Community-based initiatives (CBIs) are groups of citizens operating as a community in order to provide public goods or services. CBIs can contribute to social change to tackle persistent challenges, but this depends on their encounters with the state. We argue that CBI scholarship lacks the conceptual tools to capture the full scope of these encounters. We position CBIs beyond a public service context as part of a democratic and contested public sphere. From this, we propose a relational understanding of state–CBI encounters as dynamically made up of diverse relationalities, drawing on state–society scholarship from multiple disciplines. Through an integrative literature review, we develop a two-step heuristic that distinguishes between functional, transformational, confrontational, and cohabitative encounters and identifies possibilities for shifts in the encounter. The heuristic aids both scholars and practitioners in understanding state–CBI encounters in relation to change and in navigating encounters in the pursuit of public goals. We conclude with a research agenda for further understanding state–CBI encounters.