What the Government Shutdown Means for Grant Applicants and Awardees

With the federal government shutdown effective October 1, many federal grant programs (and awardees) are in a state of limbo. Many clients have been asking how the shutdown will effect when certain programs are announced of when expenses for ongoing grant-funded projects will be reimbursed.

Unfortunately we don’t have all the answers (in part because the agencies that we commonly work with, such as the USDA, have been shut down), but we do have a general idea of how this affects upcoming programs, current and ongoing projects, and projects that have been approved for funding but are not yet under contract.

Whether or not an upcoming program will be announced once the shutdown is resolved will largely depend on if funds had been committed to the program before the shutdown occurred. For example, the USDA’s Value Added Producer Grant program had committed funding before the shutdown and was nearing a release of the notice of funding availability (NOFA). The furlough of USDA employees will prevent the NOFA from being released until sometime after the shutdown is ended, meaning the program is on hold indefinitely.

Ongoing grant-funded projects will continue during the shutdown, but requests for grant reimbursement won’t be processed until the shutdown is resolved. This is a particular inconvenience for grant awardees since reimbursements are often requested and issued on a quarterly basis. Any grant recipient who incurred a great deal of expenses in the quarter ended September 30, 2013 may need to prepare themselves to float by without reimbursement until the shutdown ends.

Finally, we know that there are federal grants (such as the Risk Management Partnerships program) that were awarded a short time before the shutdown took place. In many cases, the shutdown happened before recipients were able to negotiate and sign agreements with the awarding agency. In these cases, negotiations won’t be able to resume until the shutdown ends, meaning that projects will be put on hold. There’s no telling how long the shutdown is going to last, so now would be a good time to develop a contingency plan in case the shutdown carries on longer than expected.

+Tim Peters is a consultant with Morrison, providing business valuations, business planning (including budgeting, cash flow forecasting, strategic planning), feasibility studies, interim controller services, competitive grant writing and special projects that don't fit into any conventional category. You can contact Tim directly at tpeters@morrisonco.net or via telephone at 530-893-4764 ext. 208.

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