Report: States Turning to Charity to Provide Welfare Services

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August 15, 2012; Source: Deseret News

State governments are increasingly turning to charities for help in the prolonged economic downturn. A report from the Government Accountability Office (GAO) to Congress is just the latest evidence that more and more people are requesting government assistance and welfare programs at a time when states are too strapped to expand the assistance they can provide. For an increasing number of states, the solution seems to be to turn to groups like the United Way, the YMCA and Shriner’s Hospital for help.

The report details a specific trend. That is, when the federal government adopted the Temporary Assistance for Needy Families (TANF) block grant in 1997, it meant for states to maintain their historical financial commitment to welfare programs. TANF provides $16.5 billion in federal funds to assist low income families, and states are expected to spend at least 75-80 percent of the amount they were spending in Fiscal Year 1994, before TANF began. In 2007, only three states counted nonprofit contributions as part of that commitment, but that number rose to 17 states in Fiscal Year 2010. The top need charities are meeting is food assistance. States are also relying on nonprofits to supply medical and dental service, employment assistance and family stabilization service.

Does it matter? According to the GAO report, “Concerns have been expressed that this option may reduce the overall level of services available to low-income families in a state if, for example, the state counts services already provided by third parties while reducing its own spending.” –Mary Jo Draper

  • Karen Rousey

    Even sadder, in some States, like Illinois, there are millions of dollars of funding due by the State to local charities that are not paid for 6 months to a year. In essence State Governments are borrowing money from nonprofits. I find it unconscionable that we loan money from government to failing “for profits” or give money to “for profits ” in terms of tax breaks and incentives and the government can’t even pay what they owe to social services for services already rendered. In many of these cases, the State is legally responsible to provide the services but then does not pay those that they hire through subcontracts to fulfill the State’s legal obligation. What happened to a free market economy and competition in the corporate sector? Government continues to pay for corporate welfare but is not paying the bill for their mandated social welfare services.