This study examines the hypothesis that a community’s heterogeneous demands for public service, represented by a community’s income inequality and racial-ethnic diversity, together with its level of political engagement, help explain the density of nonprofits in a local area. Using data on more than 3,000 U.S. counties, empirical analyses reveal that communities with a higher level of income inequality and political engagement tend to have more nonprofits per resident than otherwise similar communities. This pattern holds for the nonprofit sector overall and for 6 of the 10 major subsectors examined. These findings suggest that nonprofit organizations may fill a gap in the delivery of public services, especially when a community has a great variety of social and economic needs. This study thus highlights the role of income inequality as a factor in explaining the density of nonprofit organizations at the local level. Implications for public policy and administration are discussed.