Holes in the Nonprofit Safety Net? Rural-Urban and Regional Disparities

Background. In addition to public assistance programs, lower-income households depend on community-based nonprofit organizations (NPOs) for emergency assistance, job training, and other services to address material hardship (Guo, 2010), increasingly so in the post-welfare reform era (Sommerfeld & Reisch, 2003). Yet only 5% of households that experienced material hardship received assistance from NPOs (Guo, 2012), though a higher rate of help seeking was found among a sample of urban lower-income households (Allard et al., 2015). Compared to urban areas, nonprofits are fewer in number (Snavely & Tracy, 2003) and receive less grant funding (Swierzewski, 2007) in rural areas. This paper examines urbanicity and regional differences in the availability of per-capita NPO safety net resources for lower-income households.  

Methods. To simulate regional markets in which lower-income households theoretically could access NPO safety net resources, we created an analytic sample of 688 commuting zones (Chetty et al., 2014). Full population data of NPOs registered under section 501c3 of the Internal Revenue Code was used to construct the dependent variable, total per-capita NPO safety net program expenses derived from IRS Form 990s submitted each year of a five-year period (2008-2012). Per-capita observations were restricted to households with incomes equal to or less than 200% of the federal poverty level and NPOs that offer poverty alleviation or prevention services targeting lower-income households based on National Taxonomy of Exempt Entities (NTEE) classifications. Independent variables included a binary indicator for commuting zone urbanicity based on USDA guidelines, US Census Bureau regions and divisions, and community-level social and economic indicators using American Community Survey 5-year estimates. 

Results. The average number of safety net NPOs was significantly greater in urban (M = 70.97) than rural (M = 8.91) commuting zones (CZs) (p <.001) in 2012, yet per-capita expenses were comparable between urban (M = $285.49) and rural (M = $294.80) CZs (p = 0.85). However, per-capita resources varied by Census region (F(3, 684) = 4.99, p < .01). In the South, resources were fewer among rural (M = $137.11) compared to urban (M = $210.87) CZs (p < .001), yet there were no differences in the Northeast, West, or Midwest. By Census Division, statistically significant urban-rural differences were found only in the West South Central (AR, LA, OK, TX). Similar results were observed across all five study years.

Implications. Prior research suggests that rural compared to urban communities are at a disadvantage regarding philanthropic resources, yet considering both public- and private-sector NPO safety net resources, we find on average, urban-rural per-capita safety net expenditures were similar. However, safety net resources are much lower and an urban-rural disparity is found in the South compared to other regions. This is concerning given the rural poverty rate is nearly 6 percentage points higher than the urban poverty rate in the South. Government discretionary human service funding formulas and national and regional foundation funding priorities could be adjusted to reduce these resource disparities. Further investigation and advanced modeling is needed to account for fixed effects related to CZ social and economic conditions.