County-Nonprofit Service Arrangements: The Roles of Federal and State Fiscal Involvement

This study examines the effects of federal and state financial transfers on county–nonprofit relationships. An assessment of production choices for 122 U.S. counties reveals that federal transfers to county governments stimulate county–nonprofit relationships and promote arrangements based upon collaboration. Supporting evidence shows these effects to be more prevalent in areas with lower population density. Meanwhile, state transfers influence choices for less collaborative arrangements among more urbanized areas. The findings provide important insight regarding county–nonprofit relationships within the face of fiscal federalism. The author demonstrates that the fiscal instruments of centralized governments play an important role in choices for decentralized units to engage in collaborative arrangements with nonprofits.