Are Disasters Disastrous to Nonprofit Organizations? Investigating the Financial Implications of Hurricane Sandy for Nonprofits

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.

Responding to COVID‐19: International nonprofits' stakeholder channels, resource pressures and governance responses

“…Hypothesized resource pressures through internal stakeholders are evidenced for resources coming from employees and operational volunteers. Financial pressures, that seem to concur with external shocks (Chen, 2021;Grønbjerg et al, 2020;Lin & Wang, 2016;Shi et al, 2020), are confirmed in our analysis. Moreover, our results disclose various affected nonprofit resource channels.…”

“…The communications aimed at gathering information, sharing information and establishing or improving connections/collaborations. Initiating or increasing collaborations (Mosley et al, 2012), establishing strategic partnerships (Arik et al, 2016;Searing et al;2021) and advocacy (Mosley et al, 2012;Searing et al, 2021) are tactics often evidenced during financial shocks. Transparency to stakeholders is an essential leadership trait, sharing instrumental knowledge is a frequently used sensegiving framework (Gilstrap et al, 2016) and informing is an appropriate response technique during victim cluster crises (Coombs, 2007).…”

“…External shocks such as financial crises (Lin & Wang, 2016) and natural disasters (Chen, 2021) pressure financial resources of nonprofits. In the same vein, COVID‐19 gave rise to financial concerns in the nonprofit sector (AMRC, 2020; Beaton, 2020; Deitrick et al, 2020; Grønbjerg et al, 2020; Lasby, 2020; Mumford & Greene, 2020; Shi et al, 2020).…”

“…Empirical work largely investigates nonprofit governance responses to financial or economic shocks (Chen, 2021 ), mainly focusing on the consequences of pressured financial resources and how organizations manage financial difficulties. While an adequate level of short‐term financial capacity helps nonprofits to survive financial shocks (Bowman, 2011 ), financially vulnerable nonprofits tend to cut back their service delivery in response to such a shock (Tuckman & Chang, 1991 ).…”

Nonprofit organization communication, crisis planning, and strategic responses to the COVID‐19 pandemic

“…The present study extends beyond recent COVID-19 and disasterrelated research (Chen, 2022;Kim & Mason, 2020) by examining the communication capabilities and purposes that nonprofits apply, and also by not relying solely on economic explanations for their response strategies.…”