How is the Safety Net Responding to the Recession?
One of the bitterly ironic realities of our contemporary safety net is that it relies heavily upon nonprofit human service organizations to deliver assistance to working poor families, yet funding for these nonprofits contracts and decreases during periods of economic recession. There has not been a severe or sustained recession like the current one, however, since this transformation in the safety net took hold in the late 1980s. Survey data that I collected in the wake of the 2001 recession is suggestive: many nonprofits reported funding losses and service cutbacks, but the impact was primarily felt through cuts in public funding streams. The current recession is hitting all funding sources - public and private - quite hard.
As I have begun to draft a survey exploring the impact of the recession on suburban social service agencies, I ran across an interesting piece by Rick Cohen of the Nonprofit Quarterly, which locates many different surveys and reports tracking the impact of the current recession on nonprofit organizations. In another blog entry, Cohen summarizes key findings about reported effects of the recession on nonprofits.
It is likely that there are worse days ahead for nonprofit service organizations. Not only are state budget deficits going to persist over the next several years, but it is unlikely there will be another $1 trillion in stimulus funding to help states and communities maintain commitments to health, education, and human service programs.
There may be room to be optimistic though. We are unlikely to see the nonprofit service sector experience financial devastation on par with that following the Great Depression. Most nonprofits will have to cut back programs, staffing, and caseloads - some nonprofits may shut their doors or merge, with smaller nonprofits being particularly hard hit - but the sector will remain intact. The resiliency of the nonprofit service sector will be due in large part to the presence of sophisticated organizational structures and fundraising operations that allow today’s nonprofits to adapt to uncertainty in the environment. Also, much of the sector’s resiliency will be due to the public funding for many human service programs that will be sustained, albeit at lower levels more comparable to program funding of the early 1990s than the mid-2000s.
While we should resist giving up fiscal and programmatic ground in the fight to reduce poverty and increase economic opportunities for the poor, the recession won’t return us to a safety net circa 1930. For the next several years states and communities will not be able to help working poor families at levels we have assumed were permanent baselines or with the same approaches that had emerged in a piecemeal fashion over the four decades following the War on Poverty. The retrenchment of the safety net, however, might give us the opportunity to rethink service delivery systems, seek more effective program models, and find more efficient ways to provide help to those in need. In the meantime, we must work as communities and concerned citizens to ensure that those most in need are not left waiting until the economy and our safety net emerge into recovery.