Local government officials (LGOs) recognize the mutual dependency between local government and nonprofits, according to the new report Indiana Local Government and Nonprofit Resources released today by Indiana University’s Paul H. O’Neill School of Public and Environmental Affairs and Lilly Family School of Philanthropy at IU 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.
LGOs view nonprofits as providing a variety of important resources for local governments and vice versa –local governments also provide important resources to nonprofits. Although both parties have distinct mandates and goals, their complementary resources and capacities allow them to benefit from collaborating with one another, thereby maximizing the efficiency and quality of their own services.
Local government officials were asked to assess the importance of local nonprofits to local government across five resource dimensions. They were also asked about the importance of local government to local nonprofits across the same dimensions.
Overall, LGOs view nonprofits as extremely or very important to local government across most of the dimensions, particularly the reputation and legitimacy (67%), service capacity (58%), and policy support and influence (52%) provided to local government, followed closely by nonprofit expertise and technical knowledge (47%), with nonprofit financial support trailing (37%).
“These are notable findings,” Professor Emerita Kirsten Grønbjerg said, “It suggests that nonprofits do indeed provide a variety of important resources to local government.”
Similarly, LGOs view local government as extremely or very important to local nonprofits in most of the dimensions, particularly the reputation and legitimacy (59%) and policy support and influence (57%) that local governments provide to nonprofits. Government expertise and technical knowledge and financial support were viewed as nearly equally important, respectively (40% and 38%).
“The importance of complementary resources creates a strong foundation for effective collaborations between local governments and nonprofits, enhancing the reputation and influence of both parties,” Grønbjerg added.
Although Indiana LGOs view nonprofits as providing a variety of important resources that help their units of local governments carry out their mandates, those collaborative efforts require that the partners continue to make their particular resources available to one another.
“There may be challenges ahead for these collaborative partnerships, indeed, some have already surfaced,” Grønbjerg said. “For example, an analysis of the ALICE population (Asset Limited, Income Constrained, Employed) by Indiana United Ways shows that the number of Indiana households living in financial hardship is likely to continue to grow. As a result, the demand for human services such as housing assistance, food security, and healthcare support is likely to increase.“
At the same time, nonprofits are grappling with their own struggles. A variety of economic threats, such as increased operational costs and challenges securing donations, impact the ability of many nonprofits, particularly smaller human service nonprofits, to maintain their programs and services. In addition, if the new presidential administration makes significant changes to federal funding streams – such as where funding is directed and amounts involved – there could be significant impacts on resources available to units of local government as well as to nonprofits.
About the report
This is the 16th 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 IU Indianapolis. The co-authors of this report include project director Kirsten Grønbjerg, Anna Doering (Indiana University alumna), and Zaw Naing (Indiana University graduate student).
For more information, contact Ken Bikoff at the O’Neill School of Public and Environmental Affairs, 812-856-5490 or kbikoff@indiana.edu, and Adriene Davis Kalugyer 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), with a mission to create effective communication, cooperation, and partnerships between the federal, state, and local units of governments. PPI, a multidisciplinary institute within the Paul H. O’Neill School of Public and Environmental Affairs, delivers 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.
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 2025 “Best Graduate Public Affairs Programs” by U.S. News & World Report, O’Neill ranks second in the country. Additionally, four of its specialty programs are ranked first, including the number one nonprofit management program; five more specialties are in the top 20.
About the Lilly Family School of Philanthropy
The Indiana University Lilly Family School of Philanthropy at IU Indianapolis 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, 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 known as Twitter), LinkedIn, or Instagram and “Like” us on Facebook.