Agents or Stewards: Using Theory to Understand the Government-Nonprofit Social Service Contracting Relationship

Using agency and stewardship theories, this study examines howpublic administrators manage contracting relationships withnonprofit organizations. Interviews were conducted with publicand nonprofit managers involved in social services contractrelationships at the state and county level in New York State.The use of trust, reputation, and monitoring as well as otherfactors influence the manner in which contract relationshipsare managed. The findings suggest that the manner in which nonprofitsare managed evolves over time from a principal-agent to a principal-stewardrelationship but with less variance than the theories wouldsuggest. This results in part from the contextual conditionsthat include the type of service, lack of market competitiveness,and management capacity constraints. The intergovernmental environmentin which social services are implemented and delivered presentscomplex challenges for public managers responsible for managingcontract relationships. The findings from this study documentthose challenges and the corresponding management practicesused with nonprofit contractors.