Local Government Contracts with Nonprofit Organizations

By Frayda S. Bluestein and Anita R. Brown-Graham
Chapel Hill, NC (Fall 2001)- Nonprofit organizations have cooperated with the public sector since colonial times to provide food, medical care, and social services to those in need. The resulting partnerships have been powerful, combining the flexibility and service-delivery capabilities of the nonprofit sector with the financial and direction-setting capabilities of the public sector. Such partnerships have resulted in improved local services in many areas, including human services, community development, economic development, and environmental protection.

However, the recent movement toward enhancing that partnership presents both opportunities and challenges. Although local governments and nonprofits work together or interact in many circumstances without contracts, legal documents are the most common vehicles for these collaborations. To many local governments, reducing agreements to written contracts serves to codify an existing relationship. For others it requires a new level of detail and accountability. In either event, contracts provide important parameters for both the local government and the nonprofit organization. Without the guidance and protection of a good contract, a local government funder and its nonprofit partner may run into legal or practical problems despite their shared good intentions.
So given that contracts are beneficial to both local governments and their nonprofit partners, here are some tips that affect accountability measures:
* Contracts should focus on the services to be provided, and should also be consistent with state and federal law. Such measures may be similar to those that would be required in contracts with for-profit entities. Contracts to provide more general programmatic support, however, are likely to demand a different type of accountability.
* Size of the contract: one size doesn’t fit all. Accountability measures should be consistent with the level and the type of support involved. A contract that involves a small amount of money may not justify detailed accountability measures.
Related Resources:
Local Government Contracts with Nonprofit Organizations