Assessing the Impact of Federal Funding on Faith-Based and Community Organization Program Spending

This study examines the impact of federal funding levels on the program spending of faith-based and community organizations in Kentucky. Prior research indicates that organizations could increase spending on overall program expenses or decrease program spending relative to administrative costs as a result of greater reporting demands from federal funders. Three models of program spending are proposed: increased program spending relative to administrative costs (program enhancement effect), decreased program spending relative to administrative costs (administrative enhancement effect), and no net effect (neutral program-spending effect). The analysis supports the program enhancement effect and estimates that federal funding has a positive relationship with increased program spending relative to other expenses in faith-based and community organizations.