Influence Of Financial Sustainability Factors On Growth Of Non-Governmental Organizations In Kenya

ABSTRACT

Kenya has experienced enormous growth in establishment of NGOs, with more than

100% increase between 1977 and 1987, striking over 23,000 by 1997 and 47,000 by

2016; thereby attracting increased foreign and local funding especially from 2006;

reflecting renewed donor confidence in the government’s resolve for proper management

of the economy. Despite the phenomenal establishment of sustainability drivers; being

income generating capacity, income source diversity, financial planning and management

and having potential to geographical spread and product diversity there is limited

information constructively and logically linking sustainability factors with growth of

NGOs. Studies of factors influencing financial sustainability of local NGOs therefore

indicate inconsistencies; as some suggest that the factors includes income diversification,

and sustainable levels of incomes from local and external donors as well as own incomegenerating

activities to such an extent that the organisations continue to grow and operate

after external donor funding is withdrawn. Kisumu County has the largest number of

NGOs in the greater Nyanza region at 86 in numbers; with Nyamira having 43, Migori

34, Kisii 18, Siaya 14 and Homabay 11; by end of 2006. This gives a higher growth

expectation for Kisumu County owing to the fact that there is an escalating pressure on

need for increased revenue to sustain services, increase geographical coverage area,

increase number of units installed and provision of quality services to the underserved. In

order to address these demands the organization need to have continuity in growth. The

purpose of this study was therefore to analyze the influence of financial sustainability

factors on growth of NGOs in Kisumu County. The specific objectives were; to establish

the relationship between financial sustainability factors and growth of NGOs, determine

the influence of financial sustainability factors on geographical spread of NGOs and

analyse the effect of financial sustainability factors on product diversity of NGOs all in

Kisumu County. The study was guided by Resource Mobilization Theory and will

employ correlational research design. Study population consisted 87 NGOs in Kisumu

County. A total of 172 respondents were targeted for the survey. These included the

Program managers and Finance managers. A saturated sampling survey was used in data

collection. A Pilot study of 9 respondents was conducted, while the remaining 163 was

retained for the main study. Primary and secondary data was collected using structured

questionnaires while secondary data was collected through data schedule sheets. Expert

review, and test retest methods were used to determine instruments’ reliability while

Cronbach’s alpha test was used to achieve data validity it provided a coefficient of 0.930,

which was sufficient condition for further analysis of the study data. The Correlation

results range from 0.188 to 0.556, p≤0.05 for the variables. The regression results

revealed variables’ contribution of R2 of 0.613 for Financial Sustainability on Growth,

0.582 on Geographical spread and 0.603 on Product diversity. Therefore these

coefficients mean that Financial sustainability accounts for 61.3% to changes in growth,

58.2% to geographical spread and 60.3% to product diversity; all significant at p ≤ 0.05.

These results imply significant effect of the sustainability factors to growth of NGOs.

These findings may be helpful to NGOs in enhancing their growth, and may also be

useful to both academics and industry players in the public in exploring significance of

contributory factors to growth of NGOs.