COMMITTEE CHAIR: Dr. Louis Ngamassi Tchouakeu

TITLE: THE ROLE OF FINANCIAL RISK AVERSION IN SHAPING FINANCIAL SUSTAINABILITY AND ORGANIZATIONAL GROWTH AMONG BLACK LED NONPROFIT ORGANIZATIONS

ABSTRACT: Black-led nonprofit organizations play a vital role in addressing social and economic inequities, yet many operate within funding environments characterized by persistent financial constraints and limited access to unrestricted resources. Although prior research has explored nonprofit financial management and organizational performance, limited empirical evidence exists regarding how financial risk aversion influences financial sustainability and organizational growth within Black-led nonprofit organizations. The purpose of this quantitative correlational study was to examine the relationship between financial risk aversion, financial sustainability, and organizational growth among Black-led nonprofit organizations. Guided by Prospect Theory, Resource Dependence Theory, and Leadership Identity Theory, the study sought to better understand how leadership approaches to financial decision-making influence organizational outcomes in resource-constrained environments. The study addressed the following research questions: (1) What is the relationship between financial risk aversion and financial sustainability among Black-led nonprofit organizations? and (2) What is the relationship between financial risk aversion and organizational growth among Black-led nonprofit organizations? Data were collected through an online survey administered to nonprofit leaders with financial decision-making authority. Following data screening procedures, the final analytic sample consisted of 87 Black-led nonprofit organizations. Partial Least Squares Structural Equation Modeling (PLS-SEM) was used to evaluate the measurement model and test the hypothesized relationships among the study constructs. The measurement model demonstrated acceptable reliability and validity through assessments of internal consistency, convergent validity, and discriminant validity. Structural model results revealed statistically significant negative relationships between financial risk aversion and both financial sustainability and organizational growth. Organizations reporting higher levels of financial risk aversion also reported lower levels of financial sustainability and organizational growth. The findings suggest that excessive financial caution may limit an organization’s willingness to invest in infrastructure, revenue diversification, organizational capacity, and strategic opportunities that support long-term success. This study contributes to the nonprofit leadership and financial management literature by providing empirical evidence that leadership approaches to financial decision-making are associated with important organizational outcomes and offers practical insights for nonprofit leaders seeking to strengthen organizational resilience, sustainability, and growth.

Keywords: Financial risk aversion, financial sustainability, organizational growth, Black-led nonprofit organizations, nonprofit leadership, Prospect Theory, Resource Dependence Theory, Leadership Identity Theory

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