Demonstration projects have been widely used to demonstrate new technologies and practices to stimulate broader deployment and implementation. Apart from this technical and explicit function, demonstration projects also serve social and implicit functions that have received limited attention. This study examines the ways in which demonstration projects are drawn upon as policy instruments. Building on the political sociology approach to policy instruments, this study employs a qualitative case study design to investigate the roles of 2989 centrally funded demonstration projects in the Chinese nonprofit area. The results reveal that demonstration projects can be used not only in a technical sense for effectively addressing public problems but also in a social sense as an opportunity for justifying public action and power within a particular area in the name of public values.