All levels of government routinely partner with nonprofit organizations to provide services to constituents (Smith and Lipsky 1993; Salamon 1995).  Government opts to work with a third-party service deliverer when the government is able to save money and/or provide more effective services to its citizens (Kettl 1993; Savas 1982; Sclar 1997).  However, the relationship between government and nonprofit organizations is not without problems. 

A 2010 study conducted by The Urban Institute’s Center on Nonprofits and Philanthropy revealed large-scale, systematic problems in government-nonprofit contracting and grants processes that adversely affected the ability of many nonprofits to serve their clients. Results from this first national survey of human service nonprofit organizations indicated that key problems with the government contracting process included payments that did not cover the full cost of services provided, complex and time-consuming applications and reporting, late payments, and changes to the terms of  contracts or grant agreements.  Additionally, nearly one-third of respondents felt that their experience with government during the recession was worse than in prior years (Boris et.al. 2010).

While this study provided the first national data on the scope and nature of the nonprofit-government funding relationships among human services organizations, it raised many additional questions, especially about the situation with other types of organizations and trends after the recession.  With nearly one-third of revenue sources for reporting public charities coming from government through contracts (23.9 percent) or grants (8.3 percent), it is essential that additional research into the relationship between nonprofits and government be conducted (Roeger, Blackwood, and Pettijohn 2012).   

To answer additional questions raised in the 2010 study and ascertain how nonprofits are faring three years later, the Urban Institute conducted the second national survey of nonprofit organizations in 2013.  The 2013 survey expanded the scope of the project by including all types of organizations in the sample in a survey fielded in 2013 (except hospitals and higher education). 

This paper will present the findings from the 2013 survey on topics such as trends in problems encountered in the first survey—late payments, insufficient funding, complexity of applying and reporting, and changes in mid-stream; formal and informal feedback mechanisms and interactions between nonprofits and governments about the problems in the contracting and grants processes; attempts to simplify and improve the administrative processes; new government contracting processes or systems that include nonprofits in design and decision-making of contracts and grants; and lingering effects of the recession and continuing budget cutbacks at various levels of government.

The survey was conducted using a mixed mode (mail, web, and phone) using a stratified random sampling strategy to achieve national as well as state-level results that closely mirror the size, type, and region of nonprofit sector.  The sample consisted of approximately 20,000 nonprofit organizations.

This research is the next step in empirically documenting the issues and identifying problems and potential solutions in government funding of nonprofits. It will provide vital information on government contracts and grants with nonprofits and will be used to help improve public understanding and public policies.