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Debate about policy responses to the current recession offers an opportunity to reflect upon how the safety net helps low-income Americans and how we might strengthen our safety net. Popular impressions of safety net assistance often reference welfare cash assistance through the Temporary Assistance for Needy Families program (TANF) or food assistance through the Supplemental Nutrition Assistance Program (SNAP, formerly the Food Stamp Program). While these are important programs of support for low-income Americans, they account for only a small portion of safety net spending.

Instead, today’s safety net delivers much more assistance to persons near and below the poverty line through social service programs that support efforts to find and keep a job, cope with job loss, care for children, or address various health, substance abuse, and mental health problems. While we spent roughly $50 billion on TANF and SNAP in 2008, my recent book Out of Reach: Place, Poverty, and the New American Welfare State (Yale University Press, 2009) estimates that we spend anywhere from $150 and $200 billion each year on social service programs. Instead of a safety net predicated on cash assistance, the safety net focuses on helping poor families achieve better economic trajectories through a range of support services.

The disconnect between popular conceptions and the reality of safety net assistance not only leads to distorted political rhetoric and policy debate, but it leads us to look past important structural features of the safety net that impede our ability to successfully deliver programs of assistance.

Inherent Localness of the Safety Net
Unlike cash assistance, most social service programs cannot be delivered to clients in their homes. As a result, social service elements of the safety net rely upon local agencies to provide assistance at the street-level. Because the capacity of local social service organizations varies by region, city, and town, the American safety net actually is a conglomeration of tens of thousands of unique local safety nets. This inherent localness makes our safety net responsive to local needs and preferences, but its fragmented nature also inhibits efforts to coordinate programs, minimize duplication, or respond swiftly to widespread increases in poverty or changes in the economy.

Moreover, local variation in provision of social service can lead to safety net assistance that is inaccessible to the poor. In Out of Reach, I interviewed nearly 1,500 public and nonprofit service organizations to examine patterns of social service accessibility in metropolitan Chicago, Los Angeles, and Washington, D.C. Using these survey data, I find high-poverty neighborhoods (poverty rate over 20%) to have about one-third as much access to a variety of social services as low-poverty neighborhoods (poverty rate less than 10%). Where providers choose to locate is driven by many complex considerations, but we should be concerned that inadequate access to service providers will translate into many low-income families failing to receive needed safety net assistance because they cannot find help nearby.

Difficulty Responding to Rising Need
Particularly relevant given today’s economic environment, public and private funding for social service programs decreases during economic downturns, when government revenues, private endowments, and charitable giving decline. This responsiveness to the economic cycle means that funding available for social service programming decreases at the same time that need for assistance increases. Again turning to my interviews with service providers completed for Out of Reach, I find that about 40 percent of respondents reported decreases in at least one of five key funding sources in the years following the recession that began in 2001 (e.g., government grants or contracts, Medicaid, nonprofit grants or contracts, private giving, earned revenue). Given the severity of today’s economic conditions, we should expect the percentage of agencies reporting lost funds today to be much higher.

Not surprisingly, less reliable revenue flows generally lead to less predictable services. For example, seven out of ten government and nonprofit service agencies reporting a recent decrease in funding at the time of my interviews also reported reducing staff levels, the range of services offered, numbers of clients served, or even temporarily closing the facility to cope with lost funding. A bitterly ironic feature of today’s safety net, therefore, is that the social service agencies upon which the safety net rests become vulnerable during economic downturns right at the moment when stable sources of support are most necessary.

Moving Forward
Moving forward, we should expect the spatial accessibility and stability of the nonprofit social service sector to continue to be of enormous importance to the broad array of proposals composing today’s federal antipoverty agenda. In fact, the success of recently proposed federal antipoverty strategies ultimately rests on the strength of local service organizations. For example, for transitional job and employment training programs to be effective they should be located within reasonable commuting distances of low-skill job-seekers. Effects of social service programs intended to strengthen parenting and engage non-custodial fathers will likely vary according to the availability of such programs in neighborhoods where needs are greatest. Accomplishments of President Obama’s Office of Faith-Based and Neighborhood Partnerships will rest on the strength and sustainability of local faith-based and secular nonprofit service organizations. Likewise, neighborhood investment through programs like the Promise Neighborhoods initiative will yield results only if there is adequate nonprofit service delivery infrastructure in place.

By strengthening our public and private commitments to helping the poor, however, we can work toward building local safety nets that offer support to those in need and that will help the country emerge from the economic challenges ahead.

In today’s Washington Post, Jacqueline Salmon discusses how the recession has created daunting funding challenges for faith-based social service organizations:

Faith-based charities, which provide an enormous array of private social services to the nation’s sick, elderly and poor, are facing unprecedented cutbacks from one of their biggest funders: the government.

Given that nonprofits helping low-income populations meet basic material needs, find work, or improve personal well-being rest at the core of our safety net, it is important to understand how the current crisis is having a sharp destabilizing effect on the sources of support that more and more Americans are turning to for aid.

This Washington Post piece cites a few data points from my recent book Out of Reach: Place, Poverty, and the New American Welfare State, which examines interviews with almost 1,500 government and nonprofit social service agencies. I found that most nonprofits – faith-based or secular received some type of funding from government sources. Secular nonprofits, in particular, draw quite a bit of funding from government grants, contracts, and fees for services. About 40 to 50% of secular nonprofits are dependent upon public funding streams for at least half of their budgets. (Click here to view related papers and reports).

Faith-based service providers, contrary to popular impressions, also receive quite a bit of public funding. In metropolitan Washington, D.C., for instance, 35% of faith-based service organizations that I interviewed reported receiving government funding of some kind. Similar findings emerge in other urban and rural locations that I’ve studied.

Nonprofit service organizations – secular and faith-based – have become important partners in the delivery of government safety net programs, so it is no surprise that many receive public funds and many are hurt when government programs are cut. Reliance upon public funding sources also reflects the modest amounts that Americans give to charities that work with poor populations. Americans gave about $300 billion to charities in 2007, but less than 10 percent was targeted at social or human service nonprofit organizations (Giving USA 2008).

What the article didn’t report was that my data indicate there is substantial volatility in funding even during relatively good times. Interviewing providers between 2004 and 2006, I found that roughly one-third to one-half of faith-based and secular nonprofits experienced a recent decrease in program funding. About 7 of every 10 organizations reporting a decrease in funding also reported reducing staff, caseloads, and program offerings as a result. Figures for today certainly would exceed these striking numbers. Ensuring strong public and private support of the critical nonprofit components of our safety net, however, will be important if we are to help families cope with the recession and if we are to help people return to work soon.

As the recession persists and the labor market continues to contract, the holes in the safety net will become more and more apparent.  Gaps in how we provide help to the working poor exist in part because of significant increases in demand for aid, often from persons with few previous connections to the safety net. Not only may programs be ill-equipped to meet the needs of many low-income job-seekers, but public and private funding for many antipoverty programs decreases during economic downturns. The cyclical nature of antipoverty ironically makes less aid available right at the moment when demand is rising.

A dramatic example of how nonresponsive social programs are to economic downturns can be found in last Sunday’s New York Times, where Jason DeParle discusses how welfare cash assistance caseloads are not expanding despite many rising indicators of need.Temporary Assistance for Needy Families (TANF), a program commonly referred to as welfare, imposed strict time limits and work requirements as a condition of receiving aid back in 1996. Changes to welfare at that time also capped federal program funding by converting the TANF to a block grant. Because the TANF block grant hasn’t been adjusted for inflation in more than a decade, there is far less money available today to help poor families than in 1996. Combined, work requirements and fixed federal financing make it difficult for states to expand TANF assistance during the current downturn.

Yet, this a reality of welfare that has existed for several years. I show in my recent book that between 2000 and 2003, a period that brackets an economic recession, the number of families living below the poverty line increased by 18.9 percent. The TANF caseload, however, decreased by 8 percent during that time. Increased need in post-welfare reform America has not correspond to an increase in the number of persons receiving cash or social-service-based assistance.

Even more evidence can be seen in this chart tracking welfare caseloads from 1997 to March 2008:

Even in the wake of the recession in 2001 and the jobless recovery in the following years that did little to expand job opportunities for low-skill workers, welfare caseloads have continued to shrink and the program was unresponsive to changing need. Using the most recent data available from the Department of Health and Human Services, caseloads haven’t changed appreciably since March 2008.

The question we should be asking is:  where are working poor families going for help?  This is a question on which scholars and experts are still gathering information. There may not be many good options for the working poor. More families might qualify for the Earned Income Tax Credit (EITC) this year, which will provide a temporary boost in household income to working poor families. More families are seeking help from the Food Stamp Program and from food pantries. Nonprofit service organizations, dealing with their own fiscal crises, are unlikely to have the resources to meet rising needs. Many families may simply have to make tough choices between having enough to eat, maintaining a car to get to work or search for work, and making rent or mortgage payments. Ensuring there is a safety net for these families, however, is critical if they are to cope with temporary job loss, find work, and help get the economy moving again.