Early in March, I presented findings from my book Out of Reach at the Opportunity Dividend Summit in Detroit sponsored by CEOs for Cities. You can find the slideshow here or by clicking below:
To a greater degree than other recent economic recessions, the current downturn has hit suburban communities particularly hard. A recent Brookings Institution report by Elizabeth Kneebone and Emily Garr shows there are nearly twice as many unemployed Americans living in suburbs as in cities. Likewise, food stamp caseloads have increased at a much faster rate in suburban areas than in urban centers. Not surprisingly, many suburban nonprofit service organizations report significant increases in need and in the number of families seeking help for the first time from the safety net.
This past summer my research assistant, Ben Roth, and I have been interviewing a small sample of public and nonprofit organizations that help working poor families in the suburbs of Chicago, Los Angeles, and Washington, D.C. Our work from this summer is briefly summarized in a short research report entitled, “Suburbs in Need”, which is available at my website along with more detail about our study.
Although we are still collecting data and will publish a final report in early 2010, a couple key findings from this short research brief highlight the challenges facing service providers in suburban areas:
While the Census Bureau’s poverty report for 2008 has yet to be released, our findings are suggestive about the impact of the recession on working poor families in metropolitan areas - suburban and urban communities alike. Moreover, many states and localities will have to make additional social assistance program expenditure cuts in late 2009 and 2010 to cope with persistent budget deficits, which means that the help working poor families need until they can find a job will be harder and harder to find.
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.
Interesting piece in Governing.com - Jonathan Walters discusses some common administrative and workplace safety challenges that social service organizations face today. If you haven’t read his stuff at Governing.com, it is worth checking out.
One challenge is simply maintaining staffing levels.
“The low pay, the long hours, the constant pressure, the politics involved all add up to a level of wear and tear that drives people out of the profession and into other work–or at least into other branches of the work that aren’t so difficult.”
Turnover is problematic. Good staff transfer off the frontline, are promoted to administrative positions, or are hired away by other governmental or private organizations. The frequent churning of staff is particularly problematic in rural areas or remote communities, where there may not be large pools of professionally trained staff seeking work. Turnover also is a function of funding. Staffing levels can be unpredictable due to cuts in program funding. In my own work, I’ve found that about 1/2 of service organizations experiencing funding cuts have to reduce staffing levels as a result.
Walters details a meeting with county government service administrators and discussing the problem of turnover, particularly among child welfare caseworkers, where he asked if turnover could be reduced by offering frontline staff more money.
“No,” came one response that drew wide and vociferous agreement, “they want guns.”
Guns? Likely a somewhat glib response to his question about turnover, but Walters cites several survey findings highlighting the risks caseworkers face when completing their daily duties.
A 2002 survey of 800 social workers found that a fifth had been the victims of violence and that two-thirds had been threatened.
A 2006 national study of 5,000 licensed social workers found that more than 40 percent regard personal safety as a day-to-day on-the-job concern.
Nearly 600 exit interviews of human services workers and found that 90 percent had experienced verbal abuse, 30 percent had been attacked and 13 percent had been threatened with weapons.
These data points are consistent with the security - sometimes armed security - in place to ensure staff safety in many health and human service organizations. Not only do caseworkers encounter individuals whose behavior may be unpredictable due to mental health and substance abuse problems, but caseworkers often also are the bearers of bad news that can negatively affect families and draw emotional responses. For instance, caseworkers generally are the ones to notify families of removal of children from homes, denial of benefits, lack of eligibility, and cuts to assistance.
In addition to ensuring that federal, state, and local government maintain public commitments to supporting social service programs and cultivating greater private support of social service organizations, Walters notes the importance of legislation moving through Congress designed to strengthen the field of social work and promote safety for caseworkers. A rundown of the agenda prmoted by the National Association of Social Workers (NASW) and its advocacy partners can be found here.
One of the key themes in my book Out of Reach and this blog’s discussion of the recession, is the pro-cyclical nature of public expenditures for programs that help low-income populations. Funding for many human or social service programs that assist low-income workers increases during periods of growth, but contracts during economic downturns right at the moment when need is greatest. The current recession has hurt almost every source of government revenue and almost every source of funding for social service organizations that help low-income populations.
As governors and state legislatures begin to grasp the program cuts necessary to balance budgets in the next few years, the fragility of the safety net for low-income populations becomes more and more apparent. The safety net has come to rely more heavily upon state and local government for human service funding in the past twenty years. Yet, government programs are under budgetary pressures unprecedented in recent years.
Many regional and local newspapers track proposed social program cuts within their states, but National Public Radio and the New York Times both have recent pieces that use the budget crisis in Arizona to frame some of the broader issues at hand. According to the NPR story:
Arizona, which faced a $1.6 billion budget gap this year, has been among the hardest hit. Funding was trimmed for food banks, community health centers and home health care for the elderly. Monthly payments for foster care parents were reduced, and more than 1,100 children with chronic or disabling conditions were dropped from the state Children’s Rehabilitative Services program.
The New York Times continues:
Arizona’s crunch came on fast and hard. In January, the newly seated Republican governor, Jan Brewer, had to address a $1.6 billion budget gap by cutting $580 million in general-fund spending, taking more than $500 million from agencies financed with fees or other sources, and using $500 million in federal stimulus money — squeezing all the reductions into the final five months of the fiscal year ending June 30. Arizona expects a $3 billion shortfall in the next fiscal year. In a speech to legislators in March, Ms. Brewer proposed to fill the chasm with $1 billion in spending cuts, $1 billion in federal stimulus money and — in a risky idea she floated after emphasizing her conservative credentials — $1 billion raised through “a temporary tax increase.”
States are in a tricky spot right now - they are faced with falling revenues amidst rising program costs, even if social programs are not expanded or made more generous. For instance, inflation makes it more expensive to operate programs. Population growth and trends in demographics matter as well. Growth in population and the aging of the population both translate into greater numbers of individuals that may benefit from programs.
Few social programs or clients groups are buffered from program cuts. Looking at surveys with almost 2,000 government and nonprofit social service organizations that I completed in years following the 2001 recession, I find that about half of all organizations reported recently losing funding. The results are likely to be more dramatic if one was collecting data today. It is surprising when I look at the data that there is no particular pattern to it. Government agencies and nonprofits were equally likely to lose funds. Reliance on different revenue streams made little difference - those receiving public funds were as vulnerable as those reliant on private giving or charitable organizations. No service mission or client focus was immune - employment services, emergency assistance, housing, mental health and addiction services all seemed equally likely to face cuts.
What we should be worried about, is what happens to agencies after funding cuts. We hope organizations can make up the lost revenue or get by until the economy improves. But my survey data collected a few years ago suggest this is not the case. First, about 70 percent of service providers that lose funds report cutting staff, clients, and services as a result. Second, and perhaps more alarming, I found that about 30-40 percent of programs listed in community directories in the years following the 2001 recession were no longer offering programs or were nonoperational. Both are a sobering indication of what tough budget times mean for organizations that serve the poor.
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 deepens and unemployment rises, we can expect more and more working Americans will become poor. Families experience need in many ways: trouble finding a job, difficulty paying the mortgage or bills, struggling to have enough food. How do we as a country help working poor families today? The answer may be surprising.
Instead of depending primarily on cash assistance programs to help the poor – as the conventional wisdom supposes – most assistance we provide to the poor comes in the form of social supports that help with job search, address material needs, and promote greater self-sufficiency. This system of social service supports, however, will be severely tested in the coming months as funding from government and nonprofits decreases, and as the agencies operating programs become more vulnerable. If we are to meet the economic challenges ahead, we must have a reality-check in our discussions of safety net assistance and have accurate impressions of how we help the poor and the challenges that programs face in our communities.
While cash assistance programs are important sources of support, our safety net largely is oriented to the provision of employment services, child care programs, treatments for mental health or substance abuse problems, and help with basic food or housing needs. In a recent study, I estimate that for every $1 we spend on welfare cash assistance, we spend some $15 dollars on service programs that help millions of working poor adults provide for basic material needs and reach higher rungs on the job ladder. Even though most of these social service programs are funded by government, quite often they are delivered through nonprofit organizations that complement public dollars with private donations and volunteers.
Ironically, government funding for social service programs is cut during economic downturns and times of tight budgets. In the State of Illinois where I live, for example, a nearly $3 billion potential deficit is forcing officials to contemplate substantial cuts in funding and staff to an array of programs serving low-income populations. Similar stories can be found in all states and communities. Rollbacks in private philanthropy to social service agencies also are a likely possibility in the coming months, as foundation endowments and private donations are battered daily by volatility in the economy.
The potential impact of these cuts can be drawn from research I recently published that examined how social service agencies coped with the economic downturn of the early 2000s. Based on interviews with nearly 1,500 service organizations, I found evidence of profound instability and turmoil in our local safety nets in the years following that downturn. About 30% of agencies listed in community directories were no longer operational or offering programs for the poor. Of those still operating programs, about 40% of public and nonprofit agencies reported recently losing at least some of their program funding. Even more troubling, of those that lost funding, 70% reported cutting services, staff, and/or caseloads as a result. Given the depth of today’s economic distress, we might expect these numbers to understate the current challenges confronting community-based agencies that serve the poor.
Although my research suggests a tough road ahead, there is a lot we can do to strengthen our system. Our political leaders must resist the temptation to cut programs and at a minimum should maintain public funding levels for social service programs. We can help to better connect working poor families – many who are seeking help for the first time – to existing programs and resources nearby their homes. In addition, individuals energized by the spirit of volunteerism in the recent presidential election should direct time, advocacy, and fundraising to local nonprofit agencies that assist those in need. Even if concerned citizens give only a few dollars or a few hours per week, we could channel hundreds of billions of dollars in donations and millions of volunteer hours to nonprofits that help the most vulnerable Americans. To be sure, we cannot replace public funding for the safety net with volunteers and $10 donations; rather these private commitments are essential to strengthening the nonprofit sector on which the public safety net rests.
The stakes are high. If we do not adequately support public social service programs and the nonprofits that often deliver those programs in the coming months, not only will a poor child go to sleep without enough to eat this winter or an unemployed adult will struggle to find work to support their family, it will mean that next year poor persons will have fewer and fewer agencies to turn to for help.