Government Nonprofit Relationship After Welfare Reform

This study explored the financial relationships between government and nonprofit organizations after welfare reform, from 1997 to 2001, focusing on changes experienced by nonprofit human service organizations. Welfare reform of 1996 brought important changes to social policy. Limited studies, however, have been conducted nationwide, quantitatively, and longitudinally on government support for nonprofit human service organizations. This study intended to fill this gap and investigating the nonprofits on whether they received government support, the amount of support, and their expenses on program services from 1997 to 2001. Three theoretical perspectives guided this study were failure theories, government-nonprofit relationship, and resources dependence. This study analyzed how welfare reform policies and provisions at state level, and financial vulnerability at organizational level, predicted the changes on the chances and amount of government support and proportion of program services expenses in nonprofit organizations. This study applied three HGLM and two HLM analyses on five research models based on different research sub samples and concluded four primary findings. First, this study found that government support flowed to relatively the same nonprofits with increased amounts in the five years, implying increasing complimentary relationship between government and nonprofits. Second, with increased amount of government support in the nonprofits, the proportion of program service expenses did not change over time, implying that other costs of management and fundraising increased in the nonprofits in the five years. Third, complimentary government nonprofit relationship was found in the states with generous welfare reform provisions including larger TANF non-assistance expenditure and more generous financial incentive to work policies. Complimentary relationship was not found in states with stricter time limit policies and work requirements. Four, financially vulnerable nonprofits received government support frequently and were funded with large grants, implying small nonprofits were highly dependent on government support in the early years after welfare reform.