Name
Playing It Safe When Help Is Needed Most: Nonprofit Behavior under Economic Uncertainty
Date & Time
Monday, July 6, 2026, 10:15 AM - 10:40 AM
Description
We examine how economic policy uncertainty affects nonprofit organizations, focusing on donor behavior, managerial resource allocation, and mission-related spending. Using a large sample of U.S. public charities from 2008-2022, we document a systematic coordination failure between donors and managers during uncertainty periods. Donors increase contributions and reduce restrictions on their giving, providing organizations with both additional resources and greater deployment flexibility. This response contrasts sharply with for-profit settings, where uncertainty suppresses investment and spending. Nonprofit managers, however, respond by accumulating cash holdings and unrestricted net assets while simultaneously reducing program service and fundraising expenditures. These effects persist for approximately two years following uncertainty shocks. The result suggests a deployment mismatch: as resources flow into organizations, spending on mission-related activities contracts. This pattern reveals a fundamental governance gap in the nonprofit sector. Unlike shareholders who can compel resource distribution through contractual mechanisms, donors lack comparable tools to enforce deployment timing. Our findings challenge the assumption that donors and managers share unified mission-delivery objectives and demonstrate that existing accountability metrics, which measure what resources fund rather than when resources deploy, cannot adjudicate this temporal coordination failure. These results have implications for nonprofit governance, crisis response planning, and the design of accountability mechanisms.
Asmaul Khusna
Keywords
Economic policy uncertainty; nonprofit organizations; charitable giving; donations; cash holdings; governance
Theme
PUBLIC SECTOR / NFP
Author 1
Sandip Dhole
Author 2
Asmaul Khusna
Author 3
Daniel Neely