Divergent Patterns of Nonprofit Financial Distress

Human service nonprofit organizations have increasingly been called upon to produce public services as governments have sought to devolve responsibility to private organizations. Just as stress tests have used accounting indicators to determine the distress of banks, this article uses measures of financial distress (Shumway 2001; Trussel and Greenlee 2004) to understand what types of human service nonprofits are facing difficulties. Joining NCCS Core Files with spatial data from the American Community Survey, I find that there is a positive relationship between financial distress and minority population. The article enters the debate as to how cutting public funding for human services may harm vulnerable communities.