Nonprofit organizations play a pivotal role in recent efforts to devolve public responsibilities to lower levels of government and other sectors. The capacity of these organizations to serve as the public safety net, however, has come under question. This multiphase research project focused on the impact of welfare reform on community-based nonprofits in Cuyahoga County, Ohio. The study includes surveys, focus groups, and a case study. Results to date strongly suggest that, in spite of their importance to the welfare reform effort, the capacity of smaller nonprofits to adopt the business-oriented approach required to meet the expectations of government contracts is profoundly limited. This study discusses the implications of these findings for an enduring issue in political theory, the role of nonprofits as schools or laboratories of citizenship, and suggests that the loss of their public character is in danger of going unnoticed.