A state government shutdown would prevent many nonprofit organizations from delivering services ranging from counseling to youth job training to health services, the executive director of the Minnesota Council of Nonprofits said Wednesday.
The council plans a series of meetings starting Wednesday evening to give nonprofit groups information about a possible shutdown and help them with financial planning. That includes how to access emergency loans and ask the courts for "essential" status that would allow them to keep operating during a shutdown.
Jon Pratt, the council's executive director, said some 500 nonprofits receive direct assistance from the state. Many could have their funding halted.
The other problem is uncertainty over the state budget for the next two years, he said.
"There's really a dual crisis, because we still don't have a budget so there are organizations that wouldn't know what their allocation is or if they had any allocation once a new budget is passed," Pratt told MPR's Morning Edition. "It's hard for them to spend money on the assumption that the Legislature will appropriate their particular section of service."
Pratt said that leaves nonprofits with two questions that could have major financial impacts: How long will a shutdown last, and what will the actual budget decisions be?
While some nonprofits will be able to get short-term loans to continue their services, Pratt said banks might be leery of loaning money to others whose overall funding for the next two years is less certain.
"It's even possible that the banks would say, 'Yes we've given you a line of credit but we're going to freeze it right now because we're unsure about your future finances.'" Pratt said.
Pratt said he expects a shutdown this year would be worse than the partial state government shutdown of 2005. Back then, the Legislature had passed more appropriations bills and was "getting along better than it is now," he said.
Pratt expects nonprofits to begin informing their clients and supporters of the situation this week if they haven't already. As a shutdown gets closer, nonprofits will try to argue that their services are essential and should continue during a shutdown, he said.
Pratt said organizations like domestic violence shelters and group homes would likely be deemed essential. But agencies that provide other human services, such as conservation job training for youth on DNR land, would be hardest hit, he said.
Even if some successfully gain "essential" status, Pratt said the impact of a shutdown would be felt widely.
"We're going to see a substantial reduction in services," he said.
(MPR's Curtis Gilbert and Cathy Wurzer contributed to this report.)