Taking into consideration the underdevelopment of the Russian civil community it is of essential interest to touch upon local communities (known as TOS). Local governments and TOS communities could provide similar services and as such cooperate or compete with each other.Community initiatives could supplant poorly performing government services, or governments could outsource to communities some of its functions. Based on empirical Russian data, collected in the city of Kirov this research shows that the prevailing initial incentive to establish TOS is driven by the prospect of obtaining seed money from the government. We detected sources of TOS advantages over municipal authorities: ratio of costs and benefits, sensitivity to the demands of consumers, social capital, and voluntary nature of TOS. TOS are more likely to emerge in communities where people are sceptical about the efficacy of conventional mechanisms of democratic accountability, and prefer to collaborate with municipal governments on specific projects JEL Classification: L31, L33.
Drivers and factors of social service outsourcing to non-profits are identified and discussed. A key point of the discussion of the choice between for-profits and non-profits as outsourcing partners is whether the quality of the service is observable and verifiable by third parties. In the case of unobservable/ unverifiable quality, market incentives could be misaligned with social welfare, and non-profits gain an advantage over for-profits. Cross-country analysis reveals factors explaining variations in non-profit outsourcing. All else equal, more outsourcing is observed among nations with efficient public sector governance and strong civil society. A theory is presented to compare cost, quality and social welfare between contracting-out to for-profits and non-profits. Theory findings and predictions are illustrated by the case of outsourcing of long-term care to for-profits and non-profits, using recent evidence from the COVID-19 pandemic.
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