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Government Shutdown Makes Operations Difficult for Non-Profits

10-8-13

The ongoing government shutdown has impacted non-profits throughout New Jersey, according to Center for Non-Profits Executive Director Linda Czipo. She told NJ Today Managing Editor Mike Schneider that the shutdown has made an already challenging situation for the organizations worse.

Czipo said non-profits have had to deal with the federal government shutdown’s effects on top of the automatic sequestration cuts and the economic downturn, which have affected the groups negatively. “You’ve got organizations that were already facing increased demand for their services with funding that hasn’t been keeping pace. So the shutdown has just made a very challenging situation worse,” she said.

According to Czipo, the longer the shutdown lasts, the worse it gets. Some organizations are able to tap into a small amount of reserves, but Czipo said smaller organizations are particularly vulnerable. “Right now organizations are able to cope but it’s getting worse. Come back in a week or two or three and the story might be very, very different. But the situation is definitely getting worse,” she explained.

Non-profits don’t shut down when the government does so they still have individuals looking for help. “What is troubling is non-profits in good faith — those that are getting government funds — are continuing to provide services while the payments are not coming. So it’s hard to keep that situation going,” Czipo said.

Organizations that are affected run the gamut, according to Czipo, including food service organizations, housing organizations, sexual abuse prevention groups and drug prevention organizations.

While some non-profits have reserves, others are considering taking out lines of credit, according to Czipo, which isn’t a good situation. “Some organizations may find it difficult to continue to provide services because they aren’t able to pay their employees or won’t be able to pay their bills. Again, it’s one of these situations that the longer this goes on, the more troubling it becomes,” she said.

Czipo said it’s not a situation where she wants to blame any individual or group. “Government and our society depend on non-profit organizations to provide a wide array of services and non-profits can’t do it alone. We need everybody to help,” she said. “So in terms of Washington, there are key decisions that need to be made on the budgetary level and on a whole range of other policies. And we are just interested in seeing those problems resolved.”

Oct. 17 is the deadline for raising the debt ceiling and some have said the economic repercussions of that passing could exceed what’s happening now. Czipo called the prospect of that frightening.

“We’re still trying to dig our way out of the last economic downturn, which is far from over. And one of the things that we’ve seen is any economic recovery takes an additional two to four years to actually reach the non-profit community. People need to be secure in their own jobs and those that are in a position to give to organizations need to have their own situations stabilized,” Czipo said. “If this were to destabilize again because of a crisis with respect to the debt ceiling, the impact for non-profits is going to be immediate and pretty devastating.”

While Czipo said it’s hard to quantify how many people would be affected by a default in relation to non-profits, she said thousands would be a fair estimate.

“Right now we’re already seeing the impact of the decisions that weren’t made before. The automatic sequestration cuts were never supposed to come into effect. And we’ve already had cuts to major social programs here in New Jersey because of the automatic sequestration cuts and regular budget cuts. And they’re all taking their toll on the ability of organizations to serve communities,” Czipo said.