In 1993, Manitoba Health implemented the second phase of a reform of its mental health services. One of the elements of the reform included entering into funding arrangements with nonprofit organizations to deliver services. The literature cautioned nonprofit organizations about partnering with government. In particular, there were concerns that their organizational goals would be distorted; their advocacy role diminished; their accessability reduced; their staffing configuration altered; and finally, their structure bureaucratized. Five years after implementation of the reform the writer interviewed the executive directors of 14 organizations that accepted government funding in order to assess the extent and nature of the shift and its impact on the organizations involved. The results revealed that approximately $4 million was awarded to a variety of organizations in exchange for the delivery of a wide range of services throughout the province. In the process, the provincial government became the largest single source of revenue eclipsing all other sources. Initially, the negative impacts appeared to have been minimal. In the long term, stagnating funding levels have reduced the nonprofit organizations ability to recruit and retain staff. As a result, some are reconsidering their continued involvement in the delivery of govemment-funded services.