The Dangers of Assessing the Financial Vulnerability of Nonprofits Using Traditional Measures

This article analyzes the financial vulnerability of 228 British nongovernmental development organizations (NGDOs) during the period 2008–2012. To do this, we use the Financial Vulnerability Index developed by Trussel et al. (2002). This index is commonly used in the literature on nonprofit organizations. However, we observe a very poor adaptation of the index to the reality of this industry, at least in predictive terms. The article goes deeply into each of the variables that are used to calculate this index, and we offer explanations of their inadequacy to this subsector of nonprofits.