Thesis:

Effect of financial resource mobilization strategies on Financial sustainability of non-governmental Organizations in Nairobi county, Kenya

As donor funding declines or is redirected to other urgent initiatives, humanitarian organizations are increasingly turning to commercial ventures to lessen their dependence on dwindling financial resources. This research centers on financial sustainability, defined as the capacity of NGOs to cultivate a diversified resource base, enabling them to maintain their institutional structure and deliver benefits to intended beneficiaries even after the conclusion of donor financial assistance. The primary focus of this study was to analyze the effect of financial resource mobilization strategies on financial sustainability of non-governmental organizations in Nairobi County, Kenya. Specifically, the investigation delved into the associations between financial planning, donor fund management, income generating and income diversification approaches adopted by NGOs, all in relation to financial sustainability. The study employed a descriptive research design, drawing on theories such as Resource-Based theory, Resource Dependency theory and Resource Mobilization theory. To conduct this research, a descriptive research design was employed. The study focused on a population of 201 NGOs that are fully registered with the NGO coordination board and located in Nairobi County. The selection of the sample was carried out using a stratified random sampling technique, with a sample size of 134 determined through Yamane's formula, representing 66.7% of the total population. The respondents were chosen through a combination of simple random sampling. The primary data for this study was collected using a self administered questionnaire, utilizing a 5-point Likert scale ranging from 1 to 5. The questionnaire was pre-tested for reliability and validity. Both qualitative and quantitative data were generated through the research process. Descriptive statistics, including absolute and relative percentages, frequencies, measures of central tendency, and dispersion (mean and standard deviation), were employed. The findings were presented in tables and figures, with explanations provided in a narrative format. Furthermore, the study utilized Karl Pearson's coefficient of correlation and multiple regression analyses to explore the relationships between the independent variables and the dependent variables, enhancing the depth of the research and contributing to a comprehensive understanding of the factors influencing the performance of local NGOs in Kenya. Findings revealed moderate agreement on the effectiveness of financial practices but significant variability, indicating inconsistent implementation. Strong financial planning (r=0.254, p=0.004) was positively correlated with improved performance, while donor fund management (r=0.031, p=0.734) showed no significant relationship with organizational outcomes. Income generation (r=0.25, p=0.005) and diversification activities (r=0.254, p=0.004) positively impacted performance, emphasizing their importance. Recommendations included standardizing financial planning through training, enhancing donor communication, strengthening social responsibility initiatives, and promoting social entrepreneurship. Additionally, diversifying income streams and adopting advanced monitoring tools were deemed crucial. Further studies were suggested to explore external factors affecting financial sustainability, best practices in donor management, the impact of financial management technologies, and the long-term effectiveness of income diversification strategies. These insights provided a comprehensive approach to enhancing financial sustainability and organizational effectiveness within the NGO sector.