Nonprofit Financial Resilience: Recovery from Natural Disasters

Abstract

Nonprofits operate in increasingly complex and turbulent environments. However, few studies have explored nonprofits’ resilience during natural disasters. This study uses Hurricane Katrina as a case study to explore whether nonprofits can regain their original financial performance after significant natural disasters and what organizational capacities and abilities influence their ability to bounce back. The results show that recovery is slow, taking between three and five years for half of the nonprofits in the sample. Recovery depends on factors such as organizational size, equity, surplus, and commercial revenue. This study enriches the nonprofit financial health literature and reveals that the factors associated with financial resilience are different from those that predict financial vulnerability.

Nonprofit capacity and social performance: mapping the field and future directions

“…Regardless of their size or severity, disasters can undermine organizations’ growth and social performance. Therefore, nonprofits need to equip their resilience, which indicates companies’ capability to prepare (Fu and Lai 2021 ) and recover from disruption and perform (Chen 2021a , b ; Hutton et al 2021 ). Three types of capacity are social media communication, collaboration, and external communication essential in increasing humanitarian NGOs’ efficacy and efficiency in disaster risk sreduction operations.…”

“…By contrast, different capacities are needed in post-disaster recovery due to property damage, employee loss, and changes in the scope of their services. The most crucial capacities are financial and human resources to recover from the disaster (Chen 2021a , b ). However, most nonprofits do not have a financial reserve to recover and fail to develop sound procedures for recovering from staff losses, resulting in a drop in demand for their services.…”

“…At the same time, the primary focus of discussion in the capacity field has shifted to financial resilience capability in nonprofits. Chen ( 2021a ) examined how small nonprofits recovered from Hurricane Katrina. He confirmed that financial capacity is more important than human resource capacity after the disaster.…”

“…However, scholars’ attention has switched to the capacity dimension of nonprofits and the factors that influence their ability to accomplish social performance over the last decade. Recent research has established a link between capacity and social performance, which is affected by the size and type of nonprofits and the economic situation and time frame (Bryan 2019 ; Carman and Fredericks 2010 ; Chen 2021a , b ; Jaskyte 2017 ; Kim et al 2019 ).…”

Resilience in Arts and Cultural Nonprofit Organizations: An Analysis of the Covid-19 Crisis in France

“…In the context of a pandemic crisis, the concept of resilience appears even more crucial (Bhaskara & Filimonau, 2021 ; Lloyd-Smith, 2020 ). Studies have already shown that the resilience of the community around NPOs allows them to better weather the crisis (Paarlberg et al, 2020 ), but they remain anchored in a financial vision (Chen, 2021 ; Green et al, 2021 ; Kober & Thambar, 2021 ).…”