Material assistance: who is helped by nonprofits?

Author:Guo, Baorong

Although a vast amount of literature on the characteristics of public assistance recipients exists, little is known about the characteristics of the clientele of nonprofits that provide material assistance. This study examines the question of who receives material assistance from nonprofits. Three panels of the Survey of Income and Program Participation (1996, 2001, and 2004) adult well-being module were used to see if the use of nonprofit assistance is associated with individual and household characteristics, type of material hardship, and the use of other sources of assistance. Results show that poverty status, education, area of residence, and public program participation have a significant association with nonprofit material assistance, regardless of the type of material hardship and the use of other sources of assistance. These associations stayed relatively stable during the years of observation. It is interesting that households headed by an individual with college education were more likely than those headed by an individual without a high school diploma to receive material assistance from nonprofits. These findings may help nonprofits develop appropriate assistance programs and reach target populations.

KEY WORDS: low-income households; material assistance; material hardship; nonprofits; social service


Material hardship is a condition of failure to meet the "minimum levels of very basic goods and services, such as food, housing, and medical needs" (Beverly, 2001, p. 143). In the United States, one in every 10 people lives in material hardship (Beverly, 2001). To help those with material hardship, government at various levels and nonprofit groups provide a wide range of material assistance. During the recent economic downturn, the need for material assistance rose and an increasing number of people turned to nonprofits for assistance (Ducey, 2009). Despite the important role of nonprofits in social assistance historically and currently (for example, Allard, 2008; Lipsky & Smith, 1989; Young, 1999), little is known about the clientele of the nonprofit sector (Allard, 2008). Two reasons may account for this. First, nonprofit assistance is still small in size and scope relative to public assistance, although this is changing as the partnership between government and nonprofits grows (Salamon, 1995; Young, 1999). Second, as noted by Allard, the local nature of service providers poses a challenge to research on nonprofit groups, and this is partly reflected by the lack of nationally representative data on the use of nonprofit assistance by individuals.

Despite how little we know about the clientele of the nonprofit sector, a huge gap can be seen in the extent of material hardship and the availability of material assistance to the needy. Because of this, nonprofits are expected to play a larger role in social assistance to the needy (Alexander, Nank, & Stivers, 1999; Salamon, 1995). For this to happen, we need to look closely at who receives material assistance from nonprofits and what factors are associated with the use of nonprofit assistance. An inquiry into these questions will not only benefit nonprofits as they try to develop appropriate assistance programs and reach target populations, but also inform policymakers of the similarities and differences between the clientele of the nonprofit sector and that of the public sector. The Survey of Income and Program Participation (SIPP), which incorporates questions regarding nonprofit assistance, makes it possible to closely study the clientele of nonprofit assistance. Three panels of the SIPP (1996, 2001, and 2004) were used by the current study to examine the characteristics of nonprofits' clients and the determinants of the use of nonprofit assistance by families with material hardship.


Theoretical Perspectives

As is widely recognized, nonprofit assistance is distinct from other sources of assistance, such as government, family, and friends. Nonprofits are private institutions that act in the public interest (Salamon, 1999). Nonprofit assistance is different from government assistance because it clearly reflects collective and voluntary action in response to citizens' needs in a way independent of government effort. Although the independence of nonprofits is frequently doubted as they receive more or less government support, there is wide agreement that nonprofits are "institutionally separate from the government" (Salamon, 1999). Nonprofit assistance is also different from family and friend assistance because it is formalized and institutionalized rather than based on personal networks.

The question of who uses nonprofit assistance can be examined from a microeconomic perspective on consumption. From this perspective, individuals and families try to maximize their well-being at different stages of life, and the use of nonprofit assistance can be considered such an effort in difficult times. Material hardship often occurs when households experience poverty or negative income shocks. The presence of material hardship indicates that people have to constrain their basic consumption due to economic pressure (Schoeni & Ross, 2005). To maintain consumption and maximize well-being, some families may pursue material assistance from family members and friends, nonprofit groups, or public programs (for example, the Supplemental Nutritional Assistance Program [SNAP]). The choice of different sources of assistance is, therefore, an economic decision that compares the cost and benefit of assistance. This decision takes into account a number of factors, such as benefit level, stigma, program eligibility, and administrative barriers. According to this theoretical model, some low-income families may decide to take nonprofit assistance to maximize their consumption utility when there are barriers to public assistance or assistance from family and friends or when other sources of aid are insufficient. Barriers may include, but are not limited to, the unavailability of assistance (for example, lack of resources in social networks and ineligibility for public programs), a lack of knowledge about public programs, and the stigma and transaction costs of public assistance. For example, a report (U.S. Department of Agriculture, 2008) showed that only two-thirds of those eligible for SNAP (formerly known as the Food Stamp Program) actually received public food assistance, suggesting that many people may have misinformation about the eligibility rules. Also, given the transient nature of material hardship (Ribar & Hamrick, 2003), public assistance may be viewed as less worthy than other alternatives due to the long and complex application process. Instead, people may turn to nonprofit assistance located in their communities. Sometimes, nonprofit assistance is preferred over public assistance because the latter is often associated with stigma (Moffitt, 1983). All of this seems to point to the substitution effect of nonprofit assistance. That is, families receive nonprofit assistance because they are less likely to obtain assistance from other sources (for example, government, family, and friends). Families receiving nonprofit assistance may be demographically different from those receiving assistance from other sources. A study showed that a small proportion of people actually use both private and public assistance (Wu & Eamon, 2007).

From a different perspective, low-income ramifies may take nonprofit assistance due to the insufficiency of assistance from other sources. In other words, nonprofit assistance and public assistance are supplements for each other rather than substitutes, and families that receive public assistance may also pursue nonprofit assistance to maximize their consumption. Indeed, nonprofit assistance and public assistance are more than supplements because receipt of assistance from both sources may reflect a complementary government--nonprofit relation. That is, nonprofits are engaged in social assistance not only through provision of additional resources, but also through a partnership with government. Consequently, those who receive public and nonprofit assistance may have somewhat similar demographic characteristics. According to Young (1999), government has inherent limits in its ability to meet diverse social needs, and the nonprofit sector often faces resource constraints. As a result of the inevitable inadequacy of both sectors, a partnership has emerged in which the government provides financing and the nonprofits deliver services. Just as government has increasingly relied on purchase-of-service contracts with nonprofits, nonprofits have become increasingly dependent on government funding for delivery of services to the public. The growing partnership between government and nonprofits since the 1960s precisely reflects this complementary perspective (Young, 1999). That levels of nonprofit antipoverty activity are higher in wealthier areas (meaning more resources for nonprofits) where government contribution is also higher is evidence for this complement framework (Joassart-Marcelli & Wolch, 2003).

Empirical Evidence

Both substitution and complementarity effects of nonprofit assistance are supported to some extent by the empirical literature. Consistent with the assumption of substitution of nonprofit assistance in place of government assistance, research has shown that factors commonly associated with the use of public assistance (such as age, education, marital status, and employment) are not associated with the use of private assistance. In Neustrom, Deseran, and Moore's (2001) study using the Louisiana Survey of Families and Households, a number of factors (including age, education, employment status, rural/urban residence, family structure, marital status, Aid to Families with Dependent Children participation, number of children in a household, and race) were examined as they related to sources of informal...

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