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  • 2024
  • Indiana local government-nonprofit contracts

Local government officials contract with Indiana nonprofits for a wide range of community services, study finds

Tuesday, August 13, 2024

Almost all Indiana local government officials (LGOs) report leveraging the resources and expertise of other institutions, including nonprofits, to help ensure a wide range of services are available to community residents according to the new report Indiana Local Government Officials’ Contracting with Nonprofits released today by the Indiana University O’Neill School of Public and Environmental Affairs and the Lilly Family School of Philanthropy at Indiana University Indianapolis.

The new report is based on data from a 2020 survey by the Indiana Advisory Commission on Intergovernmental Relations (IACIR) of Indiana LGOs on issues affecting Indiana local governments and residents.

“Many of the service arrangements are quite complex, involving three or more types of institutions,” said Kirsten Grønbjerg, a Distinguished Professor Emerita at the O’Neill School and the Efroymson Chair in Philanthropy (2001-2020) at the Lilly Family School of Philanthropy. “Each type of institution operates under distinctive legal and financial incentive structures making it more difficult for LGOs to ensure that potentially fragmented services are delivered effectively and equitably across constituency groups.”

LGOs were asked whether their unit of government provides each of 29 services directly, through an agreement or contract with another local government, contract with a private for-profit firm, and/or contract with a nonprofit organization. Of those that provide a particular service, almost all LGOs report using a variety of different institutions. The reports show that all but one of the services involved nonprofits, at least to some extent.

The researchers focused mainly on contracting with nonprofits but with some comparison also to contracting with private business firms. For most of the 29 services, LGOs either were more likely to engage in contracting with nonprofits than for-profit firms, or the two were evenly balanced. LGOs contract significantly more with nonprofits than for-profit businesses for eight services: child and family services, after school programs, crime and violence prevention, free/low-cost healthcare, substance abuse prevention and treatment, information and referral services (211 services), economic development, and relief services (e.g., help with basic necessities). They contract significantly more with private business firms for three services: high speed internet services, solid waste, and property assessment.

Overall, LGOs reported most often using contracts with nonprofits for mental health (40 percent), substance abuse prevention and treatment (39 percent), relief services, free/low-cost health care (both 33 percent), addiction treatment in correctional facilities (27 percent) and child and family welfare services (25 percent).

“These are all services where nonprofits tend to have significant expertise and staff or volunteer capacity,” Grønbjerg noted.

The report also examines whether LGO characteristics, community conditions, or existing relations between nonprofits and local government may account for whether LGOs contract with nonprofit organizations, controlling for all factors. Overall, only two factors were important: type of position held by LGO officials and whether the LGO had responded to the survey after April 3, 2020, when the entire state was declared a major disaster area because of the COVID-19 epidemic. LGOs who are county officials are more likely to contract with nonprofits, while town council members or township trustees are less likely to do so. The authors speculate that county officials have broader responsibilities and more financial resources to work with than other types of LGOs. They may also have greater access to nonprofits, most of which are likely to be located in county seats.

“These findings are very useful to Indiana nonprofits and help them understand which units of government may be more likely to partner with them and for what type of services,” said Michael Budd, President and CEO of Indiana United Ways.

LGOs that responded to the survey after April 3, 2020, were also less likely to report contracting with nonprofits than those that responded before or during the early phase of the pandemic.

“We were initially surprised by this finding,” said Grønbjerg, “since emergency and other support was urgently needed because of the pandemic and it is unlikely contracts with nonprofits were abruptly terminated. A more plausible explanation for the lower use of nonprofit contractors after April 3, 2020, is that Indiana nonprofits (like nonprofits every­where else) were not able to provide services they had contracted to deliver.”

About the report

This is the 15th 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, 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 Indiana University Indianapolis. The co-authors of this report include project director Kirsten Grønbjerg and research assistant and Indiana University graduate student Eric Schmidt.

For more information, contract Ken Bikoff at the O’Neill School of Public and Environmental Affairs, 812-856-5490 or kbikoff@iu.edu and Adriene Kalugyer Davis at the Lilly Family School of Philanthropy, 317-278-8972 or adrldavi@iu.edu.

About the Indiana Advisory Commission on Intergovernmental Relations (IACIR)

The IACIR, now dissolved, was staffed by the Indiana University Public Policy Institute (PPI) and sought 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 PPI continues to deliver unbiased research and data-driven, objective, expert policy analysis to help public, private, and nonprofit sectors make important decisions that impact quality of life in Indiana and throughout the nation. As a multidisciplinary institute within the Paul H. O’Neill School of Public and Environmental Affairs, the Institute also supports the Center for Health & Justice Research (CHJR), the Center for Research on Inclusion & Social Policy (CRISP), and the Manufacturing Policy Initiative (MPI).

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 2024 “Best Graduate Public Affairs Programs” by U.S. News & World Report, O’Neill ranks first in the country for public universities. Additionally, four 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 Indianapolisis 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 X (formerly Twitter), LinkedIn, or Instagram and “Like” us on Facebook.

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