Explaining Which Local Government Officials Contract with Nonprofits

Abstract

Local governments have limited capacity to provide services such as mental health, substance abuse and treatment, emergency relief services, and free or low-cost health care. Revenue from local, state and federal government funding usually cannot meet all service demands. Local government officials (LGOs) often award grants and contracts to nonprofits and other institutions that provide important services and specialized expertise to fill these gaps. Although LGOs may purchase services from other government units or private businesses, Indiana LGOs report stronger working relationships with nonprofits and higher trust levels. LGOs’ and nonprofits’ shared commitments to public and community service build a strong basis for this trust. Almost one-fourth of Indiana nonprofits receive some form of government funding, accounting for nearly two-fifths of their revenues. This policy brief is based on research by Dr. Kirsten Grønbjerg and graduate student Eric Schmidt, of the Paul H. O’Neill School of Public and Environmental Affairs. PPI collected the research data on behalf of the Indiana Advisory Commission on Intergovernmental Relations (IACIR). The study updates data from a previous analysis of LGO contracting with nonprofits as part of a series on nonprofit-government relations in Indiana from the Indiana Nonprofits Project: Scope and Community Dimensions. The brief examines which conditions appeared to be related to whether LGOs said their unit of local government contracts with nonprofits. Understanding what predicts LGO contracting is important because, along with providing services, nonprofits can influence policy based on their expertise in implementing existing policies, serving community needs, and knowing the effects of policy priorities. When local governments contract with nonprofits, this serves as a form of endorsement and enhances the visibility and legitimacy of those nonprofits in the community.