Inequality in the Spatial Allocation of Social Services: Government Contracts to Nonprofit Organizations in New York City

Publicly funded social services are an increasingly important component of social provision spending, accounting for approximately one-fifth of today's welfare state expenditures. These funds are often allocated through purchase of service contracts between state and municipal agencies and third-party providers, usually nonprofit organizations. This study uses a unique dataset of government contracts with nonprofit organizations in New York City between 1997 and 2001 to study the relationship between the allocation of social services funding across neighborhoods and neighborhood need. We distinguish between local organizations serving their immediate neighborhoods and distributive organizations serving multiple neighborhoods. Overall, contract dollars allocated to both organizational types are positively associated with socioeconomic disadvantage, although distributive organizations are less likely to be physically located in needy neighborhoods. However, contract dollars for services targeted to specific populations are sometimes negatively associated with the prevalence of these targeted populations, especially when those contracts go to distributive organizations.