Influence of project financing strategies on organizational sustainability: a case of health sector non-government organizations; Nairobi county, Kenya

Abstract

Every organization exists to achieve certain goals and objectives but the achievement of these goals and the sustainability of the organizations are dependents on several factors among them resources availability. One of the greatest challenges facing nonprofit organizations is how to sustain themselves and support their activities financially. According to the literature reviewed NGOs are formulating different financing strategies not only because donors funding are decreasing but also because donors are shifting their focus to new areas. The purpose of this study was to examine the influence of projects financing strategies on organizational sustainability with specific reference to health sector NGOs in Nairobi County. Literature reviewed indicated that some of the financing strategies that organizations can adopt to enhance organizational sustainability are revenues diversification, organizational costs management, building strategic partnerships and maintenance of unrestricted funds. This study examined how revenues diversification, organizational costs management, building strategic partnerships and maintenance of unrestricted funds influence organizational sustainability. The sample size in this study was determined through an approach based on Precision rate and Confidence level as recommended by Kothari (2004). The formula resulted into 56 NGOs from a total population 237 NGOs. Two respondents finance and a programme staff were picked from each of the 56 NGOs resulting into a sample size of 112 respondents. The list of the 237 Nairobi based health sector NGOs was provided by the National NGOs Co-ordination Board on August 18, 2014. The research was conducted using a descriptive survey study. Questionnaires were used to collect both quantitative and qualitative data. Quantitative data was analyzed using SPSS software while qualitative data was analyzed through content analysis. The study found that costs management contribute most to organization sustainability followed by strategic partnership, revenue diversification and unrestricted fund in that order. The study also found that the four independent variables that were studied, contribute (55.1%) only of the organizational sustainability. The study recommends that to enhance sustainability the NGOs should diversify their funding base and avoids dependency on any one source of revenue whether internal or external. A balance between internally generated and externally generated revenues is highly recommended. In addition cordial relationships with strategic partners are critical as it can translate to more funding. Finally NGOs should hire competent Finance Managers that are able to manage organizations finances competently and offer appropriate advice to the management on financial matters.