The Impact of Exchange Rate Movements on the Financial Performance of International Non Governmental Organizations

Abstract

The purpose of this study was to identify the impact of exchange rate movements on the financial performance of international non governmental organizations. This study was brought about due to the significant amount of foreign aid the country receives per annum through non governmental organizations, the fluctuations of the Kenyan currency against the major world currencies and most importantly how the NGOs mitigate themselves against these risks and whether the foreign exchange gain or loss affects the financial performance of their organizations. To do this, the rescarchcr obtained the list of organizations registered as international non governmental organizations (INGOs) from the NGO coordination board. The researcher then obtained a sample adequate for the study and a questionnaire was administered electronically due to the large number of responses that were sought. The data obtained was then analyzed to determine whether there was an impact on financial performance caused by exchange rate movements Based on the data collected and after analysis, it was determined that out of the financial performance indicators being tested, there was a significant indication that financial performance could be affected by foreign gains and losses and other factors most importantly management support to the INGOs. There are a number of recommendations the study has proposed to enhance efficiency, better accountability and importantly financial management.