scottwallard.com

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.

Nonprofit organizations of all types are struggling to make ends meet. Unlike other recent downturns, this economic recession has hit every key source of revenue for nonprofits – public, charitable giving, foundation support, as well commercial and earned revenue. Although we should be concerned with the health of all nonprofits, it is important for us to recognize a bitter irony of the current economic crisis: the most vulnerable nonprofits are those that serve the most vulnerable poor populations and operate in the most resource-poor areas.

Social or human service nonprofits helping poor families provide for basic needs, find jobs, address physical and mental health problems, and care for children are in particular financial trouble. Demand for assistance is rising, while program funding is falling. Because social service nonprofits are more dependent upon public dollars than most other types of nonprofits, cuts in government funding are especially painful. At the same time, these nonprofits face tougher challenges than most other organizations when it comes to raising private donations to support programs.

Government grants and contracts are by far the most important source of revenue for the nonprofit social service sector. Recently, the New York Times ran a story discussing the financial crisis spreading through nonprofit organizations in America. The story made reference to a finding from my recent book, Out of Reach: Place, Poverty, and the New American Welfare State, which uses unique survey data explores the health of nonprofit social service providers in three cities (Chicago, Los Angeles, and Washington D.C.). In the book, I find nearly 75 percent of social service nonprofits interviewed in these three cities receive some type of government funding, and that half of those nonprofits depend on government funds for a majority of their budgets. Dependency upon public funding is even more acute in high-poverty neighborhoods of these three cities, where almost 80 percent of nonprofits receive public funding and more than 60 percent were dependent on those funds.

Nonprofit service organizations are dependent on public funding partly because government grants and contracts are reliable sources of revenue from year to year. While public funding may be dependable during good economic times, public funding for social services are among the first items cut when state and local governments encounter budget deficits. As we see in every city and town today, nonprofits are faced with declining government funding just as requests for help are rising. My three-city survey indicates 4 out of 10 nonprofits in high-poverty neighborhoods that receive public funding, report a recent decrease in that funding. Almost all of these agencies report a decrease in staffing, service provision, or number of clients served as a result.

Nonprofit social service agencies also are reliant on public funding because of the steep challenges they face in generating private charitable giving. High-poverty neighborhoods simply lack private wealth and resources needed to support very many nonprofit service organizations. The geographic isolation of poor neighborhoods from the surrounding community creates additional hurdles to private fundraising. Programs offered and populations served by nonprofits operating in high-poverty areas often will feel far removed from the daily experiences of potential donors in more affluent communities. Such distance between cause and donor make it difficult to successfully appeal for charitable gifts.

It is no surprise, therefore, to see that less than 10 percent of the more than $300 billion Americans give to charity each year is targeted at nonprofit social service providers. Similarly, when looking at my data on urban nonprofits, I find that only 15 percent of nonprofit agencies in high-poverty areas draw more than a quarter of their budget from private giving. Moreover, for nearly all of these organizations, the amount of private giving received has not changed appreciably in recent years.

If we are to successfully pull ourselves from the current economic quagmire, we must not only channel public and private investment into activities that create jobs, but we must channel public and private funds to the nonprofit service organizations that help Americans cope with job loss and temporary needs. Sustained support for the nonprofit service sector is critical if we are to help connect poor populations with better opportunities and strengthen poor communities battered by the recession.

Popular media encourages Americans to prioritize philanthropy and private giving, particularly to the poor. Although these stories can be found all over, the New York Times has run many pieces on these themes as of late.

Judith Flanders suggests Boxing Day as an opportunity to recommit ourselves to volunteerism and philanthropy:

Instead Boxing Day could return as a day of giving. Not necessarily cash . . . but rather one day a year to donate skills or effort, a day for sharing something of value in the larger community.

Nicholas D. Kristof also recently pointed out the importance of giving in bad economic times, highlighting evidence that conservatives give more than liberals to prod the left:

So, even in tough times, there are ways to help. Come on liberals, redeem yourselves, and put your wallets where your hearts are.

Other news stories find examples of Americans giving to charities that serve the needy and in some cases giving more to these charities than in previous years.

Giving more is good, but changing how we give is key.  According to Giving USA, less than 10% of all private giving is to human service nonprofit organizations that assist the poor. Americans collectively give more than $300 billion a year to nonprofits and charities, but only a tiny fraction goes organizations that provide services and assistance to the poor. In fact, once the holiday season has passed and the effects of the recession begin to take greater hold on our pocketbooks, we should expect there to be less giving from individuals to nonprofit charities in 2009 – not more.

Why does giving to the poor trail giving to other causes?  In part, the nonprofit organizations that serve low-income people have shifted energies away from cultivating private giving to relying on larger, more reliable public grants and contracts.  But, part of the blame lies with middle- and upper-income Americans who do not target much of their private giving to nonprofits that serve those in need. Perhaps this pattern of giving is driven by our collective optimism that we will not need help from charity during bad economic times, or by our spatial disconnect from charities that serve those in the highest-poverty neighborhoods.

Whether we are conservatives or liberals, residents of rural areas, suburbs, or cities, we should focus our giving more intently on the nonprofit food banks, shelters, employment service providers, literacy and education programs, early childhood programs, and housing assistance services that are the foundation of our local safety nets.

If we are to emerge from economic recession, it will require stronger community-based nonprofits that can help working poor families cope with temporary job loss and find work.  Greater private giving to those organizations, therefore, is an important first step we all can take toward lessening the blow of the recession on our communities.

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.

Available at Amazon.com

Welcome to my blog! In the coming weeks and months, I will post on issues related to poverty and social policy in America. Please visit my website (www.scottwallard.com) and check out my new book Out of Reach: Place, Poverty, and the New American Welfare State, from Yale University Press.