Risk Management Practices and Financial Sustainability of Non-governmental Organizations in Migori County, Kenya

Abstract

Risk management practices is relevant to all organizations and the aim of any management is to maximize expected gains, taking into account its volatility. Entities sustainability is key to the functionality and survival of organization of which cannot be achieved without clear understanding of the link between sustainability and risk management practices. It is therefore considerate to undertake continuous performance review, accountability and partnerships,to realize organization’s potential self-sufficiency with respect to risk management practices. This study sought to establish the linkage between risk management practices and financial sustainability of NGO`s in Migori county. The specific objectives of the study were to establish the effect of monitoring and evaluation on financial sustainability of NGO`s in Migori, determine the extent of effect of accounting and transparency on financial sustainability of NGO`s in Migori and establish how Partnership and alliance affect financial sustainability of NGO`S in Migori. The study used both primary and secondary data gathered from sample of 22 NGO`s out of 30 NGO`s targeted in Migori county. The study adopted stratified sampling technique and data was collected using pre-tested questionnaires and key informant interviews with researchers and implementer managers of selected NGO`s.Data analysis was done using SPSS. The research embraced both descriptive research design, and multiple regression in data analysis a regression model was formulated to establish relationship between independent variable and dependent variables. The finding revealed partnership and alliance had the highest influence with 705.0r and the only significant variable with 008.0p , followed by accountability and transparency 549.0r and lastly Monitoring and Evaluation 372.0r , The study confirmed existence of relationship between the four items of study including monitoring and evaluation, accountability and transparency, partnership and alliance and financial sustainability of NGO`s in Migori county. The study found out that most NGOs did not have mechanisms for strong partnerships and alliances in place and that accountability and transparency was weak. Because of weak M&E systems, many organizations were not able to provide evidence to demonstrate value for money in the donor supported investments, posing a risk to continued support by the funders. Besides the influence of these four items on sustainability of NGOs. The study also found that overreliance on donor funding was a major threat to sustainability. Many organizations relied on a single funder, and did not have alternative resource generation mechanisms. Based on these findings, the study recommends interventions to strengthen partnerships and alliances, and to improve accountability and transparency among NGOs. Performance matrix should be developed for each of these organizational development areas to monitor progress over time. NGO`s should reduce overreliance on donor funding, and generate internal revenue to sustain their programs. Regarding evidence for program development, M&E systems of NGOs should be strengthened as a way of knowledge management and information use to guide resource allocation and to document impact of interventions to enhance accountability and transparency.