Local government officials (LGOs) rate quality and effectiveness of nonprofit services as the most important considerations when awarding grants and contracts to nonprofits, according to the new report Indiana Local Government Officials’ Grant and Contract Considerations released today by Indiana University’s Paul H. O’Neill School of Public and Environmental Affairs and the Lilly Family School of Philanthropy at IUPUI.
The new report is based on data from the 2020 survey by the Indiana Advisory Commission on Intergovernmental Relations (IACIR) of Indiana LGOs on issues affecting Indiana local governments and residents.
Local governments are responsible for providing their communities with a range of important services. They deliver many services directly (e.g., public schools, police) but also contract out many to other units of government, and both for- and nonprofit organizations. Issuing grants and contracts to nonprofits allow LGOs to leverage key nonprofit organizational capacities in return for financial payments to nonprofit contractors. As a result, LGOs must weigh the benefits of using nonprofit contractor against contract costs.
LGOs were asked to rate the importance of eight grant and contract considerations. Four of these (quality, effectiveness, accessibility, and volume of services they can provide to clients) capture nonprofit organizational capacity–the benefits local government obtain when they contract with nonprofits. The remaining four include the contractual payments to nonprofits (nonprofit cost efficiency) as well as the costs involved in managing the contract system, monitoring nonprofit performance, and communicating with nonprofit contractors.
Overall, LGOs were significantly more likely to rate nonprofit organizational capacity as important than the contract management costs.
“This is a notable finding,” said Kirsten Grønbjerg, a Distinguished Professor at the O’Neill School and the Efroymson Chair in Philanthropy (2001-2020) at the Lilly Family School of Philanthropy. “It suggests that although the costs of managing the contract system is important to LGOs (particularly the cost efficiency of nonprofit services), they place even greater value on nonprofit service capacities.
The report examines whether LGO characteristics, community conditions, or existing relations between nonprofits and local government may account for giving greater weight to these considerations, controlling for all factors. As expected, the authors found that LGOs who were themselves involved with nonprofits (as a leader, member, and/or volunteer) were significantly more likely to find both types of considerations (as well as nonprofit quality of services) important when awarding grants and contracts, as do LGOs who report strong working relationships with nonprofits and trust nonprofits “to do the right thing.”
The report also shows that LGOs who had held their current elected position longer were significantly less likely to find quality of services, organizational capacity, and contract management important. Those that had previously served in leadership capacities for nonprofits were significantly less likely to view quality of services and nonprofit organizational capacity as important.
“We were initially surprised by these findings,” Grønbjerg said. “However, we speculate that these LGOs were likely more familiar with local nonprofits and rely on this familiarity when choosing to whom to award grants and contracts.”
About the report
This is the 14th report in the series on nonprofit-government relations in Indiana from the Indiana Nonprofits Project: Scope and Community Dimensions. The report uses data from periodic surveys by the Indiana Advisory Commission on Intergovernmental Relations (IACIR) on issues affecting Indiana local governments and residents. Other reports in this series have explained trust in nonprofits, major disaster preparedness, working relations, contracting, and payments in lieu of taxes (PILOTs).
These analyses are a joint effort of the O’Neill School of Public and Environmental Affairs at Indiana University Bloomington, the Indiana Advisory Commission on Intergovernmental Relations (IACIR), and the Indiana University Lilly Family School of Philanthropy at IUPUI. The co-authors of this report include project director Kirsten Grønbjerg and research assistant and Indiana University graduate student Anna Doering.
For more information, contract Ken Bikoff at the O’Neill School of Public and Environmental Affairs, 812-856-5490 or kbikoff@indiana.edu, and Adriene Kalugyer Davis at the Lilly Family School of Philanthropy, 317-278-8972 or adridavi@iupui.edu.
About the Indiana Advisory Commission on Intergovernmental Relations (IACIR)
The mission of the IACIR is to create effective communication, cooperation, and partnerships between the federal, state, and local units of governments to improve the delivery of services to the citizens of Indiana. The Center for Urban Policy and environment, now known as the IU Public Policy Institute, was named by the General Assembly to staff the IACIR.
About the O’Neill School of Public and Environmental Affairs (SPEA) at Indiana University Bloomington
The O’Neill School is a world leader in public and environmental affairs and is the largest school of public affairs and public policy in the United States. In the 2023 “Best Graduate Public Affairs Programs” by U.S. News & World Report, O’Neill ranks first in the country. Additionally, five of its specialty programs are ranked first, including the number one nonprofit management program; four more specialties are in the top 10.
About the Lilly Family School of Philanthropy
The Indiana University Lilly Family School of Philanthropy at IUPUI is dedicated to improving philanthropy to improve the world by training and empowering students and professionals to be innovators and leaders who create positive and lasting change. The school offers a comprehensive approach to philanthropy through its undergraduate, graduate, and certificate, and professional development programs, its research and international programs and through The Fund Raising School, Lake Institute on Faith & Giving, the Mays Family Institute on Diverse Philanthropy and the Women’s Philanthropy Institute. Follow us on Twitter, LinkedIn, or Instagram and “Like” us on Facebook.
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