COMMITTEE CHAIR: Dr. Hesam Shahriari

TITLE: THE ROLE OF FINANCIAL RISK AVERSION IN SHAPING FINANCIAL SUSTAINABILITY AND ORGANIZATIONAL GROWTH IN BLACK-LED COMPARED TO NON-BLACK-LED NONPROFIT ORGANIZATIONS

ABSTRACT: Black-led nonprofit organizations are critical to advancing social equity and addressing systemic inequities, yet they continue to face persistent financial disadvantages. Previous research highlights disparities in philanthropic funding, such as smaller grants, restricted support, and limited access to multi-year commitments, that constrain financial flexibility and reinforce risk-averse behaviors. While nonprofit studies broadly examine financial risk aversion, sustainability, and growth, there is limited scholarship on how race and leadership identity shape financial decision-making. Few comparative studies analyze how financial risk aversion manifests differently in Black-led versus non-Black-led organizations, creating a significant gap in the literature.

The purpose of this proposed study is to examine the relationship between financial risk aversion, financial sustainability, and organizational growth in nonprofit organizations, with particular attention to the experiences of Black-led nonprofits. This research builds on Prospect Theory, Resource Dependence Theory, Behavioral Agency Theory, and Leadership Identity Theory to explore how risk-averse behaviors intersect with leadership identity and perceived organizational performance. The central research questions ask: (1) How do risk-averse financial behaviors impact the financial sustainability of Black-led nonprofits compared to non-Black-led nonprofits? and (2) How do risk-averse financial behaviors impact the organizational growth of Black-led nonprofits compared to non-Black-led nonprofits?

A quantitative, correlational research design will be employed. Data will be collected through surveys of nonprofit leaders, triangulated with IRS Form 990 filings, and secondary datasets. This study will test relationships among financial risk aversion, sustainability, and growth, while accounting for moderating effects of leadership identity and perceived organizational performance. The study population will include U.S.-based 501(c)(3) nonprofit organizations across health, human services, and education sectors, with a balanced sample of Black-led and non-Black-led organizations.

By integrating theory with comparative empirical analysis, this study seeks to advance scholarly discourse on nonprofit financial decision-making, expand understanding of equity in organizational behavior, and provide insights for funders, policymakers, and nonprofit leaders striving to strengthen sustainability and resilience in resource-constrained environments.

Keywords: financial risk aversion, Black-led nonprofits, organizational sustainability, organizational growth, leadership identity, nonprofit finance

Room Location: Northwest Center, Room 205