As the uncertainty around federal funding continues, Your Part-Time Controller, LLC is committed to sharing regular updates and other resources with its clients and friends. YPTC’s insights draw on over thirty years of experience providing best-in-class services to nonprofits of every kind.
WHAT NONPROFITS SHOULD KNOW:
- Federal funding remains in flux. Federal agencies continue to come under fire, with almost daily reports of staff reductions and grant cancellations—but also lawsuits and other challenges. For those seeking relevant updates, the National Council of Nonprofits has a convenient tracking summary of Executive Orders impacting nonprofits, an expanded FAQ page, a new risk assessment tool, and a checklist of steps to take when a grant is terminated.
- A budget shutdown was averted. Congress approved a ‘continuing resolution’ in March that ensures there will not be a government shutdown before the end of the fiscal year on September 30. Note that the resolution prohibits any congressionally directed spending, so organizations with “earmark” grants due to be paid this year will need to make other plans.
- There are reports of “passive” state freezes. There is a complex funding landscape in which some, but not all, states are parties to lawsuits that entitle them to benefit from injunctions restoring funding cut by Executive Orders. In addition, states are sometimes interpreting Executive Orders, court injunctions, and the like in different ways. Nonprofits may be faced with situations where they are subrecipients to a grant that has not been cancelled at the federal level, yet the state refuses to make payments.
- YPTC is actively adding useful resources as part of its new “Managing through Uncertainty” series. Recent additions include a recording of the March 26 national webinar “Demystifying Federal Funding,” an Accounting Podcast episode discussing how the federal funding freeze hurts nonprofits, a blog post about securing foundation grants, and much more. Sign up to receive convenient alerts.
WHAT NONPROFITS SHOULD DO:
- Communicate proactively with your funders (patience and persistence may be required for federal agencies), your board and staff, industry organizations and state associations, sister institutions, your Congressional representatives, and all of your stakeholders. Don’t be shy about sharing the impact of your work, as well as the impact of any funding cuts that have affected your organization.
- If you are entitled to request any drawdowns on current federal grants, file the request now, as there continue to be delays, due in part to reductions in federal staff.
- If your organization has received a stop-work order or a cancellation letter for an award, you may want to seek legal counsel before responding.
- Prepare rolling cashflow forecasts in whatever cadence makes the most sense for your situation. Monthly? Weekly? Accurate and timely reports are essential planning tools.
- Engage in scenario planning by creating separate forecasts that include unfavorable outcomes. How would you meet your mission with less money available? Would you spend less? Spend differently? Together with your Board, think through your options before trouble hits.
- Explore revenue diversification to reduce risk further. For example, can your organization replace or supplement government funding with foundation grants or individual gifts? If your forecasts suggest a gap in cash flow, it may be appropriate to apply for a line of credit.
- As you update your strategic planning, consider ALL funding sources, not just federal funding. Even minor changes can significantly impact your efforts. Remember to include earned income, contributions, sponsorships, grants and other revenue sources like rents and royalties.
- Consider sharing your organization’s story with the National Council of Nonprofits through the NCN Survey of the Effects of Executive Actions on Nonprofits.
The YPTC Federal Awards Team salutes your ongoing efforts to meet your mission and looks forward to hearing from you anytime at federalawards@yptc.com.
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