Ripple

There is a big danger in piecemealing how aspects of the partial government shutdown affect nonprofits, describing those impacts in programmatic siloes. The government shutdown in and of itself is a terrible indictment of the increasing dysfunction of our political process, with the specific segmented program impacts adding up to more than the sum of their parts. That’s the advocacy challenge: presenting a full picture of the rolling impacts of the government shutdown and how they undermine efforts to help poor people at a critical time of the year—heading into winter.

If you think you aren’t directly being affected by the shutdown—you haven’t seen a delayed or canceled paycheck or government reimbursement; you haven’t noticed a reduction in services—you might think you’re immune or you’ve escaped the fallout, but you haven’t. Aspects of a functioning federal government are found everywhere in life, you just don’t notice them. In time, however, none of us will escape the effects of a government shutdown. Their absence will show through eventually for everyone. The stories from the nation’s array of community action agencies show just how devastating and interrelated the impacts of the shutdown are in neighborhoods and cities across the nation.

 

Shutdown’s Ripple Effects

Assume at some point the shutdown will finally, thankfully, come to an end. As of this writing, President Obama and House Speaker John Boehner are making some limited overtures toward conversation and negotiations. Perhaps, when this is published, the shutdown may have been ended. Even so, the budget deals on the table are short-term deals, meant to last only through mid-November or so. The president himself surprised his own party by floating the idea of a short-term deal on the budget ceiling, even though to this point Democrats had argued that even if the budget became a series of short-term deals, no such thing should happen with the debt ceiling, the ability of the nation to pay its bills.

Even if the shutdown ends, nonprofits are going to feel its effects for a long time to come. The future reverberations of the shutdown are discernible in how the shutdown is playing out in nonprofit programs right now. 

Some elements of the nonprofit sector provide multiple, interrelated services to poor people, notably the nation’s community action agencies. Frequently, community action agencies (CAAs) are sponsors of Head Start programs, weatherization services, youth programs, services to the elderly, family planning, child care, job training, neighborhood-based employment programs, homeless program services (including shelters and scattered-site housing), foreclosure prevention assistance, and family services case management, just to name only a small sample of the services offered by the iconic Action for Boston Community Development, one of the nation’s oldest and most prominent CAAs. Their array of interrelated programs and services for the poor makes them useful barometers of the long-term reverberations of the shutdown.

Frequently, CAAs house and operate Head Start programs for low-income pre-school children. Serving York, Lancaster, and Chester counties in South Carolina, Carolina Community Actions (CCA) in Rock Hill was able to reopen its Head Start programs last week to 864 pre-school children as a result of its share of a $10 million donation made to Head Start agencies nationwide by philanthropists Laura and John Arnold from their eponymous foundation, a gift that National Head Start Association executive director Yasmina Vinci described as “selfless.”

But there are over 1,000 community action agencies in the U.S., according to the Community Action Partnership, a national trade association of CAAs. According to the federal government, there are some 1,600 agencies operating Head Start and Early Head Start programs. It costs Carolina Community Actions about $555,000 a month to operate its Head Start program—the costs of staff, buildings, transportation, special services for children with disabilities, meals, etc. The money from the Arnolds will keep Rock Hill’s Head Start program going through October; that’s it. As more Head Start centers close later in October, the $10 million donated by the Arnolds will not go far.

The community action agency in a northern Illinois community demonstrates the interrelationships. The Community Action Partnership of Lake County operates Head Start programs in seven Lake County locations. It fended off having to close its Head Start program like CCA did in October because of its funding cycle, but it could have to close the program if the shutdown goes much longer and CAP runs out of Head Start funding; it costs $5 million a year for CAP’s Head Start programs. The shortfall in Head Start funding would be on top of the impact of the shutdown on other CAP programs, in addition to the $300,000 budget cut it took last year due to sequestration. The agency is trying to generate what it calls “social enterprises so [they] won’t have to rely on government support,” according to Mary Lockhart White, the CAP executive director, but it’s hard to imagine that the revenues generated by a resale boutique or the contributions it is able to scour up from churches, businesses, and individuals will do much to compensate for the delay or loss of government program dollars.

It isn’t just that the programs operated by community action agencies are interrelated. The people served by CAAs face multiple challenges that CAAs, probably uniquely among domestic nonprofits, try to meet comprehensively, and that ability is jeopardized by the shutdown. For example, the government shutdown has forced Community Action of Southern Kentucky to cut back on its Migrant Head Start program, its supportive housing programs for the homeless, and some programs for refugees. Particularly important for low-income families is the assistance they receive with paying energy bills through CASK’s Low Income Home Energy Assistance Program (LIHEAP), which, due to the shutdown, has had its startup shifted from November 1st to November 12th, and terminated its weatherization program in August. The shutdown plus sequestration cuts—the agency faces a budget reduction of $1.2 million this year—means that it might not be able to assist as many people for as long as it did last year with energy assistance (1,338 households that received $165,720 in energy assistance payments).

Winters are cold in Kentucky, but colder in Connecticut, where the Thames Valley Council for Community Action and other CAAs had received 17,199 applications for LIHEAP assistance as of September 20th. The delay in a federal budget has officials concerned that they might not be able to rely on much more than the $7.45 million available statewide in LIHEAP carry-over funding. CAAs in Massachusetts have actually suspended their LIHEAP programs, including at North Shore Community Action Programs in Peabody, where the executive director, Laura MacNeil, determined that the agency couldn’t afford to keep the program operating and therefore laid off its staff, and at Action for Boston Community Development (ABCD), where executive director John Drew found himself unable to negotiate settlements with the utility agencies to pay bills because, due to the shutdown, “we have nothing to negotiate with.”

Typical beneficiaries of LIHEAP programs are, in addition to low-income families, elderly households. At Central Missouri Community Action, executive director Darin Preis says his agency has cash reserves to keep programs like senior nutrition programs and the prevention of elder abuse and neglect for about a month and a half, which puts it in better shape than many nonprofits, but longer than that, CMCA programs would be shuttered. In Texas, Karen Garber of the Brazos Valley Community Action Agency said that the shutdown places the operation of three programs in the most jeopardy: the Women, Infants, and Children (WIC) food and nutrition program, Head Start, and Meals on Wheels delivery of food for the elderly and the disabled. Western Michigan’s Area Community Services Employment and Training Council already laid off 11 staff members in response to the shutdown, closed its food pantry, and announced it will not be able to offer weatherization, emergency fuel, and migrant assistance services.

Overall, the U.S. Department of Health and Human Services, under whose aegis most of these anti-poverty programs fall, has a number of important programs for seniors closing during the shutdown. Writing for the National League of Cities, Neil Bomberg says that the HHS shutdown plan calls for funding to cease for senior nutrition, prevention of elder abuse, long-term care ombudsman, and advocacy for persons with developmental disabilities programs.

These reductions and closures are only part of the picture. Also at risk are Section 8 rental subsidies and housing vouchers. Quarterly formula grants for the Social Services Block Grant (SSBG) and the Community Services Block Grant (CSBG) won’t flow during the shutdown either, but fortunately the Senior Farmers Market Nutrition Program has been spared—because its authorization actually expired on September 30th, before the shutdown started, and Congress never got around to reauthorizing the program.

This is only the array of programs explicitly targeted to the poor and delivered primarily through community action agencies. There are many more programs that are stalled or inoperative due to the shutdown: Veterans Benefit Administration offices are closed due to VA layoffs, having furloughed 7,000 staff, meaning that the processing of veterans claims is pretty much halted at the moment. The State of Washington furloughed 418 staff and reduced the hours of another 450 as a result of the shutdown, which is roughly half of the staffing of the state’s employment security department. Due to protests, Arizona reversed its initial decision to not make monthly welfare (Temporary Assistance to Needy Families or TANF) checks, but went ahead with laying off staff who would process disability payments. In Wisconsin, beginning on October 17th, if the shutdown is still going on, people will start to lose their Food Stamp Quest swipe card refills. And so it goes for many crucial safety net programs.

These aren’t sob stories or predictions of calamitous slowdowns in the economy. Rather, they are simply the services that low-income people count on for basic survival, services that are increasingly at risk and in shorter supply for every day that the shutdown continues. Some agencies might come up with strategies for coping, others might be among those rare nonprofits with reasonable fund balances and operating reserves to keep these programs operating out of their own resources for a period of time. For most other nonprofits serving the very poor, those coping strategies may not be there and their reserves are close to tapped out. Nonprofits do a lot of amazing things with very little in their quivers, but the winding down of the social safety net side of the federal government cannot be anything but detrimental to the nonprofit sector’s continued delivery of critically needed services for the poor.

 

What To Do—Not

The House of Representatives unanimously voted to deliver back pay for furloughed federal employees. Congress promised to deliver paychecks to members of the military, despite the shutdown. The Department of Defense was somehow able to call some 350,000 civilian employees back to work.  

Don’t get fooled. Like congressional choices to protect some functions from the impacts of the sequester, these piecemeal shutdown bills are being used by advocates of reduced government funding to determine which programs have sufficient public support to warrant their being retained and which should be subject to future, deeper budgetary slashes. An example is this widely circulated tweet by one Patrick Ruffini, the president of a digital-focused political marketing firm and a well-respected, influential Republican political strategist:

 

Someone quickly replied with a clarification of the strategy:

 

In other words, the piecemeal funding programs that members of Congress are putting forward to exempt various programs is like field-testing programs to determine which merit being saved and which can be sacrificed in future budget negotiations. 

Already, in the feints of both sides toward negotiations, the Republicans, having milked the budgetary impasse for whatever they could to make things more difficult at the healthcare exchanges and among the ACA navigators, appear ready to drop their obsession with the Affordable Care Act and cut a deal with the White House for more budget cuts, potentially taking advantage of the market intelligence they’ve gleaned from testing the potential support for cutting various federal programs.

The clue? Earlier this week, Rep. Paul Ryan (R-WI), the chair of the House Budget Committee, penned an op-ed in the Wall Street Journal outlining a strategy for ending the shutdown. It is an important statement because, unlike the various Tea Party types that have been all over the media looking to sound tough (example: Kentucky’s Tom Massie, who said of the shutdown, “It’s just not that big of a deal”), Ryan has been relatively quiet during the shutdown debate, even though it is his committee that has responsibility for the subject matter of the impasse. Given his role in the House, it is hard to imagine that Ryan’s op-ed didn’t get the blessing of House Speaker Boehner.

Note what Ryan says and doesn’t say: Ryan never mentions the Affordable Care Act or its disparaging “Obamacare” moniker as a negotiating issue. He suggests that for the combined shutdown and debt ceiling limit impasse, “to break the deadlock, both sides should agree to common-sense reforms of the country’s entitlement programs and tax code.” The strategy is to shift the focus from national healthcare insurance, which the president and his colleagues won’t touch, to budget cuts, which they already have altered regarding discretionary domestic spending in the form of the sequester and could add to in reopened negotiations over the shutdown and the debt ceiling. “For my Democratic colleagues, the discretionary spending levels in the Budget Control Act are a major concern. And the truth is, there’s a better way to cut spending,” Ryan writes. “We could provide relief from the discretionary spending levels in the Budget Control Act in exchange for structural reforms to entitlement programs.”

Because Ryan comes off as much more reasonable and thoughtful than the likes of Michele Bachmann or Steve King, his gambit for negotiations with the White House over the budget, rather than the Affordable Care Act, will probably get lots of play. But the strategy, reflected in Ruffini’s field-testing of federal programs for potential cuts, ends up as one of cementing in many of the sequester’s budget reductions in domestic discretionary spending and opening entitlement programs to very controversial changes.

While the Republicans might appear to be holding the nation hostage to the Tea Party’s obsession with killing the Affordable Care Act, the likely scenario they might use in potential negotiations is to put their political capital behind bigger, deeper budget cuts in the programs that nonprofits use to serve their clients and communities. Remember that the Democrats, for their part of the Continuing Resolution battle, have more or less accepted the sequestration cuts as the new normal. Nonprofits know that the shutdown impacts that they are seeing are reflections of, or additions to, the sequestration cuts. This cannot stand. That’s why in the Senate, Majority Leader Harry Reid has been increasingly steadfast against the dozen or so “targeted” funding bills that have emerged from the House of Representatives to exempt specific government functions from the shutdown.

At the same time, there is an equally important danger in the budget shutdown that might lead nonprofits and philanthropists to try to step into the funding breach for selected programs. The motivations are in many cases only from the heart. Senator Joe Manchin (D-WV) announced recently that the Fisher House Foundation has offered to pay the $100,000 death benefits to the families of soldiers killed in combat. Another nonprofit, Luke’s Wings, has also offered its own cash for families of those killed in battle. In the end, the House of Representatives voted to pay for the otherwise shutdown-delayed military death benefits, but programs for the military and for veterans attract bipartisan support in Congress. Programs of a more social-safety-net dimension do not necessarily spur congressional funding following the intervention of philanthropic donors.

In the realm of K-12 education and pre-school education, because of fiscal years, 7,000 Head Start pupils in six states found themselves without slots as of October 1 and theoretically could benefit from the Arnolds’ proffered donation, but William Bevacqua, the assistant director of Action for Bridgeport Community Development (ABCD), expressed hesitation with a temporary solution to a problem that might simply be encountered a few weeks further on if the budget impasse isn’t rectified. As generous as the Arnolds’ $10 million might be, the more than 7,000 kids who lost their Head Start support in six states on the first of October will be joined by 11,000 more if the stalemate continues later in October, and another 86,000 if the shutdown continues into November. Congressional action to refund Head Start despite the shutdown doesn’t seem to be in the offing. 

Already, conservatives are riding the news about the Arnolds to make a statement about how private charity can take the place of government on some occasions. Lindsey Burke at the Heritage Foundation writes that “At a minimum, the Arnolds’ contribution suggests that private foundations, low-cost church-based providers, and in-home care should be drawn upon first to provide preschool and day care,” with government stepping in to help lower income people deal with the costs. While every one has a personal story about their interest in making this specific government program or that the one that warrants an exception, the advocates for shrinking government overall are looking at nonprofits’ and philanthropists’ stepping into the funding breaches as harbingers of a longer-term strategy of devolving governmental functions—and governmental costs—for some activities to charity and philanthropy.

 

What To Do—Do

We began with the negative, warding off the natural impulse to save specific government programs through special legislation or heroic philanthropic initiatives, out of concern that they add up to a piecemealing or outsourcing of public priorities. In the alternative, then, what should be done? Given the remarkably prolific outpouring of commentary from advocates of the shutdown, see the latest from guitarist Ted Nugent, whose recent op-ed on a politically conservative website was titled, “Keep the Fedzilla Beast Shut Down!”

Nonprofits have to tell the story of the shutdown to every member of Congress—not the hypothetical, but the real stories of programs and services stalled and dropped on top of the budget cuts that have filtered through during the past two years. Throughout the budget debacle and government shutdown, it has been clear that many members of Congress have been playing a parochial game, focused on what they see as the priorities and interests of their congressional district constituents, with scant regard for the larger national interests. If that’s the game, nonprofits should be mobilizing in each congressional district, providing their elected legislators with a headcount of their constituents who are being deprived of vital services.

And make it public. Put it in the local press, as op-eds addressed to members of Congress about what they are doing to their constituents by their budgetary inaction.

Add in efforts to mobilize state lawmakers. Compared to the Washington Beltway, legislators in state capitols tend to show more of a pulse. As of the August congressional recess, the 113th Congress had passed and sent to the president all of 22 bills; the 112th, widely seen as the most unproductive Congress ever, had passed 28 during its January-to-recess time. According to Karen Suhaka, writing for BillTrack50, in 2011­­–2012, to take a potentially representative year, most states passed between 200 and 800 bills, the highest being Virginia and Texas, with enacted bills coming close to 1,600. It would appear that the active legislative dynamic in the federal system is in state capitols.

Tell state legislators and municipal officials that a big chunk of their funding is really federal pass-through dollars that are increasingly threatened, first by the sequester and now by the shutdown. As of fiscal 2010, federal funds directly accounted for 34.8 percent of state government expenditures, boosted obviously by stimulus spending. While federal dollars will have declined in state budgets with the expiration of ARRA spending, probably to around 31 percent by Fiscal 2012, that is still much above the federal government’s pre-recession proportion (26.3 percent in FY 2008). Add in state matching funds for federal dollars, and the proportion closes in on nearly half of state budgets connected to federal dollars in one way or another. The ability of local and state politicians to deliver is at stake in what whatever progress might be made toward ending the shutdown—and reversing the sequester in the process.

That’s why nonprofit energies cannot be sidelined in this debate. In simply passing a “clean” Continuing Resolution, the nonprofit sector risks seeing the sequester accepted with nary a cross word from Democrats. Saving the Affordable Care Act from a dozen or so Tea Party politicians who don’t even have much depth of support from their own Republican Party colleagues is worthy, but nonprofits have to watch out for the intricate Paul Ryan strategy of shifting to tax reform and federal spending to cement in budget cuts or even make them deeper in a review of so-called “entitlements.” And remember that the reason that the federal healthcare exchange is operational despite the shutdown is that the Affordable Care Act is an entitlement, as Ryan himself noted in response to conservatives who criticized his WSJ op-ed.

Too often recently, the nonprofit sector has appeared battered and bruised like a boxer on the wrong end of repeated body shots, tending toward hunkering down to survive the onslaught and looking to adjust and get through the round by seeking strategies for walling one’s nonprofit off from others, as though it were possible to cope and get by while other nonprofits’ programs and services wither away. Strategies for coping with the shutdown, on top of strategies for coping with the sequester, simply chip away at the nonprofit sector’s delivery on its mission.

The shutdown, combined with the business-as-usual sequester, constitute a significant threat to the functions of the nonprofit sector. Impacts, as we have shown, reverberate from community to community, nonprofit subsector to subsector. There is no escape; there is no opportunity to hide in the sand. It is not going to be “solved” by sharper fundraising, better marketing, or, as is being expressed in many quarters, nonprofits behaving like or emulating businesses. Nonprofits like the community action agencies cited above constitute the delivery mechanism for the nation’s response to the needs of the poor. Despite the willingness of nonprofit and philanthropic “angels” to keep services alive, when the federal government is backing out of this space, charity and philanthropy cannot, and really should not, take its place.

 

An earlier version of this article identified John Drew as the executive director of Action for Bridgeport Community Development in negotiating settlements with utility agencies. It should have read Action for Boston Community Development, and has been corrected. Nonprofit Quarterly regrets the error. Action for Bridgeport Community Development, whose executive director is Charles Tisdale, was correctly referenced later in the article concerning the proffered donation from Laura and John Arnold, an action that would have helped maintain children in Head Start programs for a limited period of time. The assistant director of ABCD in Bridgeport, William Bevacqua, reports that more than 1,000 Head Start children there who were affected by the federal government shutdown were returned to their classes due to the intervention of Governor Dannel Malloy, who was able to find state funds for reopening the Head Start program.