Partners or Providers? An Analysis of Nonprofit Federal Contractor Performance

Abstract

As competition over grant funding increases, nonprofit organizations (NPOs) are increasingly likely to enter into contracts with government agencies to ensure funding stability and accomplish organizational goals. Public agencies seek to reduce the possibility of contractor performance problems. Unlike profit-seeking firms that may need constant monitoring, NPOs could be more likely to serve as stewards of public resources, delivering services consistent with shared goals. However, few empirical studies have assessed the comparative performance of private and nonprofit contractors to determine whether there are meaningful differences in practice. This study analyzes nearly 25,000 U.S. federal definitive contracts that concluded between 2005 and 2015. Using predictive statistical analyses, findings indicate that nonprofits deliver more complex work than their for-profit counterparts, are less likely to be terminated early, do not require additional contract modifications, and are treated similarly to other vendors. Taken together, the results suggest that there are mutual benefits when governments and nonprofits engage in contracts.