After the Shutdown: Centering People Strategy in a Time of Uncertainty

The recent government shutdown may have just ended, but its effects on the nonprofit sector, especially those reliant on direct or indirect federal funding, are still unfolding.

With only a short-term funding extension in place, nonprofit leaders face a familiar but urgent challenge: how to support their people through uncertainty. And with the holiday season approaching, the emotional and operational stakes are even higher.

Nonprofits are powered by people. The shutdown disrupted not just programs and payments, but also the psychological safety of staff who are already stretched thin. It also had a tremendous impact on those who rely on their services, many scrambling for basic necessities including food and nutrition. We saw some of the longest food lines of our time, heavily taxing food banks across the country. The list is long when it comes to nonprofits who had to do even more with their already limited resources.

I see this moment calling for three imperatives.

The first is a renewed focus on HR strategy. Transparent communication is essential. Staff want to know where things stand, what leadership is doing to prepare, and how their roles may be affected. Leaders should prioritize clarity over certainty, acknowledging what’s unknown while reinforcing commitment to the mission and the team.

How we helped: A mid-sized human services nonprofit partnered with our HR Outsourcing team to stabilize operations after federal award delays. We implemented interim HR leadership, standardized onboarding, and introduced regular compliance audits aligned to grant requirements—restoring confidence and reducing audit findings at year-end.

Mental health and wellbeing also deserve attention. The holiday season can be emotionally complex even in stable times. Layer in economic anxiety and workplace stress, and it becomes critical to revisit benefits offerings, promote time-off usage, and encourage managers to check in with empathy. Small gestures, whether flexible schedules, recognition of effort, or even a simple “thank you” can go a long way in reinforcing morale.

How we helped: A membership association worked with our Total Rewards team to rebalance its benefits portfolio toward mental health access and family support. We helped them communicate the value of these offerings more clearly, resulting in higher employee satisfaction and improved benefits understanding in post-rollout surveys.

Retention is my final area of concern. High-performing staff may be quietly exploring other options, especially if they perceive instability. Now is the time for stay interviews, career conversations, and creative engagement strategies. Even if raises aren’t feasible (or aren’t tied to calendar year end), offering professional development, leadership opportunities, or role clarity can help reinforce commitment.

How we helped: A education-focused nonprofit engaged our People & Organizational Strategy team to conduct a retention risk assessment. We mapped critical roles to funding reliability and created a skills-based role architecture that clarified internal mobility paths. Within two quarters, they saw a measurable drop in regrettable turnover.

And one bonus thought… for nonprofits tethered to federal funding, HR teams should prepare for potential disruptions early in 2026. Reviewing employment contracts, compliance obligations, and staffing contingency plans now can help avoid reactive decisions later. HR leaders must stay close to finance and program teams to anticipate changes and respond proactively.

Ultimately, this season offers more than a pause; it’s a chance to reconnect with your people and your purpose. At OneDigital, we’re here to help you navigate this moment with clarity, compassion, and strategic support across HR, benefits, and financial services.

Our team of HR nonprofit consultants are constantly looking around the corner on behalf of our clients to ensure they understand the potential impacts of policy changes to ensure they stay compliant and resilient. Check out this recent article on What the OBBBA Means for Nonprofits: Strategy, Compliance & Funding Readiness.