Organizational Discontinuity in Nonprofit Organizations: A Study of Closures, Mergers, and Other Terminal Outcomes

Nonprofits provide social goods: They deliver needed community services, mobilize groups for social causes, allow individuals to express values and faith, and provide a space for people to generate social innovations. Some nonprofits may continue indefinitely; others intentionally finish operations when its mission is accomplished; yet others may experience diminished capacity to operate that lead them to stop operations temporarily or permanently (e.g., closures). This research aims to uncover the elements and conditions that lead nonprofits to discontinue operations. By challenging the dichotomous paradigm of the life course in nonprofits that assigns organizations to alive vs. dead categories, this research uses the concept of organizational discontinuity to integrate the understanding of the diverse ways in which nonprofits suspend operations. To explain organizational discontinuities, a conceptual framework rooted in organizational theories is presented. Nonprofits under study come from a national subsample of 501(c)(3) charities that reported operations in 2003 and no longer showed evidence of continued activity in 2019. To characterize the types of discontinuities, this research uses organizational autopsies, which is a research method that uses administrative and online secondary data to diagnose the operational status of nonprofits. To further understand organizational discontinuities, this research presents a closer look at two representative phenomena, closures and dissolutions of non-surviving organizations in mergers. Case studies of 36 organizations help to identify the elements associated with organizational discontinuities in nonprofits. Results include a detailed categorization of types of organizational discontinuities and an identification of the internal and external elements associated with closures and mergers in older nonprofits. Conceptually, this research aims to contribute to the discussion of organizational change in nonprofits as an irregular and multicausal process. Data and method advancements include the use of online secondary data as an alternative to breaking with the existing reliance on administrative data in studies of the nonprofit sector. Finally, the results of this research aim to inform practitioners about the capacity-building areas that organizations should strengthen to prevent discontinuity of operations.