Nonprofits are increasingly feeling the squeeze from donors and funders to maximize their output while managing rising costs and stagnant budgets. To navigate this financial strain, many are turning to flexible staffing solutions such as contractors, consultants, and temporary employees instead of hiring full-time staff.
These staffing strategies, however, present certain challenges.
As nonprofit management scholars, we examined data from 2008 to 2018, involving 7,838 arts and cultural nonprofits, including museums and theaters. Our research, published in two peer-reviewed journals, highlighted a significant disparity between the anticipated benefits of flexible labor arrangements and their actual impact on these organizations.
Our first study evaluated operational performance by measuring in-person attendance at events like theatrical performances and museum exhibits, serving as an indicator of service delivery and audience engagement.
Published in the July 2025 issue of Public Management Review, our findings revealed that nonprofits relying solely on flexible labor experienced a 27% decrease in attendance compared to those employing full-time staff. This issue was more severe when such staffing was used for core functions, like program delivery.
Interestingly, when flexible staff were used for administrative roles such as IT or fundraising, attendance levels were comparable to those organizations employing permanent staff for these tasks.
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The situation was similarly concerning regarding financial performance.
Our subsequent study, published in June 2025 in Nonprofit Management & Leadership, showed that while flexible labor might alleviate cash flow issues in the short run, it fails to enhance long-term financial stability.
Thus, while flexible staffing can provide immediate financial relief, it does not offer sustainable benefits, acting more as a temporary fix than a permanent solution.
We believe that the success of many nonprofits hinges on hiring staff committed long-term to their missions and communities.
Why it matters
In the corporate world, flexible labor models thrive on efficiency and cost reduction. However, nonprofits derive their value from trust, continuity, and robust community connections.
Building the essential institutional knowledge and dedication that strong nonprofit staff need takes time.
Temporary staff might not stay long enough to develop relationships or fully grasp a nonprofit’s mission. Programs could suffer when leaders are transient.
Trust between nonprofits and beneficiaries is formed through consistent, positive interactions. Because this trust is fragile, flexible labor might be less advantageous for nonprofits than for-profit entities.
For many nonprofits, personnel expenses are a major budget component, making them tempting targets for cuts. Yet, replacing permanent employees with contractors risks weakening the core of the organization.
What still isn’t known
Our research focused on arts and cultural nonprofits, which represent a large portion of arts organizations. Almost 9 out of 10 museums and visual arts institutions, 3 out of 4 dance companies, and about 6 out of 10 theaters are nonprofits.
The pros and cons of flexible staffing might differ in other nonprofit sectors, such as healthcare or social services.
Variables like contractors with extensive organization knowledge might perform better than those with less experience.
Due to data constraints, we treated all flexible labor as one category. The effects of hiring independent contractors, on-call workers, and temporary staff via contracting firms may vary.
