| dc.description.abstract | The Non-Governmental organizations are major players in the economic developments and
social wellbeing within the host countries. In Kenya, the NGOs contribution was highly
recognized by the government. Despite the increase in funding for NGOs, concerns were raised
on lack of sustainability and the effect that the drastic reduction would have on the quality of life
on the affected communities. This study aimed at establishing the effect of financial management
practices on the sustainability of Non- Governmental Organizations in Nairobi County. It
examined the effect of budgetary practices, the effect of working capital management practices,
the adoption of integrated financial management information systems and the effect of internal
control practices on the sustainability of NGOs in Nairobi County. Further, the study examined
the moderating effect of NGO regulations on the effect of financial management practices on the
sustainability of NGOs in Nairobi County. The study was guided by the theory of the budgeting
process, the resource-based view theory, the operating cycle theory, and the theory of economic
regulation. It was anchored on a positivist paradigm philosophy. The study employed descriptive
research design. A sample of 286 out of a target population of 1000 senior program managers
and chief executive officers was obtained using stratified random sampling. A pilot study was
conducted on 15 senior program managers and chief executive officers from NGOs within the
Nairobi County who did not form part of the sample population. This allowed for the assessment
of the reliability and content validity of the data collection instruments which were found to be
satisfactory. Reliability was tested using the Cronbach coefficient. Primary data was collected
from sampled officers using structured questionnaires, while secondary data was obtained from
the audited financial statements of the NGOs and publications by the NGO coordination board.
172 questionnaires were found to be satisfactorily completed for analysis yielding a 60.14%
response rate. The data collected was summarized and presented in tables and charts. Statistical
Package for Social Scientists (SPSS) was used for data handling and analysis. The descriptive
statistics included frequencies, percentages, means, modes and standard deviations. Inferential
statistics included hypothesis testing using Chi Square test for independence to test whether the
rating was dependent on the age of the NGOs, modelling using correlational and linear
regression analysis and Analysis of Variance (ANOVA). For regression analysis, the normality
of the response variable (NGO sustainability) data was confirmed using the Shapiro-Wilks test,
while other diagnostic tests included Variance Inflation Factors (VIFs) and Pearson‟s Correlation
analysis to assess collinearity, coefficients of determination, t and F statistics. The explanatory
variables (financial management practices) were found to have pronounced multicollinearity,
thus necessitating partial regression analysis to investigate the effects of financial management
practices on NGO sustainability. In assessing sustainability of NGOs, the current ratio, the donor
dependency level, and the survival ratio were computed. The study showed that budgetary
practices have significant effects on NGO sustainability specifically, donor dependency level and
survival rate. However, enhanced regulations by the NGO coordination board would result to a
more decreased donor dependency level and a more increased survival rate. Working capital
management practices have significant effects on the NGO sustainability specifically current
ratio and survival rate. The NGO regulation raised the rate at which adoption of IFMIS
influenced current and survival rate. Lastly, internal control practices were found to have
significant effects on all indicators of NGO sustainability, current ratio, donor dependency level
and survival rate. NGO regulation was found to reduce the rate at which improved internal
control practices influence the indicators of NGO sustainability. The study recommended that
NGOs in Nairobi County should improve the working capital management practices through
improved grant receipt scheduling and liquidation of expenditure which leads to improved cashflows.
Further, | en_US |
