Sage Journals: Discover world-class research

Abstract

Nonprofit organizations are sensitive to external disasters due to their high reliance on external funds and volunteers. In this study, I investigate how disasters affect the financial health of nonprofits and what factors make them more vulnerable within the context of disaster. The sample in this study includes nonprofits directly and indirectly affected by Hurricane Sandy. Using a logistic regression model, I explore if the disaster contributed to the likelihood of a nonprofit experiencing financial distress. Disaster, as an external shock, increases risks of nonprofits experiencing financial distress, especially for smaller nonprofits and nonprofits not relying on commercial revenue.

Keywords

nonprofit financial health revenue organizational characteristics community characteristics disasters impacts

Get full access to this article

View all access options for this article.

References

Amadeo

(2018). Hurricane Sandy damage and economic impact facts how bad was hurricane Sandy? https://www.thebalance.com/hurricane-sandy-damage-facts-3305501

Auer

(2006). Open and operating? An assessment of Louisiana nonprofit health and human services after Hurricanes Katrina and Rita. The Urban Institute. http://webarchive.urban.org/UploadedPDF/900916_open_and_operating.pdf

Benoit

(2011). Linear regression models with logarithmic transformations. London School of Economics, London, 22(1), 23–36.

Bowman

(2011). Financial capacity and sustainability of ordinary nonprofits. Nonprofit Management and Leadership, 22(1), 37–51.

Carroll

D. A.

Stater

K. J.

(2008). Revenue diversification in nonprofit organizations: Does it lead to financial stability? Journal of Public Administration Research Theory, 19(4), 947–966.

CNN Library. (2018). Hurricanes statistics fast facts. https://www.cnn.com/2013/05/31/world/americas/hurricane-statistics-fast-facts/index.html

De Andrés-Alonso

Garcia-Rodriguez

Romero-Merino

M. E.

(2015). The dangers of assessing the financial vulnerability of nonprofits using traditional measures. Nonprofit Management and Leadership, 25(4), 371–382.

Easterling

D. R.

Meehl

G. A.

Parmesan

Changnon

S. A.

Karl

T. R.

Mearns

L. O.

(2000). Climate extremes: Observations, modeling, and impacts. Science, 289(5487), 2068–2074.

FEMA. (2012). New York Hurricane Sandy (DR-4085). https://www.fema.gov/disaster/4085

10.

Froelich

K. A.

(1999). Diversification of revenue strategies: Evolving resource dependence in nonprofit organizations. Nonprofit and Voluntary Sector Quarterly, 28(3), 246–268.

11.

Frumkin

Keating

E. K.

(2011). Diversification reconsidered: The risks and rewards of revenue concentration. Journal of Social Entrepreneurship, 2(2), 151–164.

12.

Grønbjerg

K. A.

(1993). Understanding nonprofit funding: Managing revenues in social services and community development organizations. Jossey-Bass.

13.

Guo

Acar

(2005). Understanding collaboration among nonprofit organizations: Combining resource dependency, institutional, and network perspectives. Nonprofit Voluntary Sector Quarterly, 34(3), 340–361.

14.

Hager

M. A.

(2001). Financial vulnerability among arts organizations: A test of the Tuckman-Chang measures. Nonprofit and Voluntary Sector Quarterly, 30(2), 376–392.

15.

HS Task Force. (2017). Hurricane Sandy houses of worship & charitable organizations recovery task force. https://recoverydiva.files.wordpress.com/2017/04/hurricane-sandy-recovery-task-force-report-april-2017_final_single.pdf

16.

Hung

Hager

M. A.

(2019). The impact of revenue diversification on nonprofit financial health: A meta-analysis. Nonprofit and Voluntary Sector Quarterly, 48(1), 5–27.

17.

Joseph

(2011). The impact of the “great recession” on the financial resources of nonprofit organizations (Wilson Center for Social Entrepreneurship, Paper 5). http://digitalcommons.pace.edu/wilson/5

18.

Kapucu

(2007). Non-profit response to catastrophic disasters. Disaster Prevention and Management: An International Journal, 16(4), 551–561.

19.

Keating

E. K.

Fischer

Gordon

T. P.

Greenlee

J. S.

(2005). Assessing financial vulnerability in the nonprofit sector. (Harvard University Faculty Research Working Paper Series No. 27). Hauser Center for Nonprofit Organizations.

20.

Kim

Mason

D. P.

(2020). Are you ready: Financial management, operating reserves, and the immediate impact of COVID-19 on nonprofits. Nonprofit and Voluntary Sector Quarterly, 49, 1191–1209.

21.

Lam

McDougle

(2016). Community variation in the financial health of nonprofit human service organizations: An examination of organizational and contextual effects. Nonprofit and Voluntary Sector Quarterly, 45(3), 500–525.

22.

Lin

Wang

(2016). What helped nonprofits weather the great recession? Nonprofit Management and Leadership, 26(3), 257–276.

23.

McMullin

Raggo

(2020). Leadership and governance in times of crisis: A balancing act for nonprofit boards. Nonprofit and Voluntary Sector Quarterly, 49(6), 1182–1190.

24.

Never

(2014). Divergent patterns of nonprofit financial distress. Nonprofit Policy Forum, 5(1), 67–84.

25.

Paarlberg

L. E.

S.-H.

Nesbit

Christensen

R. K.

Bullock

(2018). A field too crowded? How measures of market structure shape nonprofit fiscal health. Nonprofit and Voluntary Sector Quarterly, 47(3), 453–473.

26.

Pfeffer

Salancik

G. R.

(2003). The external control of organizations: A resource dependence perspective. Stanford University Press.

27.

Prentice

C. R.

(2016a). Why so many measures of nonprofit financial performance? Analyzing and improving the use of financial measures in nonprofit research. Nonprofit and Voluntary Sector Quarterly, 45(4), 715–740.

28.

Prentice

C. R.

(2016b). Understanding nonprofit financial health: Exploring the effects of organizational and environmental variables. Nonprofit and Voluntary Sector Quarterly, 45(5), 888–909.

29.

(2019). Risk and diversification of nonprofit revenue portfolios: Applying modern portfolio theory to nonprofit revenue management. Nonprofit Management and Leadership, 30(2), 193–212.

30.

Salamon

(2004). The resilient sector: The state of nonprofit America. Public Administration, 82(4), 1019–1040.

31.

Stinchcombe

A. L.

March

J. G. J. H. O. O.

(1965). Social structure and organizations. In March

J. P.

(Ed.), Handbook of organizations (pp. 142–193). Rand McNally.

32.

Stys

(2011). Non-profit involvement in disaster response and recovery. Center for Law, Environment, Adaptation and Resources at the University of North Carolina School of Law.

33.

Tinkelman

Mankaney

(2007). When is administrative efficiency associated with charitable donations? Nonprofit and Voluntary Sector Quarterly, 36(1), 41–64.

34.

Trussel

Greenlee

(2004). A financial rating system for nonprofit organizations. Research in Government and Nonprofit Accounting, 11(1), 105–128.

35.

Trussel

J. M.

(2002). Revisiting the prediction of financial vulnerability. Nonprofit Management and Leadership, 13(1), 17–31.

36.

Trussel

J. M.

Parsons

L. M.

(2007). Financial reporting factors affecting donations to charitable organizations. Advances in Accounting, 23, 263–285.

37.

Tuckman

H. P.

Chang

C. F.

(1991). A methodology for measuring the financial vulnerability of charitable nonprofit organizations. Nonprofit and Voluntary Sector Quarterly, 20(4), 445–460.

38.

Wicker

Breuer

(2013). Understanding the importance of organizational resources to explain organizational problems: Evidence from nonprofit sport clubs in Germany. VOLUNTAS: International Journal of Voluntary and Nonprofit Organizations, 24(2), 461–484.

39.

Woronkowicz

(2018). The effects of capital campaigns on local nonprofit ecologies. Nonprofit and Voluntary Sector Quarterly, 47(3), 645–656.

40.

Zietlow

(2012). A financial health index for achieving nonprofit financial sustainability. Available at: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2049022