Studies find nonprofits' use of flexible labor negatively affect operational outcomes, lack long-term financial benefit

LAWRENCE — As nonprofit organizations face increasing pressure to operate efficiently and adapt to shifting funding environments, many have embraced flexible labor — hiring contractors, temporary staff and consultants — to cut costs and expand capacity. But new research from the University of Kansas suggests that this trend may come at a hidden cost to both mission delivery and long-term sustainability.

Two studies by Hala Altamimi, assistant professor of public affairs and administration at KU, and Qiaozhen Liu, assistant professor at Florida Atlantic University, examine how the growing use of flexible labor affects nonprofits’ operational effectiveness and financial outcomes. Using large-scale panel data from 2008 to 2018 on U.S. arts and cultural nonprofits, their findings challenge the dominant narrative that flexible labor is a win-win solution for strapped organizations.

“There’s been a widespread push to ‘do more with less,’ often in the name of efficiency,” Altamimi said. “But our findings suggest that overreliance on flexible labor can ultimately undercut the very goals nonprofits are trying to achieve.”

Operational consequences of flexible labor: If you put in less, you may get less

In the first study, published in the journal Public Management Review, Altamimi and Liu analyzed how flexible labor affects nonprofits’ operational performance — measured by annual in-person attendance. Their results show that increased dependence on flexible labor leads to lower attendance, especially when flexible workers are placed in core roles directly tied to service delivery and programming. 

The authors explain that the negative effects stem from a mismatch between flexible labor models and the institutional, motivational and relational context of nonprofit work:

• Institutional: Unlike private firms, nonprofits pursue public value and mission fulfillment — not just cost minimization. Short-term staffing strategies can weaken program quality and long-term effectiveness.
• Motivational: Nonprofits often attract workers motivated by intrinsic goals such as mission alignment and social impact. The transient nature of flexible labor may disrupt these motivational drivers and reduce commitment.
• Relational: Building trust with communities, donors and collaborators requires continuity and deep relational ties — something hard to sustain with high turnover or temporary roles.

“Our research shows that when flexible labor is used in mission-critical functions, it can degrade performance,” Altamimi said. “Cost savings should not come at the expense of connection, quality or community trust.”

Financial tradeoffs of flexible labor

The second study, published in Nonprofit Management & Leadership, explores whether flexible labor delivers on its promise of cost savings. Altamimi and Liu find some short-term financial benefits such as liquidity. However, these benefits do not translate into stronger long-term financial performance, such as solvency or return on assets.

Importantly, the researchers did not find evidence of financial harm either. Instead, the long-term impact was neutral. They argue that nonprofits’ ability to attract intrinsically motivated workers may help offset the downsides of flexible labor in financial terms.

“Flexible labor can help nonprofits weather short-term fiscal pressures,” Altamimi said. “But there’s no evidence that it contributes to long-term financial strength. That’s a red flag for organizations thinking about flexible labor as a growth strategy.”

Rethinking labor strategy

Together, the studies present a cautionary tale. While flexible labor may offer temporary relief, it is not a sustainable solution if it compromises core functions or weakens institutional capacity. Nonprofits, the researchers argue, should be selective in how they deploy flexible labor — reserving it for peripheral functions or short-term needs.

“Flexible labor isn’t inherently bad,” Altamimi said. “But nonprofits need to understand where and how it fits. It can support resilience in a crisis, but it shouldn’t become the default employment model.”

The findings have broad implications for nonprofit leaders, funders and policymakers as they navigate labor challenges in an increasingly marketized and uncertain environment.

Altamimi, who has also examined what drives the use of flexible labor in nonprofits, brings a broader focus to her research on how organizations adapt and perform. Her work spans both public and nonprofit sectors and explores how internal decisions, like how authority is distributed, how resources are allocated and how staff are structured, influence an organization’s ability to navigate change, operate efficiently and deliver results.