How Does a Government Shutdown Impact Federal Grant Programs?

The threat of a partial government shutdown ended this weekend when the President signed a $1.2 trillion funding package passed by the House and then by a wide margin in the Senate.

     The legislation funds the government through September 30, 2024, when a new budget, or Continuing Resolution (CR) needs to be passed to avoid a shutdown. Had a partial government shutdown lasted past the weekend, a wide range of federal services and thousands of employees would be affected, as many government workers are furloughed until their agencies reopen.

     Over the past 50 years, the government has had 21 shutdowns. Some lasted a few hours and the longest spanned 35 days in 2018. However, the threat of impending government shutdowns has become a recurring theme on Capitol Hill in the last few months. Fiscal Year 2024 began more than five months ago on October 1, 2023, yet Congress had to pass three stopgap Continuing Resolutions to keep the government operational while they finalized appropriations.  

With all the news headlines, many CFS clients may be wondering what the impacts are to both new grant applications and ongoing federal grant awards if the government shuts down. 

     For clients who have active and ongoing grants with impacted departments, there could be delays in grant management activities including payments, administration, and engagement with department staff. This may also be the case for programs that are managed at the state level but rely on federal funds to operate. However, these impacts may be minimized if the specific program was awarded advanced appropriations.  

     Clients who have pending grant applications should expect delays in award notices and reviewer feedback. If grants have been awarded, contract negotiations could pause until a potential shutdown ends. There may also be delays in the release of anticipated new funding opportunities and additional guidance on recently released programs as program staff may be furloughed. Clients should also be mindful of application deadlines that fall during a shutdown period and look for guidance published by the agencies on how to proceed. While it is not required, some agencies may extend deadlines until the budget negotiations are resolved.  

     While MOST lawmakers on both sides of the aisle are traditionally positioned to avoid a shutdown, it is important for clients to be aware of potential impacts to their federal funding strategies. It will not be surprising to see another threatened shutdown in the fall, but at CFS, we will leverage our network of strategic partners to keep our clients up to date on the latest developments and contingency plans as lawmakers complete the appropriations process.