How organizational characteristics affect the adaptive tactics used by human service nonprofit managers confronting financial uncertainty

The way that nonprofits respond to funding uncertainty is crucial to their ability to meet goals and position themselves for future success. This article investigates how structural, managerial, and financial characteristics affect the adaptive tactics used by human service nonprofits during times of financial stress. These tactics include adding new programs, reducing programs or staff, expanding or starting joint programs, pursuing earned income, and expanding advocacy involvement. Using longitudinal data on human service nonprofits collected on either side of the 2002–2003 economic downtown, we find that larger size provides organizations with a unique ability to choose among different adaptive tactics, as larger size was significantly predictive of adding new programs, reducing programs, expanding advocacy, and pursuing earned income. Strategic planning was positively associated with innovative tactics such as starting joint programs or pursuing earned income. Financial stress or declines in an organization's major funding source led to cutbacks, as expected, but managers who foresaw these challenges were able to respond proactively by adding programs or starting joint programs. However, managers with more training did not respond much differently than did other managers, and organizational age and use of performance management tools had no effect in guiding organizational responses to financial uncertainty.