Panel Paper: Challenges of the Nonprofit-Government Relationship: After the Great Recession

Saturday, November 10, 2012 : 1:45 PM
Hall of Fame (Sheraton Baltimore City Center Hotel)

*Names in bold indicate Presenter

Erwin de Leon, The Urban Institute and Brent Never, University of Missouri, Kansas City

Over the course of several decades governments have moved production of many human services from the public to the nonprofit and private sectors, thereby cementing the partnership between governments and nonprofit providers (Smith & Lipsky, 1993; Salamon, 1995). The Great Recession however caused serious strain on this partnership (Boris, de Leon, Roeger, & Nikolova, 2010). At a time when demand for many social services has peaked, public fiscal resources previously used to support these services have reached a nadir.

Analysis of data from Urban Institute’s national survey of 2,497 human service organizations indicate that organizations are likely to face late payments, changes in contract terms, and even contract cancelation, all of which lead to organizations being more likely to have to reduce salaries, lay off employees, or raid financial reserves. This hollowing out of organizational capacity can have serious implications for delivery of services. Quality and quantity of services can diminish while public demand remains high.

This analysis serves as the foundation for a discussion of the current system of human service provision and production. While the contract as a tool of government continues to play an essential role in service production, the foundational understandings of the rights and responsibilities inherent in any service production arrangement has been breached. Are the foundational values upon which our human-service production system is based – a meta-contract between governments and producers – sound in an era of fiscal imbalance? Does the recent recession represent a short-term alteration of this relationship, or a fundamental change in how government provides human services? 

These fundamental values have come into question as elected leaders and their constituents face the choice of either increasing revenue through taxes or decreasing expenditures through cutting services. The first fundamental value, that there are vulnerable populations that must receive government provision of services, has re-entered the public policy debate in areas such as concerns over services for unauthorized immigrants and their children. The second value, that the use of private organizations as the preferred method of producing services, has also entered into the public debate through the best way of providing healthcare coverage to the uninsured. There has been less revision to the third value, with citizens generally believing that many public problems will require long-term, sustained solutions in order to mitigate their effects.

States have taken different approaches, from re-envisioning the meta-contract together with their nonprofit partners to unilaterally re-orienting their relationship with organizations. Human service nonprofits may face several years before they can approach a stable relationship with governments. 


Boris, E. T., de Leon, E., Roeger, K. L., & Nikolova, M. 2010. Human service nonprofits and government collaboration: Findings from the 2010 National Survey of Nonprofit Government Contracting and Grants. Washington, DC: Urban Institute.

Salamon, L. M. 1995. Partners in public service: Government-nonprofit relations in the modern welfare state. Baltimore, MD: The Johns Hopkins University Press.

Smith, S. R., & Lipsky, M. 1993. Nonprofits for hire: The welfare state in the age of contracting. Cambridge, MA: Harvard University Press.