The Relationship Between Financial Management Practices and Sustainability of Non-governmental Organizations in Nairobi County

Abstract

Imprudent financial management practices have affirmed to be paramount motive of financial instability and eventual closeout of most non-governmental organizations (NGOs) in Nairobi. They are so clinging to donors and other public/ private enterprises for funds that in the event they pull out the organization will close out. Theories have set out that the effectiveness of financial sustainability can be determined by resource that is almost impossible to replicate and one which are valuable or rare to an organization, set rules and guideline under which the agent operates thereby safeguarding the principal interest & procuring the right resource that will bid the best result for the money spent. This setting sparked the desire for the current study to be organized to meet this knowledge disparity. This study used descriptive research design with a target population of 1252 filed NGOs in Nairobi. A specimen of 93 of the target population was picked in conjunction with opinion poll with questions on the survey objective. Data collected was assembled and results presented in figures and tables. Analysis of variance (ANOVA) was carried out, the research confirmed that the F-ratio (F (3,72) =7.949, p=0.000) was statistically significant predictor of the outcome in that the model fitted well to the data with a p-value less than 0.05. The study also reveals that financial analysis and reporting has a significant negative influence on sustainability (β -23.146, P 0.008) which cash management and capital budgeting did not have a significant effect on sustainability of NGOs in Nairobi as shown by P values above 0.05. The study advocates that the board and management of NGOs should carry out due diligence on risk assessment of new projects before it can take it up and to continue to monitoring it so that it does not deviate from the plan. Stringent controls should also be put in place to manage finances while reporting and analysis should be done by competent personnel and reviewed before it is sent out to the right users. The study also recommends the need for future studies to focus on other sectors of the economy.