Many countries have established grassroots forestry institutions to manage and protect small-scale forestry resources and provide technology and services to private foresters. Since the inception of township forestry workstations (TFWs) in China almost 70 years ago, TFW has supported resource protection and forest property reform. In this paper, we employ fixed effect models to test the effects of TFW on collective forest carbon density and provide evidence for improving the quality of collective forests. Our results demonstrate that TFWs in China improve the carbon density of collective forests by performing forestry management and service functions. However, significant differences in TFWs exist under different management systems, and the dual leadership township forestry workstation (D_TWF) is more effective in increasing the carbon density of collective forests. The management system’s heterogeneity directly affects its performance, with D_TWF performing better management functions and the single leadership township forestry workstation (S_TWF) performing better service functions. These results underscore the importance of reforming the TFW management system in accordance with local conditions. In areas with abundant forest resources, the TFW’s management system should shift to single leadership (jurisdictional or vertical management). In forest resource-scarce regions, the TFW’s management system should change to dual leadership.