Since the early 2000s, the central government has encouraged local governments to begin contracting out the provision of social services, such as education and health services, to both for and non-profit organizations to meet increasing demands for social services and to modernize the Chinese bureaucracy. As non-profits are uniquely situated in communities, contracting with non-profit organizations might improve public policies if mechanisms are created to allow these organizations’ experiences and social innovation to feed back into the policy process. The two cases examined in this paper, HIV service contracting in Yunnan and migrant education contracting in Shanghai, illustrate that current policy solutions result in greater service provision but not the capture and feedback of information into public policy. In response to these findings, we recommend creation of legal/financial infrastructure that will encourage social innovation by non-profits and contracting policy solutions that mandate policy feedback mechanisms.

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