnerabilities; for others, it validated years of careful planning. For everyone, it was a reminder that resilience is built long before the crisis hits.

Now is the time to:

• Tighten cash flow practices and reserve policies.
• Revisit risk management and scenario planning with your leadership team and board.
• Strengthen internal controls and clarify how decisions will be made when funding is disrupted.
• Tap into resources from sector organizations such as the National Council of Nonprofits and maintain ongoing dialogue with auditors and financial advisors.

Shutdowns, inflation, and political uncertainty may be outside your control. But how your organization prepares, responds, and learns from them is not. With deliberate planning and honest assessment, not-for-profits can move beyond survival mode and build the financial resilience needed to carry out their missions, no matter what comes next.

To learn more, connect with a CBIZ not-for-profit financial professional today.