Nonprofit organizations are becoming increasingly important as social service providers. Beyond questions of accountability for efficiency and effectiveness, very little discussion has taken place regarding the democratic impacts-procedural and substantive-of relying on nonprofit organizations and philanthropy to provide these services, especially basic social services to the poor. In this broader context, nonprofit and other philanthropic institutions can both enhance and detract from democracy. This chapter suggests that public administrators might look beyond principal-agent models to guide their relationships with nonprofit organizations and consider the broader democratic implications of relying on these organizations to provide social services to the poor. To discuss these issues, the chapter is divided into three sections. The first section briefly summarizes the current trend to rely on nonprofit organizations to provide social services in the United States and the narrow and inadequate principal-agent focus public administration seems to have regarding the role of nonprofits. The second section provides an overview of the ways in which nonprofit and other philanthropic institutions both create and negate democracy. Finally, based on findings from a study of giving circles, the third section provides a discussion of ways in which we might create a more democratic nonprofit and philanthropic sector and the limitations involved in this pursuit.