With a clear agenda to reform the public service system and promote a service-oriented nonprofit sector, the Chinese government has been building a local service system by contracting with nonprofit organizations (NPOs) at the community level. Through the competing institutional logics perspective, this article examines the challenges that NPOs experienced and their responding strategies. The study found that bureaucratic logic, managerial logic, professional logic, and guanxi relations logic coexisted in the service field and each had different expectations of NPOs. In juggling the various requirements of these competing institutional logics, NPOs faced three major challenges: powerless status, legitimacy crisis, and accountability dilemma. Nevertheless, they were committed to the community and demonstrated agency in addressing these challenges. The strategies they used included using an intermediary platform to reduce power imbalance, compromising to share legitimacy with neighborhood committees, establishing professional identity, building community, and meeting both upward and downward accountability.

The government of the Communist Party of China (CPC) rolled out a national policy to contract out social and welfare services to non-governmental organizations (NGOs) in 2013. This study explores how government contracting of services affects NGOs. We examine three areas: marketization, financial dependency, and autonomy. We find significant convergence of the effects of contracting on NGOs in China with NGOs’ experiences in liberal democratic countries, despite divergent political regimes. Found effects are explained by the combination of the authoritarian government of the CPC with the neoliberal governance structures introduced by contracting. Convergence with international experience despite divergent political regimes is attributed to the neoliberal essence of the policy of contracting of services.

The Chinese government and human service NPOs are joining the bandwagon of service contracting with enthusiasm. Although this new policy endeavor has attracted much interest, empirical studies are scant. Drawing from interviews with 14 nonprofit organizations and two government officials conducted in 2012 and 2014, along with abundant secondary data, this paper analyzes the impact of China’s service contracting on the following: the social service delivery system, the promotion of NGOs development, and the nature of government-nonprofit relationship. The study found that service contracting has positive impacts on NGOs, such as facilitating their fundraising through sharing the government’s legitimacy. However, the majority of contract funding went to organizations that have a close government connection. We argue that the future of China’s service contracting is determined by the Chinese government’s primary political agenda, which is social control.