In the United States, significant variation regarding the quality of public goods exists across local governments. In this article, I seek to explain these patterns. I argue that economically and racially homogenous communities are collectively willing to invest more resources in public goods relative to diverse communities. I provide evidence in support of this claim by analyzing the relationship between race and income diversity and the share of community security and education that is provided by private entities. I find that as racial diversity and income inequality increase, the share of private security guards and white children enrolled in private school is higher.