Agents or stewards: How government manages its contracting relationships with nonprofit social service providers

This study examines the context and variation in which government manages its contracting relationships with nonprofit organizations using agency and stewardship theory. Interviews were conducted with public and nonprofit managers involved in social services contract relationships at the state and county level in New York State. The use of trust, reputation, information, and monitoring as well as other factors influence the manner in which contract relationships are managed. The findings suggest that nonprofits engaged in contracts with government are managed largely as stewards, but there is much less variance in the management practices applied than either theory would suggest. This results in part from the nature of the service, the lack of market competitiveness, and administrative capacity constraints. The intergovernmental environment in which social services are implemented and delivered poses complex challenges for public managers responsible for managing contract relationships. The findings from this study document those challenges and the corresponding management practices used with nonprofit contractors.