Drivers of Flexible Labor Adoption in Nonprofit Organizations

As nonprofits operate in a competitive environment with limited resources, they constantly seek new ways to optimize their resources. This study investigates factors influencing nonprofits’ decision to integrate flexible labor, such as independent contractors, into their workforce. Using longitudinal data from 2008 to 2018 in the arts and cultural sector in the United States, this study tests hypotheses related to the impact of an organization’s financial health, cost of permanent employment, reliance on government funding and donations, organizational size, and service demand variations on flexible labor use. The findings confirm that nonprofits offering higher fringe benefits and facing greater service demand fluctuations rely more on flexible labor. However, contrary to our expectations, this study also finds that nonprofits with stronger long-term financial health are more inclined to adopt flexible labor, while larger nonprofits use less flexible labor than their smaller counterparts. This study advances our understanding of the organizational and sector-level factors behind flexible labor adoption in nonprofits and offers practical implications for managing it.