Factors Affecting The Financial Sustainability Of Donor-funded Local Non-governmental Organizations In Kenya: A Survey Of Local Ngos In Turkana County, Kenya

Abstract

This study sought to assess the factors affecting financial sustainability of donor-funded local NGOs registered with the NGO board in Turkana County. The objectives of the study were to assess the effects of donor relationship management on the financial sustainability of local NGOs, to assess the effects of income diversification on the financial sustainability of local NGOs, to assess the effects of managerial skills of the Senior Management Team on the financial sustainability of local NGOs and to establish the effects of financial management systems on the financial sustainability of local NGOs. The study used Open System Theory, Resource Dependency Theory, Institutional Theory, and Social Capital Theory. Because of the small number of NGOs in Turkana County, this study reflected all 34 local NGOs in the region. A systematic sampling procedure was used to target three members from the base unit of analysis. The study used primary data collected using questionnaires consisting of structured questions. The study used both inferential and descriptive statistics in data analysis using SPSS and the results presented in tables. Inferential and descriptive statistics were used to analyze the quantitative data, with responses from 90 participants from local NGOs in Turkana, Kenya. The results of the research revealed that donor relationship management had a favorable and significant impact on the financial sustainability of donor-funded local NGOs in Kenya, meaning that, donor relationship management did impact the financial sustainability of local donor-funded NGOs in Kenya. On the other hand, the findings indicated that income diversification had a positive and substantial effect on the financial sustainability of donor-funded local NGOs in Kenya. Thirdly, managerial skills of senior management had a positive but insignificant effect on the financial sustainability of donor-funded local NGOs in Kenya. Finally, the research results elucidate that sound financial management systems have a favorable but insignificant impact on the financial sustainability of donor-funded local NGOs in Kenya. The study recommends that local NGOs should have multiple sources of income to ensure their financial sustainability as well as maintain proper relationships with donors since these two variables are very significant in determining the financial sustainability of local donor funded NGOs.