Journal of Business & Economic Policy

ISSN 2375-0766 (Print), 2375-0774 (Online) DOI: 10.30845/jbep

Revisiting the Financial Vulnerability of Nonprofit Business Leagues Post-2007 Recession
Bernard G. McNeal, DBA, CPA

As early contributors to the literature on nonprofit financial vulnerability, Tuckman and Chang developed a fourfinancial ratio model that they argued could be used to predict the financial vulnerability of nonprofit organizations. Tuckman and Chang concluded that financially vulnerable organizations would most likely cutback services or cease to exist after experiencing substantial financial hardships. This current study described an empirical test of the usefulness of the Tuckman and Chang’s model in predicting the financial vulnerability of a population of nonprofit business leagues before the financial shock of the 2007 recession. This current study concluded that the Tuckman and Chang model could identify and predict the financial demise of certain types of nonprofit business leagues, but not all. The findings of this study have implications for nonprofit organizational stakeholders, and fill the gap in the literature on the practical application of ratio analysis in nonprofit subsectors.

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