Relying on expected data
Having a group that is not a group may lead to reporting issues down the road.  For instance, if you want to know the average number of Materials per Group, the results could easily be skewed by the overly large number of unassigned group members.

I'd lean towards having a cross reference table that links Groups to Materials.  So a table named MaterialsGroupsXRef that contains GroupID and MaterialID; any Material that is a member of a Group has a row in that table.

Any Materials that are not a member of a Group would not show up in the MaterialsGroupsXRef table.  This allows you to easily identify Materials that do not have a group.  Likewise, you could easily identify Groups with no Materials.