Do Boundaries Matter? Linking Nonprofit Capacity and Resiliency Tactics

• In Event: Financial Sustainability and Influence During Conflict

Abstract

The severe social and economic disruptions caused by the COVID-19 pandemic have unleashed financial, managerial, and logistical challenges for nonprofits. Many nonprofits encountered funding difficulties as they were forced to suspend or readjust their programs, cancel fundraising events, and/or lost contracts (Kim & Mason 2020; Salamon & Newhouse 2020). Even though there is a wide range of research and recent reports on nonprofit strategies during this time of uncertainty, little is known about why and how the nonprofits choose to enact the response strategies that were chosen.

This study integrates the literature on nonprofit capacity (Connolly & York 2003; Despard 2017; Millesen et al., 2010) and resiliency (Mosley et al., 2012; Searing et al., 2021) to examine how nonprofit characteristics influence organizational responses to financial impacts and disruptions caused by the COVID-19 pandemic. Using survey responses from 500+ small- and medium-sized tax-exempt charities in two different U.S. states -- Nebraska and Texas -- coupled with national administrative data, this study explores the relationship between nonprofits’ managerial capacity and their resiliency tactics. The survey is used to measure nonprofit resources and characteristics, such as board structure, staff and volunteer capacity, organization structure, size, location, evaluation practice, and communication visibility. Following earlier work where the authors used factor analysis to determine resiliency approaches, this study links the different organizational capacities with the chosen resiliency strategies.

Overall, while there is well-developed literature of nonprofit capacity building and a growing number of nonprofit resiliency studies, we still lack understanding on how the first influences the second during the time of crisis. For example, Mosley et al. (2012) found that organization structure, managerial and financial characteristics influenced a nonprofit’s response strategy. Larger organizations with higher levels of capacity allowed nonprofits to be more flexible in selecting their adaptive tactics that provided better control of their revenue stream while smaller nonprofits with fewer resources did not have the luxury to make the changes that they would like to (Mosley et al., 2012). Similarly, Arik et al. (2016) examined nonprofit responses to the last economic recession and indicated that nonprofits with fewer funding sources tended to have a lower level of strategic response. More recently, using survey data from human services and art nonprofits, Kim and Mason (2020) found that nonprofits with a higher level of operating reserves are less likely to reduce operating hours, lose staff, or experience disruption in acquiring supplies.

This study contributes to the growing literature on nonprofit resiliency and holds important implications for understanding nonprofit response strategies across different boundaries, geographies, and jurisdictions. Initial findings determine that some (but not all) tactics and relationships transcend geographical boundaries. The findings shed light on understanding the relationship between nonprofit characteristics and their resiliency tactics while aiming to identify the potential areas for nonprofit adaptive capacity building. As nonprofits are operating in an increasingly complex and uncertain environment, this knowledge is critical to developing nonprofit resiliency and the capacity to successfully confront unexpected events that can potentially threaten their survival.

References

Arik, M., Clark, L. A., & Raffo, D. M. (2016). Strategic responses of non-profit organizations to the economic crisis: Examining through the lenses of resource dependency and resourced-based view theories. Academy of Strategic Management Journal 15(1): 48-70

Connolly, P., and York, P. (2003). Building the Capacity of Capacity Builders: A Study of Management Support and Field-Building Organizations in the Nonprofit Sector. Retrieved May 17, 2022, from https://www.issuelab.org/resources/8470/8470.pdf

Despard, M. R. (2017). Can nonprofit capacity be measured? Nonprofit and Voluntary Sector Quarterly, 46(3), 607-626.

Kim, M., & 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(6), 1191-1209.

Millesen, J. L., Carman, J. G., & Bies, A. L. (2010). Why engage? Understanding the incentive to build nonprofit capacity. Nonprofit Management and Leadership, 21(1), 5-20

Mosley, J. E., Maronick, M. P., & Katz, H. (2012). How organizational characteristics affect the adaptive tactics used by human service nonprofit managers confronting financial uncertainty. Nonprofit Management and Leadership, 22(3), 281-303.

Salamon, L. M., & Newhouse, C. L. (2020). The 2020 nonprofit employment report (Nonprofit Economic Data Bulletin no. 48). Johns Hopkins Center for Civil Society Studies.

Searing, E. A., Wiley, K. K., & Young, S. L. (2021). Resiliency tactics during financial crisis: The nonprofit resiliency framework. Nonprofit Management and Leadership, 32(2), 179-196.

Authors

• Elizabeth A.M. Searing, University of Texas at Dallas

• Trang Hoang, University of Nebraska at Omaha

• Craig Maher, University of Nebraska at Omaha