Congress passed a continuing resolution. Here’s how nonprofits can use that extra time to prepare

America’s nonprofit community breathed a sigh of relief after the Senate got the 60 votes needed to avoid a government shutdown. While fears of potential funding disruptions were averted through a continuing resolution, there are takeaways from the last several weeks of uncertainty that nonprofit leaders should keep in mind.

To help nonprofit leaders reduce their vulnerability going forward, we offer some context about how government shutdowns can impact the nonprofit sector, as well as a “resilience checklist” to create a stronger financial position for the future. 

How can nonprofits prepare for or navigate through uncertain times?

Organizations should plan ahead as much as possible, consider various scenarios and shore up their systems — from budgeting to internal controls to community networks — to enhance resiliency. This “resilience checklist” of 14 tips can help nonprofits reduce their exposure:

1. Plan for multiple scenarios: Organizations should determine what different lengths of funding restriction would mean for staffing and service delivery. How long will their funding last if they’re 100% staffed, 80% staffed and so on? How long will funding last if they deliver services to 100%, 75% or 50% of their constituents? How long can they meet payroll, and does that vary by program? Leaders need to know their numbers — and mix and match them for various scenarios — so they’re prepared to respond.

    

2. Review your grant and contract terms: Leaders should review their funding streams so they’re aware of any restrictions on drawdowns and all details of their external approval process. If the organization reduces staff, headcount served or program services, what does that mean for grant or contract compliance? Some agencies may need to file a scope change or a key personnel change to remain compliant, while others may be fine consolidating job descriptions.

    

3. Identify possible bottlenecks in your internal processes: In an emergency situation, you might have to make important business decisions more quickly than usual. For example, you may need to schedule emergency board meetings to access reserve funds or make staffing or program changes. Refamiliarize yourself and your governing body members with schedules and processes.

    

4. Revisit your enterprise risk management plan: Ideally, all of the aforementioned details and scenarios should be in your organization’s risk management plan — but that’s not always the reality. Particularly if you’ve had leadership turnover, it’s good to review your risk management plans and correct any concerns.

    

5. Follow current program requirements until told otherwise: With national policies seemingly changing by the day, it’s easy to get caught up in the headlines and anticipate how those changes could impact your programs. However, recently issued executive orders don’t always override the guidelines you received when your grant or contract was issued. Those program requirements remain in place until you are specifically notified otherwise.

    

6. Document everything: During periods of stress or uncertainty, you’re bound to carry out some processes a bit differently than usual, and possibly without the benefits of a full staff and your usual experienced contacts at federal agencies. If someone gives you the wrong advice or you shortcut a process in good faith and miss a step, your best defense is good documentation.

    

7. Keep employees as informed as you can: Even if you don’t have all the answers, share what you do know with employees. Be upfront with them about possible changes, including workforce reductions. Sharing information helps create trust, reduce stress and prevent panic.

    

8. Reengage community partners: Reach out to organizational peers and state and local officials. With everyone facing the same challenges, there may be opportunities to share information and resources. If your federal funding source isn’t paying or is slow to pay, your state or local government may have more budget flexibility.

    

9. Make strategic connections to strengthen your expertise: With many government agencies and private sector employers laying off experienced workers, there may be opportunities to bring talented people on board as employees or contractors. If your organization is short on advisors, now is the time to look for those partners. State and national associations, organizational peers, local bankers, HR attorneys and specialized advisors like Wipfli are all helpful allies.

    

10. Discuss payment flexibility with key vendors: Don’t be afraid to reach out to your landlord and other key vendors to feel them out on payment term flexibility. They’ll appreciate your upfront communication, and knowing your options will save you time and stress if you get into a cash flow bind.

     

11. Assess your technology and data: Federally funded programs will likely receive a lot of scrutiny going forward. Technology can be a helpful lever as organizations are asked to prove their impacts and outcomes through data. You want to ensure that you have good, clean data ready to go and that you can pull information out of your systems very quickly. You should also look at your technology road map from a program delivery standpoint and consider how you might improve efficiency and engagement through technology.

     

12. Determine your most compelling metrics: Most year-end grant reporting requirements require only basic metrics. Organizations may have to dig deeper and think about key performance indicators through more of a business lens. Stats that speak to efficiency ratios rather than number of people served — such as interaction rates and FTE count per program participant — may be meaningful in this environment. These types of metrics can also help organizational leaders make hard decisions about program reductions or service fit.

     

13. Keep an eye on network security: During the early days of the COVID-19 pandemic, cyberattacks increased as organizations were thrown into turmoil. Statistics show that cybercrime is more frequent during times of change or confusion because attackers know people let their guard down when they’re under stress and under-resourced. Remind employees to vet all links before clicking on them, no matter how busy they are.

      

14. Keep telling your story: Let your community know how you bring value. In addition to data and stories of the impact on those you serve, remind your community of those you employ and how you bring vital resources to all in the community. Are you a large employer? Have you been a part of revitalization or community growth? Are you a part of a cherished history? Share your story.

Be aware of compliance changes

Changes to the Office of Management and Budget (OMB) Uniform Guidance (2 CFR Part 200), which governs federal grants and agreements, took effect October 1, 2024. Leaders should note important changes that may affect grant and contract compliance.

Key changes include:

• Increased audit thresholds: OMB raised the expenditure threshold triggering a single audit from $750,000 to $1,000,000 during the fiscal year. The threshold for the Type A program designation also increased from $750,000 to $1,000,000.

• Increased financial thresholds: OMB raised the equipment capitalization threshold for equipment purchases from $5,000 to $10,000, which allows organizations to expense equipment costing less than $10,000. The Modified Total Direct Costs (MTDC) calculation now includes up to the first $50,000 of each subaward, an increase from the previous $25,000 limit. OMB also raised the de minimis indirect cost rate from 10% to up to 15% of MTDC, providing greater flexibility for organizations to cover more of their overhead costs without a negotiated indirect cost rate. Finally, the maximum amount for fixed-amount subawards has been increased from $250,000 to $500,000, contingent upon prior written approval from the federal agency.

• Enhanced cybersecurity measures: Recipients and subrecipients are now required to incorporate cybersecurity measures within their internal controls to safeguard sensitive information, including personally identifiable information. This encompasses enhanced data encryption and multifactor authentication protocols.

Don’t kick the can down the road

While any uncertainties — particularly those that threaten financial security — are inherently stressful, the long-term outcomes of past government shutdowns have typically been positive. Organizations have found opportunities for outsourcing, adjusted their community assessments, diversified funding and revamped strategies to be more efficient and resilient. Those are just a few reasons nonprofit organizations should seize the shutdown moment to get their houses in order.

The other big reason is because this won’t be the last disruption. By acting now, organizations can avoid “kicking the can down the road” and ending up in the same place in the future.

How Wipfli can help

Wipfli is keeping a close eye on regulatory policy changes. It’s one more way we’re here to support nonprofit leaders through strategic planning, financial audits, compliance guidance and technology integration. For more information on how we can help you, visit our nonprofit page today and for the latest insights, visit our update center.