Rising Pressure from Government Funding Cutbacks (Human-Services Nonprofits)
The FY 2026 “skinny” federal budget proposes 22.6% ($163 B) cuts to domestic discretionary spending, and subsequent agency details signal reductions or restructuring across HHS, HRSA, SAMHSA, CDC, and other programs that directly support mental health, housing, addiction services, and workforce development—pillars many small businesses rely on through nonprofit partnerships. While Congress controls appropriations, nonprofits are already experiencing delays, program eliminations, and intensified grant competition.
What it means for small businesses:
Local nonprofits often provide job training, childcare navigation, recovery support, and mental health
access that stabilize your workforce. Funding contractions can reduce program capacity, lengthen
waitlists, and shift costs back to employers via higher turnover and absenteeism.
Do this in February:
- Diversify community support channels: build partnerships with multiple providers (not a single nonprofit) to spread risk; add employee resource guides that include public and private services.
- Strengthen nonprofit grant operations (if you’re a nonprofit employer or sit on a board): improve time/labor tracking by grant, reimbursements aligned to payroll cycles, and documentation standards to speed audits and cash flow.
- Engage in advocacy: coordinate employer–nonprofit testimonies at local hearings and with state delegations to highlight workforce impacts of federal reductions.
Compliance Checkup: Pay Transparency, Retirement, Remote Taxation
Expect tighter enforcement and updates across payroll, retirement, AI in hiring, and pay transparency laws. The SECURE Act 2.0 expands automatic enrollment for new 401(k)/403(b) plans, while multi state remote work creates withholding, registration, and classification complexities. Several jurisdictions continue to broaden pay transparency requirements.
Do this in February:
- Run a pay posting audit for any open roles: Ensure ranges are consistent, defensible, and compliant with applicable state/city rules.
- Confirm plan auto enrollment settings for eligible employees and update onboarding packets accordingly.
- Evaluate remote worker tax setup: State registrations, nexus, and payroll filing obligations for each location.
