In recent years, organizations across sectors—ranging from businesses to government entities and nonprofits—have increasingly embraced a paradigm demanding more output with fewer resources. This expansive drive for efficiency, championed widely under frameworks of New Public Management (NPM), has spawned a surge in decentralization initiatives and a marked shift toward flexible labor models. Nonprofits, particularly in the arts sector, have not been immune to this transformation. While the allure of flexible labor—comprising temporary employees, contractors, and consultants—is palpable for organizations navigating budgetary constraints, emerging evidence from the University of Kansas paints a more nuanced portrait. Beyond immediate financial relief, the reliance on such labor modalities signals complex, and at times deleterious, operational and fiscal ramifications.
Central to this discourse are two interlinked studies led by Hala Altamimi, assistant professor of public affairs and administration, in collaboration with Qiaozhen Liu of Florida Atlantic University. Their research meticulously interrogates the operational consequences and financial dynamics of flexible labor utilization within arts-based nonprofit organizations over a comprehensive decade (2008-2018). Drawing on the robust dataset from DataArts—covering more than 18,500 U.S.-based nonprofits—the investigations circumvent anecdotal assumptions, delving deeply into longitudinal patterns that elucidate the real costs and benefits embedded in flexible workforce strategies.
From an operational vantage point, the findings are unequivocal: increasing dependence on flexible labor correlates with deteriorating performance outcomes, most notably reflected in declining event attendance. This metric, quintessential to the vibrancy and viability of arts nonprofits, serves as a critical barometer of organizational health and community engagement. Altamimi explicates that the prevailing rhetoric of achieving “more with less” tends to obscure the intrinsic complexities of nonprofit missions. Unlike commercial entities laser-focused on profit margins and efficiency metrics, nonprofits thrive on mission-alignment, intrinsic motivation, and relational capital—all facets compromised when core roles are outsourced to transient labor.
The conceptual framework underpinning the study differentiates between core and peripheral organizational roles. Core roles—defined here as those integrally tied to program delivery such as direct service provision, performance production, and audience engagement—are indispensable to fulfilling the nonprofit’s mission. Peripheral roles, encompassing administration and fundraising, although essential, possess less direct influence on programmatic outcomes. Significantly, the data reveal that substituting flexible labor in core roles exacerbates negative operational outcomes far more than in peripheral functions, underscoring the fragility of mission-centric work when continuity and embedded knowledge are undermined.
These operational deficiencies have theoretical roots in institutional, motivational, and relational dimensions unique to the nonprofit sector. Institutional distinctiveness predicates that nonprofits are not merely cost centers but mission-driven entities where output transcends standard efficiency metrics. Motivationally, nonprofit employees frequently exhibit elevated levels of mission affinity, often foregoing higher remuneration in favor of meaningful engagement—a dynamic disrupted when flexible laborers, who may lack such commitment, occupy significant organizational space. Furthermore, relational capital—the intangible social networks and community rapport critical to resource acquisition and partnership building—suffers in the flux and impermanence characterizing flexible labor arrangements, attenuating organizational capacity to sustain long-term alliances.
Financial analyses, presented in a companion study utilizing parallel methodologies and datasets, unearth another layer of complexity. While flexible labor adoption does afford nonprofits short-term fiscal relief, manifesting as cost savings and improved liquidity buffers, these advantages do not translate into long-term financial resilience. Fundamental indicators of solvency and profitability remain static or deteriorate despite ongoing flexible labor integration, suggesting that such strategies are stopgap measures rather than sustainable financial solutions. It is noteworthy that the lack of pronounced long-term negative fiscal outcomes should not be mistaken for financial improvement; rather, it delineates a plateau of financial stagnation fraught with operational trade-offs.
Altamimi’s work cautions against uncritical embracement of flexible labor, advocating instead for strategic and judicious deployment cognizant of role specificity and organizational culture. She emphasizes the need for nonprofits to align labor strategies with mission imperatives and internal human capital dynamics, recognizing that flexible labor’s utilitarian appeal must be balanced against its potential to erode intrinsic motivation and social capital, thereby undermining program efficacy. This nuanced approach demands leaders reconsider flexible labor not as a panacea for budget constraints but as one component within a multidimensional resource management toolkit.
The broader implications of these findings resonate beyond arts nonprofits, casting light on pervasive sector-wide phenomena propelled by the infusion of New Public Management principles in public service domains. Altamimi’s research contributes to a critical reevaluation of decentralization and private-sector emulation in nonprofit management, questioning assumptions that market-oriented labor practices inherently translate to enhanced effectiveness or fiscal health. By foregrounding empirical evidence within this debate, the studies challenge organizational leaders and policymakers to rethink labor configurations and to safeguard the mission-driven core amidst evolving employment landscapes.
Furthermore, the analytic rigor underpinning the studies—leveraging extensive multi-state datasets spanning over a decade—provides a robust evidence base uncharacteristic of previous research on flexible labor in the nonprofit realm. This depth facilitates granular insights into temporal trends and causal inferences, equipping stakeholders with nuanced understanding to navigate the delicate balance between operational efficiency and organizational integrity. The scholarship thus situates flexible labor usage within a strategic calculus, illuminating both its transactional benefits and its transformational risks.
Ultimately, the research underscores that the adoption of flexible labor is neither inherently problematic nor unequivocally beneficial for nonprofits. Instead, it calls for a strategic, context-sensitive application aligned with mission priorities and long-term organizational sustainability. Short-term cost containment should not eclipse considerations of programmatic quality, community engagement, and workforce motivation. Altamimi succinctly encapsulates this ethos: “If you put in less, you get less,” cautioning against overreliance on flexible labor as a growth or recovery strategy. As nonprofits grapple with constrained resources and complex missions, such calibrated insights may prove pivotal in shaping sustainable labor practices that honor both fiscal responsibility and mission fulfillment.
This body of work exemplifies a crucial advancement in nonprofit management research, emphasizing the importance of marrying empirical evidence with sector-specific organizational theory. By illuminating the interdependencies between labor structures, operational outcomes, and financial trajectories, it offers a sophisticated lens through which nonprofit leaders can examine their own labor configurations. As flexible labor models continue to proliferate across sectors, the lessons derived from these investigations resonate universally—reminding institutions that efficiency gains must be weighed alongside mission coherence and community impact.
Subject of Research: People
Article Title: The Financial Implications of Flexible Labor Use in Nonprofit Organizations
News Publication Date: 24-Jun-2025
Web References:
- Public Management Review: https://www.tandfonline.com/doi/full/10.1080/14719037.2025.2526533
- Nonprofit Management and Leadership: https://onlinelibrary.wiley.com/doi/10.1002/nml.70002
- Adoption of Flexible Labor in Nonprofits: https://www.mdpi.com/2076-3387/15/5/180
- Effects of Decentralization: https://academic.oup.com/jpart/article-abstract/33/1/170/6549741?redirectedFrom=fulltext
- Adoption of Private Sector Practices: https://journals.sagepub.com/doi/full/10.1177/08997640211057404
Keywords: Social sciences, Communications, Population, Economics, Business, Commerce, Economics research, Socioeconomics, Social research
