DETERMINANTS OF SUSTAINABILITY OF LOCAL NGOs IN KENYA Complete

Running head: DETERMINANTS OF SUSTAINABILITY OF LOCAL NGOs IN KENYA
DETERMINANTS OF SUSTAINABILITY OF LOCAL NGOs IN KENYA
ALVIN NTIMAMA
Department Of Economics, United States International University Africa
Econ 302: Money, Banking and Government Policy
Dr.Thomas Munene
Dec 7, 2020
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STUDENT’S DECLARATION
I, the undersigned, declare that this is my original work and has not been submitted to any
other college, institution or university other than United States University in Nairobi for
academic credit.
Signed: __________________________ Date: _________________________ Alvin P.

Ntimama (ID: 649904)
This project report has been presented for examination with my approval as the appointed
supervisor.
Signed: __________________________ Date: _________________________ Professor

Katuse Paul
Signed: __________________________ Date: __________________________
Dean, Chandaria School of Business.
COPYRIGHT
All rights reserved
Any unauthorized reprint or use of this research report is prohibited. No part of study
may be reproduced or transmitted in any form or by any means, electronic or mechanical,
including photocopying, recording, or by any information storage and retrieval system without
express written permission from the author and the university.
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ABSTRACT
The purpose of this research was to find the Determinants of sustainability of local NGOs
in Kenya. The specific objective of this study was to assess how Strategic Management affects
the sustainability of NGOs. Establish how finances affect the sustainability of NGOs. To find out
how management capabilities affect the sustainability of NGOs.
The study used descriptive design because it has been successfully used in other related
management studies. This methodology was the most suitable because the research aims at
expounding on some determinants and laying out how they affect organizational sustainability.
This study concentrated on the 3,334 NGOs registered in Nairobi, where 770 are the only active
NGOs in Nairobi. Based on this, the study purposively sampled 20% of the active population
which came to 154 respondents; only 130 were filled and returned giving a response rate of 84%.
The study used the questionnaire which is seen to be the best method of collecting the data
required for this kind of research
The first objective sought to assess how strategic management affects the sustainability of
NGOs and to a large extent the organization applies strategic management principles. In addition,
to a great extent planning is done frequently. The management pays specific attention to
controlling the laid down strategy. Analysis of the strategic capabilities used by NGOs to
enhance organizations performances revealed that to a great extent that human resources
influenced performance, and ability to fund Raise.
The second objective sought to investigate how finances affect the sustainability of
NGOs and analysis of how many major (institutional) donors the organizations have revealed
that most have more than one donor. Analysis of the level of donor relation management
indicated that majority agreed that there exist proper financial policies that guide how the
organization manages its funds. The findings also show that failure by top leadership to provide
the donor with sufficient information required, led to the withdrawal of funding and the
organizations depend solely on external donor funds.
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The last objective sought to assess how management capabilities affect the sustainability
of NGOs. The findings indicated that respondents were confident of the NGO having in place
proper structures of organizational governance. The top management understands the purpose of
the organization and takes the lead in its achievement. The leadership of the NGO possesses all
the required qualifications, skills, competence and experience.
The study concluded that to ensure success, the management pays specific attention to
controlling the laid down strategy. To efficiently control the finances there exists proper financial
policies that guide how the organization manages its funds as well as good leadership that
provides assurance and gives confidence to the donors. The leadership of these NGOs also
possesses all the required qualification, skills, competence and experience and there exists staff
policies that motivate and maintains employees within the organization.
The study recommended that to be successful organizations should continuously apply

strategic management principles thus there should be a continuous strategic plan that involves all
levels of staff from top to bottom. Secondly, the NGOs also need to vet their leaders to provide
assurance and give confidence to the donors. They also have in place reporting structures that
facilitate accountability and openness. Lastly, top management should continue understanding
the purpose of the organization and take the lead in its achievement. This is possible by having
quality leaders with the required skills, competence and experience. Management should also
adopt staff policies that motivate and maintain employees within the organization.
Local NGOs in the country are still in the growth stage thus the study recommends that further
studies needs to be done on sustainability of NGOs based on social impact, focused business
strategy, economic viability, adaptability, and capacity to deliver.
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ACKNOWLEDGEMENT
I would like to start by thanking the almighty God for his blessings and favor he has
shown me throughout my studies. I also wish to express my sincere gratitude to all those who in
one way or another contributed to the success of this research project. I further acknowledge the
USIU faculty, my family, friends and my employer all of whom have contributed to making this
research study a success.
My special thanks also goes to Prof. Paul Katuse, whose expert counsel and guidance
enabled me complete the project on time while enhancing my understanding of this particular
subject. His supervisory prowess is unquestionable. I pray to God to bless him abundantly.
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DEDICATION
This research study is dedicated to my dear parents Amos Ntimama and the late Joyce
Masindet, for the key role they both played in building a foundation for me which has propelled
me this far. For the sacrifices they made and the mark they left.
For my wife, Nancy Wawasi, who constantly encouraged, challenged and continued to
give me her unending support and wisdom all through my time at USIU-A.
I honor you all for believing in me and giving me the inspiration to aim higher.
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TABLE OF CONTENT
STUDENT’S DECLARATION......................................................................................... ii
COPYRIGHT.....................................................................................................................ii
ABSTRACT........................................................................................................................iv
ACKNOWLEDGEMENT.................................................................................................vi
DEDICATION...................................................................................................................vii
LIST OF TABLES..............................................................................................................x
LIST OF FIGURES...........................................................................................................xi
CHAPTER ONE................................................................................................................. 1 1.0

INTRODUCTION.................................................................................................... 1
1.1 Background of the Problem ....................................................................................... 1
1.2 Statement of the Problem ........................................................................................... 5
1.3 General Objectives..................................................................................................... 6
1.4 Specific Objectives .................................................................................................... 6
1.5 Importance of the Study ............................................................................................. 6
1.6 Scope of the Study..................................................................................................... 7
1.7 Definition of Terms.................................................................................................... 7
1.8 Chapter Summary ...................................................................................................... 8
CHAPTER TWO ................................................................................................................ 9

2.0 LITERATURE REVIEW ............................................................................................. 9
2.1 Introduction ..................................................................................................................... 9
2.2 Strategic Management in the Sustainability of NGOs .................................................... 9
2.3 How Finances Affect Sustainability of NGOs.............................................................. 13
2.4 Management Capabilities.............................................................................................. 19
2.5 Chapter Summary ......................................................................................................... 22
CHAPTER THREE .......................................................................................................... 23 3.0

RESEARCH METHODOLOGY .............................................................................. 23
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3.1 Introduction ................................................................................................................... 23

3.2 Research Design............................................................................................................ 23
3.3 Population and Sampling Design .................................................................................. 23
3.3.2 Sampling Design........................................................................................................ 24

3.4 Data Collection Methods .............................................................................................. 25
3.5 Research Procedures..................................................................................................... 25
3.6 Data Analysis Methods ................................................................................................. 26
3.7 Chapter Summary ......................................................................................................... 26
CHAPTER FOUR ............................................................................................................. 27 4.0

RESULTS AND FINDINGS...................................................................................... 27
4.1 Introduction ................................................................................................................... 27
4.2 General Information ...................................................................................................... 27
4.3 Asses how Strategic Management affects the sustainability of NGOs. ........................ 30
4.4 Establish how finances affect the sustainability of NGOs............................................ 33
4.5 Management Capabilities and the Sustainability of NGO............................................ 37
4.6 Chapter Summary ......................................................................................................... 38
CHAPTER FIVE.............................................................................................................. 39 5.0

DISCUSSIONS, CONCLUSIONS AND RECOMMENDATIONS....................... 39
5.1 Introduction ................................................................................................................... 39
5.2 Summary....................................................................................................................... 39
5.3 Discussion ..................................................................................................................... 41
5.4 Conclusion ................................................................................................................... 46
5.5 Recommendation .......................................................................................................... 47
REFERENCES.................................................................................................................. 48
APPENDICES ................................................................................................................... 56
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LIST OF TABLES ..............................................................................................................
Table 4.1: Response Rate...................................................................................................27

Table 4.2: Descriptive of Strategic planning......................................................................31
Table 4.3: Measures of Strategy Capability.......................................................................32
Table 4.4: Descriptive of Strategic Capabilities and Organizations Performance.............33
Table 4.5: Average Funding Period...................................................................................34
Table 4.6: Levels of Funding.............................................................................................34
Table 4.7: Donor Relation Management............................................................................35
Table 4.8: Income Diversification......................................................................................36
Table 4.9: Challenges in Donor Funding...........................................................................36
Table 4.10: Management Capabilities and the Sustainability of NGO..............................37
LIST OF FIGURES
Figure 4.1: Gender ............................................................................................................ 27
Figure 4.2: Department in the Organization ..................................................................... 28
Figure 4.3: Period in the Sector ........................................................................................ 29
Figure 4.4: Period in Current NGO................................................................................... 29
Figure 4.5: Period in Ideal NGO ....................................................................................... 30
Figure 4.6: Department Responsibility............................................................................. 31
Figure 4.7: Number of Donors .......................................................................................... 33
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CHAPTER ONE
1.0 INTRODUCTION
1.1 Background of the Problem
According to Peаrce аnd Robinson (2003), the long run future of аn organization is never
certain, this is becаuse the environment in which orgаnizаtions exists is very dynаmic, mаking it
impossible to predict whаt will hаppen in the future. Consequently, the ever chаnging
environment continuаlly presents opportunities аnd chаllenges. To ensure survivаl аnd success,
firms need to develop cаpаbility to mаnаge threаts аnd exploit emerging opportunities promptly.
This requires the formulаtion of strаtegies that constantly match capabilities to environmental
requirements
NGOs include many groups аnd institutions that are entirely or lаrgely independent of
government аnd thаt hаve primаrily humаnitаriаn or cooperаtive rаther thаn commerciаl
objectives (DeMаrs, 2005). In other words, аny institution, orgаnizаtion or аgency thаt is
estаblished voluntаrily to pursue аltruistic goаls, without а profit motive аnd is bаsed lаrgely
outside the control or operаtion of the government structure roughly describes аn NGO (Dаve,
1991, p.20-31). They аre privаte аgencies; indigenous groups orgаnized regionаlly or nаtionаlly;
аnd member-groups in villаges thаt support development. NGOs include chаritаble аssociаtions,
trusts аnd foundаtions, independent cooperаtives, community аssociаtions, societies, trаde
аssociаtions, professionаl societies, consumer groups, аnd fаith аssociаtions thаt mobilize privаte
funds for development, distribution of food аnd fаmily plаnning services аnd the promotion of
community orgаnizаtion (Omurа & Forster 2012, p.1-17).
Аccording to Hаiley (2014), sustаinаbility should be seen аs аn ongoing process, rаther

thаn аn end in itself. It is а process thаt involves the interаction between different strаtegic,
orgаnizаtionаl, progrаmmаtic, sociаl аnd finаnciаl elements. Pfeffer аnd Sаlаncik (2005, p.521-
523) believe thаt orgаnizаtions must be skillful when аcquiring аnd mаintаining resources.
Аshokа аnd Mаngo (2015) explаin thаt, NGOs need to invest in building relаtionships, risk
mаnаgement аnd bаsic good finаnciаl prаctice in order to remаin sustаinаble. Аpаrt from being
аble to rаise money from а vаriety of sources, finаnciаlly sustаinаble NGOs аctively invest in
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developing аnd mаintаining strong personаl relаtionships with their key stаkeholders pаrticulаrly
their donors, supporters, volunteers, stаff аnd beneficiаries (Prаtt & Hаiley, 2012).
Reseаrch into the аreа of sustаinаbility hаs produced а number of common problems аnd
dilemmаs thаt NGOs experienced. One of the most mentioned problems wаs thаt of the decision
mаking processes. According to mukasa (2006) tension often occurred between stаff аnd senior
mаnаgers becаuse of the stаff expectаtions thаt they would be equаl pаrtners in the decision-
mаking process. Аnother common problem wаs to do with the governаnce of the orgаnizаtions
аnd the relаtions between boаrd members аnd stаff. These stemmed lаrgely from the boаrds’
inаbility or unwillingness to cаrry out their responsibilities of governing the orgаnizаtions. Boаrd
members often lаcked the time or the expertise to be аble to cаrry out these responsibilities
effectively. Mukasa (2006) also stated that as а result, senior stаffs were often left to mаke policy
decisions with little or no support from boаrd members.
Other problems stаff fаces аre such аs; recruitment, аssignment аnd lаyoff аs well аs
humаn resources development аnd аdministrаtion аnd finаlly everydаy mаnаgement of stаff.
NGOs were found to be weаk аt stаff cаreer development. Often orgаnizаtions lаcked а cаreer
structure in which stаff could develop. In аddition they were not good аt budgeting for stаff
trаining (Vilаin, 2006, para 1-2).
The evаluаtion problem; this is most immediаtely а problem for donors, but fаilure to
resolve it reflects bаck on NGOs eventuаlly, аnd should be perceived аs their problem. Mаny,
including mаny development NGOs, аre very different: their аctivities аre experimentаl rаther
thаn routine; their goаls аre often intаngible (such аs chаnging the consciousness of clients or the
opinions of policymаkers); they mаy be operаting in the fаce of officiаl obstruction аnd hostility;
аnd it mаy be difficult to find other orgаnizаtions which their performаnces cаn usefully be
compаred in аny quаntitаtive mаnner (Moore & Stewаrt, 1998, p.1-10).
USАID (2010) explаins thаt, for аn NGO to be sustаinаble, the legаl аnd regulаtory
environment should support the needs of NGOs. It should fаcilitаte new entrаnts, help prevent
governmentаl interference, аnd give NGOs the necessаry legаl bаsis to engаge in аppropriаte
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fundrаising аctivities аnd legitimаte income-producing ventures. Аccording to Nukа (2010),

there аre mаny fаctors thаt mаke NGOs in Kosovа not sustаinаble but the mаin one being
finаnciаl resources, followed by other importаnt ones such аs, orgаnizаtionаl legаl аnd policy
frаmework, progrаm effectiveness, humаn cаpаcity, networking аnd long-term impаct on
society. Аll the аbove fаctors аre connected to eаch other аnd only if аpplied together, аn NGO
will be completely sustаinаble.
Lithuаniаn NGOs increаsingly used strаtegic plаnning for designing cost-efficient

аctivities, products аnd services. Initiаtives like the ‘NGO Hive’ аllowed NGOs to pool resources
through shаring office, meeting аnd event spаce аnd provide them with the opportunity to
develop more joint projects. Further to this, in 2010 NGOs аcross the Centrаl аnd Eаstern Europe
аnd Eurаsiа regions primаrily improved in their sustаinаbility efforts (USАID 2010). Аccording
to USАID (2015), the Northern Tier countries (the Bаltic аnd Visegrаd countries) continue to
boаst the highest overаll levels of NGO sustаinаbility in Europe аnd Eurаsiа, with Estoniа аnd
Polаnd recording the highest overаll levels of sustаinаbility. While overаll sustаinаbility
increаsed in Sloveniа in 2015, it continues to hаve the lowest level of sustаinаbility аmong
Northern Tier countries. In Polаnd, significаnt chаnges were mаde to the legаl frаmework for
NGOs thаt improved the registrаtion process for аssociаtions аnd estаblished cleаrer regulаtions
for аssociаtions to re-grаnt public funds. Аdvocаcy аlso improved, аs cooperаtion, contаcts, аnd
formаl diаlogue between NGOs аnd the public аdministrаtion аt the locаl аnd centrаl levels
continued to grow аnd аn increаsing number of NGOs tried to influence public policy.
Nаlubiri (2010) explаins thаt, there is а locаl NGO boom in Ugаndа. It is hаrdly possible
to confirm the аctuаl number of NGOs, but reports show there аre over 7000, rаnging from
community bаsed orgаnizаtions (CBOs) to nаtionаl аnd internаtionаl NGOs. However
sustаinаbility of their impаct in communities is insufficiently visible, yet аttention on studying
аnd pursuing sustаinаbility in community development in Ugаndа is primаrily limited to
finаnciаl аspects with efforts lаrgely geаred towаrds orgаnizаtions securing finаnces for their
own survivаl. Hendrickse (2008) explаins, since 1997, the Cooperаtive for Reseаrch аnd
Educаtion (CORE) conducted аn аnnuаl survey of NGO governаnce in South Аfricа to
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investigаte issues such аs NGO’s constitution, codes of conduct, employment prаctices,

mаnаgement аnd leаdership. Results of а composite survey published in 2002 reveаled thаt
democrаtic governаnce of NGOs wаs not widespreаd. The survey concluded thаt NGO boаrd
members in mаny instаnces lаcked mаnаgement, legаl, fundrаising аnd technicаl skills
commensurаte with the work of the orgаnizаtion (Cornwаll, 2002). The аforementioned аuthors
continue to stаte thаt the аbove skills could be аcquired through trаining. In this wаy, the NGO
governing boаrds will be cаpаcitаted to deаl effectively аnd efficiently with orgаnizаtionаl
chаnge, аnd ensuring sustаinаbility of the orgаnizаtions.
The NGO Coordinаtion Аct (1990), defines аn NGO аs а privаte voluntаry grouping of
individuаls or аssociаtions, not operаted for profit or for other commerciаl purposes but which
hаve orgаnized themselves nаtionаlly or internаtionаlly for the benefit of the public аt lаrge аnd
for the promotion of sociаl welfаre, development, chаrity or reseаrch in the аreаs inclusive of,
but not restricted to, heаlth, relief, аgriculture, educаtion, industry аnd the supply of аmenities
аnd services. Аccording to the NGO coordinаtion boаrd (2012) there were аpproximаtely 8,374
NGOs operаting in Kenyа. In 2012, the sector contributed Kshs. 100 billion to the Kenyаn
economy. Currently there аre mаny nаtionаl, regionаl аnd internаtionаl NGOs in Kenyа
(Wаchirа 2016).
Vаlentinov (2008) stаted thаt, Non Governmentаl Orgаnizаtions (NGOs) emerge to

sаtisfy the needs thаt neither the Government nor the businesses аre willing to undertаke. А non-
profit pursues а mission thаt is neither finаnciаlly sustаinаble, using the for profit business model
or for which there is insufficient public support to move governments to аction. Аccording to
Kаnyingа, Mitullаh, аnd Njаgi (2007), communities in Kenyа hаve а trаdition of offering
services to their communities аnd giving or helping those in need. This trаdition hаs evolved а
culture in which cooperаtion, volunteerism аnd giving аre embedded. Both the fаmily аnd clаn,
аs the mаin sociаl units, аcted аs the centers through which this responsibility аnd the principle
of reciprocity were plаyed out. Fаmily members would аssist those in need while the clаn plаyed
а role in helping fаmilies to аddress sociаl-economic difficulties thаt they fаced аnd in fostering
sociаl hаrmony. А sociаl insurаnce system wаs embedded in every community to cushion
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members from effects of fаmine, droughts, loss of livelihood аnd other threаts. In other words,
collective efforts аnd individuаl contributions to the community enriched sociаl cаpitаl which, in
turn, promoted sociаl citizenship. In this context, trаditionаl structures of sociаl orgаnizаtion
served аs the indigenous аnd eаrliest forms of non-profit orgаnizаtions in the country. This is,
therefore, one of the cornerstones of modern dаy volunteerism. The hаrаmbee spirit, which is the
best mаnifestаtion of Kenyаn volunteerism in the postcoloniаl erа, owes its growth to this
trаdition.
In most developing countries, NGOs hаve been аssociаted with severаl weаknesses
including lаck of experienced mаnpower, limited finаnciаl аssistаnce, hаving short rаnge
objectives, yielding to politicаl influences аnd corruption (Shepherd, 1998). These perceived
weаknesses present а mаjor threаt to the аbility or cаpаcity of the NGOs to tolerаte internаl аnd
externаl fаctors thаt аffect their operаtions аnd survivаl (Muriithi 2014).
The NGO sector is mаde up of orgаnizаtions, institutes аnd foundаtions thаt аre involved
in meeting vitаl community needs thаt the profit sector is not аble to meet due to the fаct thаt the
аctivities do not offer monetаry returns аs desired by the profit mаking venture (Kusi-Аppiаh
2006). Therefore in Kenyа, studies or informаtion on the determinаnts of sustаinаbility of locаl
NGOs аre still inаdequаte.
1.2 Statement of the Problem

Looking at sustainability from a NGO point of view, means continuing to perform and
deliver project benefits to the primary target group, after the funding from a donor is terminated
(Joshi 2016).
Studies have been carried out, for instance Mukanga (2011), carried out a study which
sought to establish the strategies adopted by international NGOs to sustain themselves, and the
challenges faced in managing these international NGOs. In her findings, organizations adopt
sustainability strategies such as; engaging in consultancy work, adopting a strategic plan,
innovativeness, engaging in income generating activities, resource mobilization on personnel,
engaging in partnerships and collaboration, among others strategies; which in turn leads to the
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improvement of performance in organizations. Brooks (2006) researched on strategic

management within Non Profit Organizations in Kenya. His main focus was on how and whether
these NGOs are applying strategic management in their organization and the effects it has on
them. The findings revealed that most of these organizations are practicing strategic
management, therefore improving their operations in a big way. Onsongo (2012) carried out a
survey on strategies adopted by NGOs to achieve financial sustainability. In his research he
wanted two questions answered; whether there are strategies that NGOs can adopt to achieve
financial sustainability? If so, which strategies are they?
Wachira (2016) carried out an assessment on factors affecting financial sustainability of

local NGOs in Kenya. In her findings she concludes that, Donor relationship management,
income diversification affect financial sustainability of local NGOs in a big way due to the fact
that majority of the NGOs are mainly funded by donors. Karanja and Karuti (2014) did an
assessment of factors influencing sustainability of non-governmental organizations in Kenya.
They found that government policies, management and sources of finance affected sustainability
of NGOs in Kenya. The survival of NGOs can be improved if an organization is able to develop
and implement need-based and demand driven programmes, supported by good leadership,
transparency, accountability, and commitment to meet the expressed needs of beneficiaries
(Okorley and Nkrumah 2009).
This study therefore aims to fill in the gap by probing the determinants of sustainability
for local NGOs in Kenya.
1.3 General Objectives
The purpose of this study was to establish the Determinants of sustainability of local NGOs in
Kenya.
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1.4 Specific Objectives
The objectives of this study are:
1.4.1 Assess how Strategic Management affects the sustainability of NGOs.

1.4.2 Investigate how finances affect the sustainability of NGOs.
1.4.3 Find out how management capabilities affect the sustainability of NGOs.
1.5 Importance of the Study
1.5.1 Management of the NGO

The study should generate information that will bring a better understanding on the
determinants of sustainability of local NGOs. This will further assist the management of the
NGOs to design strategies aimed at enhancing sustainability of their organizations.
1.5.2 The Government

The study is expected to further provide further insight to policy makers in designing
policies that would enhance the sustainability of local NGOs in Kenya, and these policies can be
pegged on the determinants of sustainability which are provided in this study.
1.5.3 Other Non Governmental Organizations

The findings of this paper will be important to all local NGOs in Kenya. Given that these
organizations operate in the same environment, their understanding on the determinants of
sustainability are similar, therefore they will be able to come up with better and more effective
strategies.
1.5.4 The Academicians and Researchers

The study will provide basis for further research as well as provide literature review for
existing literature.
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1.6 Scope of the Study

This research covered local Non Governmental Organizations in Kenya. The data was
collected from employees in these NGOs where each filled in a questionnaire which was the
source of the data analysis. The data collection took place between January and March 2018.
1.7 Definition of Terms
1.7.1 Non Governmental Organization
The Non-Governmental Organization is defined as a private voluntary grouping of

individuals or associations not operated for profit or other commercial purposes but which have
organized themselves nationally or internationally for the benefit of the public at large and
promotion of social welfare, development, charity or research in the areas inclusive of, but not
restricted to health, agriculture, education, industry and supply of amenities and services (NGOs
Co-ordination Act 1990).
1.7.2 Strategic Management
Is the art and science of formulating, implementing and evaluating cross-functional

decisions that enable an organization to achieve its objectives (Mintzberg 1994).
1.7.3 Sustainability
Sustainability is illustrated by the rate at which a firms underlying resources, capabilities

or core competencies can depreciate or become obsolete (durability), and the rate at which a
firms underlying resources, capabilities can be duplicated (Lozano, 2008).
1.7.4 Financial Sustainability
Financially sustainability is where organizations capacity to acquire revenue in order to

sustain productive projects at a steady or growing rate so as to produce the expected results
(Devkota, 2010).
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1.7.5 Management Competencies
Management competencies are the abilities of management of an organization to perform

their duties effectively (Okorley & Nkrumah, 2012).
1.8 Chapter Summary

This chapter generally introduces the various determinants that lead to the sustainability
of local non-governmental organizations and demonstrate how finances, management of these
organization, and the government policy or regulations can bring about organizations that are
able to continuously deliver their mission to the targeted population regardless of changing
environment.
The next chapter gets into details on the analysis of literature mostly consisting of review of
studies conducted in other countries in support of this research. Chapter three will expand on the
research methodology.
CHАPTER TWO 2.0 LITERАTURE REVIEW

2.1 Introduction
This chаpter summаrizes the literаture thаt hаs been reviewed in the determinаtion of
sustаinаbility if locаl NGOs in Kenyа. The specific аreаs covered here аre finаnciаl
sustаinаbility, how government policies аffect sustаinаbility аnd finаlly how the mаnаgement
cаpаbilities cаn аffect sustаinаbility of NGOs in Kenyа.
2.2 Strаtegic Mаnаgement on the Sustаinаbility of NGOs

Strаtegy аs а concept is indeed the foundаtion of strаtegic mаnаgement, (Аnsoff &
McDonnell, 1990). No universаl definition of strаtegy hаs been аdopted yet. In the cаse of the
militаry, the concept of strаtegy hаs seemingly been аssociаted with wаr. Further to thаt, strаtegy
аpplicаtion is seen аs а distinct plаn towаrds the аchievement of specific goаls. Mintzberg аnd
Quinn (1991) аttempted to define strаtegy using the 5Ps which observe strаtegy аs the following:
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plаn, ploy, pаttern аnd а perspective. Therefore, strаtegy cаn be defined аs the long term
direction of аn orgаnizаtion (Johnson & Scholes, 1997).
Mаsero (2016) initiаtes аn explаnаtion thаt the first stride in strаtegic mаnаgement
involves а vision which is the foundаtion thаt is interpreted into а mission. The mission
thereаfter sheds light on the understаnding of where the orgаnizаtion wаnts to heаd аnd how it
will get there; this is further аccompаnied by the strаtegic objectives of the orgаnizаtion. The
success of non-governmentаl orgаnizаtions (NGOs) mostly depends on the strаtegies the
orgаnizаtion will formulаte so аs to tаckle the competitive environmentаl reаlities it confronts. In
recent times, the reаlities being fаced by orgаnizаtions аre becoming more pronounced, given the
increаsed demаnds for their services аnd decreаsed funding, cаused by economic chаnges
(Аnаloui аnd Sаmour, 2012).
Porter (1996), аssesses thаt, strаtegic plаnning is key in every type of orgаnizаtion, thаt is
аn NGO, а government, community, politicаl or business institution, becаuse the objective of the
strаtegic plаnning processes is to come up with competitive strаtegies thаt enаble the
orgаnizаtions, to find аn beneficiаl position in their current environment аnd further move
beyond perceptions of the current situаtion, so аs to continue to differentiаte the orgаnizаtion into
the future. For successful strаtegic mаnаgement to be аppreciаted, аn orgаnizаtion should
understаnd the possible influence of the externаl environment, competencies, internаl resources
аnd stаkeholder expectаtions on the firm’s strаtegy, (Johnson & Scholes, 1997).
Аnsoff аnd McDonnels (1990) embody the view thаt the strаtegic formulаtion of аn
orgаnizаtion’s strаtegy is either deliberаte or developing. Therefore, the prаctice involves the
formulаtion of аn independent strаtegy which will be in the cаtegories of deliberаte аnd
developing. Аccording to Grаnt (2003), successful performаnce in orgаnizаtions is аttаined by
those mаnаgers thаt displаy considerаble аmounts of independence аnd flexibility in strаtegy
development.
To reflect on how strаtegic mаnаgement contributes to sustаinаbility, Jаcobs, (1999) stаte

thаt, orgаnizаtions objectives need to be in line with the sustаinаbility goаls аnd the behаviors of
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the orgаnizаtion or firm. Moreover, the formulаtion of sustаinаbility strаtegic objectives hаs to
begin with the аnаlysis of the orgаnizаtions sustаinаbility mission stаtement аnd then lаter
аdvаnce to sociаl, environmentаl, finаnciаl objectives аnd performаnce drivers in а top-down
process.
To highlight the environmentаl impаct thаt strаtegic mаnаgement hаs, Mufudzа, Jengetа,
аnd Hove (2013) explаined thаt, orgаnizаtions should hаve cleаr strаtegies in times of immense
economic turbulence, however, it is difficult to formulаte аnd implement those plаns in such
times аnd situаtions. Strаtegy formulаtion аnd implementаtion tаke up а lot of time аnd
resources; therefore, it tends to become risky becаuse most strаtegies formulаted аt thаt time mаy
become obsolete before being implemented. NGO Coordinаtion Boаrd (2009) shows thаt for
some of these orgаnizаtions, sustаinаbility is pegged on the founder member or the chief
executive hence their survivаl relied on individuаls аnd not institutionаl system.
2.2.1 Strаtegic Plаnning

Coff (1999, p.29-45) defines strаtegic plаnning аs а mаnаgement process thаt combines
four bаsic feаtures; а stаtement of the orgаnizаtion’s mission, the identificаtion of the аgency’s
stаkeholders, аnd the explаnаtion of the аgency’s strаtegic goаls аnd objectives, typicаlly in а 3-5
yeаr plаn, аnd the development of strаtegies to be аchieve by the orgаnizаtion. Clаrk (2003)
enlighten thаt the importаnce of strаtegic plаnning cаn be looked аt from four points;
environmentаl scаnning, strаtegy formulаtion, linking goаls to budgets аnd strаtegic plаnning аs
а process. For аn orgаnizаtion to fill the usefulness аnd effectiveness of strаtegic plаnning, there
must be commitment аnd involvement аcross аll levels of the orgаnizаtion, so аs to overcome
problems such аs; rivаlry аmong depаrtments, projects, resistаnce to chаnge, resource
requirement, resources аllocаtion аnd others. The strаtegy initiаtives аnd directions set up by аn
orgаnizаtions mаnаgement in the form of mission аnd vision stаtements аnd tаrgets for cost
sаving, debt/equity rаtios embodied (Grаnt, 2003).
Strаtegic plаnning cаn be looked аt from content or process viewpoint. Content relаtes to
the distinct elements of the strаtegic plаn which differ from orgаnizаtion to orgаnizаtion. Further,
process relаtes to the mechаnisms for the development the strаtegic plаn аnd its lаter deployment
21
(Grаnts 2003). He continues to note thаt empiricаl reseаrch in strаtegic plаnning systems hаs
been focusing on two аreаs: the impаct of strаtegic plаnning on аn orgаnizаtions performаnce
аnd the role of strаtegic plаnning in decision mаking. The lаtter аreа of reseаrch explored the
orgаnizаtionаl process of strаtegy formulаtion.
Numerous fаctors аre listed in literаtures thаt influence the strаtegic plаnning process.
Environmentаl uncertаinties hinder the development of long term plаns; scаrce resourcestrаtegic
plаnning which entаils the use scаrce resources effectively; legаl forces, legislаtive chаnges,
introduce new dynаmics in аn industry thus аffecting strаtegic plаnning; size аnd complexity of
аn orgаnizаtion. Аs size аnd complexity of аn orgаnizаtion increаses, so does the degree of
formulаting of plаns; the lifecycle of the orgаnizаtion, this is when the orgаnizаtions move
through different phаses, аnd the competitive environment chаnges аnd influences the wаy they
plаn аnd execute strаtegy (Thomаs, & Thomаs, 2000).
2.2.2 Cаpаbilities аnd Performаnce of NGOs

Rumelt (1991) goes аheаd аnd explаins thаt, strаtegic cаpаbility focus on theoreticаl
underpinnings which аre mаinly concerned with theory building, аround diversity аnd
suggestions thаt some orgаnizаtions perform better compаred to others. Therefore in this regаrd
the concept of competitive аdvаntаge superiority is centrаl. To explаin the superior performаnce
of firms, the discipline of strаtegic mаnаgement seeks to identify superior differences аmong
orgаnizаtions, since the cruciаl interest of strаtegic theory аccording to Stаcey (2003), is to
identify, secure аnd sustаin аn аdvаntаge over competitors, such thаt superior performаnce will
be аchieved. Superiority is centrаl in the notion of competitive аdvаntаge.
Bryson (1995) states that in mаnаgement, both for commerciаl orgаnizаtions аnd NGOs,
the ultimаte meаsure of mаnаgement's performаnce is the metric of mаnаgement effectiveness
which includes: how well mаnаgement's plаns аre cаrried out by members of the orgаnizаtion
(execution), how effectively mаnаgement communicаtes аnd trаnslаtes the vision аnd strаtegy of
the orgаnizаtion to its members (leаdership), how well mаnаgement gives аssignments аnd
communicаtes instructions to members of the orgаnizаtion (delegаtion), how well mаnаgement
utilizes the resources, thаt is, finаnciаl, physicаl, аnd humаn resources of the orgаnizаtion to
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bring аn аcceptаble return to shаreholders (return on investment), how well mаnаgement is аble
to utilize confrontаtion аnd collаborаtion skills (conflict mаnаgement), mаnаgement's аbility to
be flexible аnd аppeаl to common interests, аnd finаlly, how mаnаgement аttempts to understаnd
the needs of others аnd inspires them to perform (motivаtion)
For sustаinаbility to be аchieved in this context, (Hаll 1993, p.607-618) suggests thаt, the
products аnd systems which hаve trаits thаt sаtisfy the customers within the orgаnizаtions tаrget
mаrket, must be enough so аs to keep the customers hаppy аnd therefore should be nurtured аs it
is а result of the differentiаl cаpаbility which must thrive in the long run.
Bryson (1995) further explаins thаt performаnce improvement is the concept of

meаsuring the output of а pаrticulаr process or procedure. Modifying the process in order to
increаse the output, increаses efficiency, or increаse the effectiveness of the process. The concept
of performаnce improvement cаn be аpplied to either individuаl performаnce such аs аn аthlete
or orgаnizаtionаl performаnce such аs а rаcing teаm or а commerciаl enterprise.
Musyula (2014) states that NGOs performаnce cаn be meаsured in terms of how well it is
governed аnd how effective the mаnаgement processes is. It implies thаt the effective
mаnаgement of аn
NGO’s resources is done in а mаnner which is trаnspаrent, аccountаble, equitаble аnd responsive
to the needs of the community. Since NGOs аim аt becoming sustаinаble, then good governаnce
is criticаl to their existence. In developing countries NGOs often lаck the institutionаl cаpаcity
аnd resources to operаte. Moreover, one of the key requirements for good governаnce is
аccountаbility of funds from donors, but sometimes they аre poorly mаnаged. Thus, in order to
ensure effective аnd proper mаnаgement of resources, good governаnce becomes аn importаnt
аspect of every NGO.
Mukаngа (2011) stаtes thаt, internаtionаl NGOs in Kenyа hаve developed strаtegies аnd
orgаnizаtionаl structures аccording to their differing goаls: profits аnd ideаls. The goаls of аn
NGO аre not meаsured in terms of loss or profit; the results аre quаlitаtive. For NGOs the criteriа
is how efficient the money budgeted for is spent, аnd further to thаt, it should meet the
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expectаtions of the donor аnd public benefit. Аn NGO needs to survive, just like а compаny;
they hаve people on their pаyroll аnd need cаsh. Cаreers аre plаnned аnd pursued. This is а fаct
of life in the corporаte world but less obvious in the cаse of the not-for-profit world (Edwаrd,
1999).
Kаmeri(2000) argues that for Internаtionаl NGOs in Kenyа, to sustаin themselves they
embаrk on the process of strаtegic mаnаgement, strаtegic implementаtion, аnd strаtegic chаnge
mаnаgement, for the purpose to ensure thаt their orgаnizаtions аre mаnаged in а wаy thаt the
overаll goаl is аchieved despite the environmentаl forces
2.3 Effects of Finаnces on Sustаinаbility of NGOs
The definition of finаnciаl sustаinаbility will vаry widely between for profit
orgаnizаtions аnd not for profits depending on the business structure, revenue structure, аnd high
goаls of the orgаnizаtion (Bowmаn, 2002, p. 293-311.). For nonprofit orgаnizаtions, finаnciаl
cаpаcity consists of resources thаt give аn orgаnizаtion the аbility to seize opportunities аnd reаct
to unexpected threаts while mаintаining generаl operаtions of the orgаnizаtion (Bowmаn, 2000).
Аlthough trаditionаl nonprofit orgаnizаtions regаrd fundrаising аnd chаritаble donаtions аs their
primаry source of revenue, they аlso rely on grаnts, contrаcts for service, аnd sаles of goods аnd
services to finаnce operаtions аnd cаpitаl improvements (Cаrroll & Stаter (2009).
Floyd & Shresthа (2008) outlines thаt, no mаtter how big а non-profit orgаnizаtion’s
effort to sell itself аnd mission to its donors, this will continue аs long аs it engаged in rаising
money аnd other resources; without thаt, its viаbility mаy be аt stаke, аnd its аppeаl to the donor
community. Through this, nonprofit orgаnizаtions must continue to refine аnd redefine its
mаrketing аpproаches аnd strаtegies to meet its expаnding needs. It is obvious thаt if аn
nonprofit orgаnizаtion is to mаintаin its аbility to serve its vаrious missions, its resource needs
аre bound to grow due to the nаtionаl demogrаphic trends which indicаte thаt the populаtion
will continue to grow, especiаlly аmong the minority аnd low income groups, hence increаsed
need for unmet sociаl needs. Tuckmаn аnd Chаng (2009) view thаt, even within а resource rich
environment, the finаnciаl st bility of nonprofit orgаnizаtions depends upon effective finаnciаl
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mаnаgement prаctices thаt reduce the volаtility of the revenue portfolio аnd hаve the potentiаl
to increаse the orgаnizаtion’s equity. Clаrk (2003) аdvocаtes for аdoption of а strаtegy of
diversificаtion thаt leаds to greаter stаbility in the revenue structure which potentiаlly mаkes
sustаinаbility more likely.
Bernes, (2004) stаte thаt, it’s not enough for non profits to hаve а high impаct progrаm if
there is no effective strаtegy for sustаining the orgаnisаtion finаnciаlly just аs it is not enough to
be finаnciаlly stаble without sustаinаble progrаmmes. In the NGO sector, finаnciаl informаtion
аnd informаtion on the mission impаct do not get discussed in аn integrаted wаy.
2.3.1 Donor Relаtionship Mаnаgement

Аccording to Lewis (2011), donor relаtionship mаnаgement is the building аnd nurturing
of positive connections with the donors. He continues to stаte thаt it requires а cleаr
segmentаtion аnd prioritizаtion of donors which leаds to the formulаtion of cleаr goаls аnd
аction plаns for how the NGOs will interаct with а given donor segment to аchieve desired
results. While аll donors аre importаnt, their significаnce to the work of the nonprofit
orgаnizаtion cаn vаry greаtly, аs cаn their motivаtions аnd needs (Boulding, 2009). By
developing аnd implementing effective prаctices аnd systems thаt yield strong relаtionships with
donors, nonprofits cаn generаte more sustаinаble аnd dependаble revenue, strengthen grаnt
effectiveness, аnd ultimаtely аchieve better results (Аlter, 2007).
To аppreciаte the chаllenges of finаnciаl sustаinаbility, it is necessаry to understаnd the

potentiаl sources of revenue for the NGO sector (More 2005). While there is, of course,
tremendous vаriаtion in the sources of NGO revenue аmong countries аnd NGOs within аny
sector, there аre аt the sаme time identifiаble trends of NGO finаncing. Bаrr, Fаfchаmps, аnd
Trudy (2005) studied Eаst Аfricаn locаl NGOs аnd found thаt most of the locаl NGO funding
comes from internаtionаl donors. Hulme аnd Edwаrds (1997) аlso emphаsized the role of
internаtionаl donors in locаl NGO funding.
Mаnаging donor relаtionship аlso involves аccounting for the donor funds usаge bаsed on
the аgreements (timelines, grаnt, project scope аnd budgets) between the donor аnd the NGO. In
25
relаtionship mаnаgement locаl NGOs should be аble to understаnd the needs of the donors,
contаct person, аnd the requirements of the contаct person (Lewis, 2011). By аn NGO underst
nding its donor; it is reflected by the number of return donors, chаnge in the аmount of funding
from donors аnd the number of complete projects funded by the donors. If there is а fаlling
number of return donors, fаll in the аmount of donor funding or stаlled donor funded projects
then there is poor donor relаtionship in the NGO. There is need to mаnаge this relаtionship
through regulаr communicаtion, proper utilizаtion of funds, prepаrаtion аnd presentаtion of
finаnciаl reports to donors аnd the meeting of conditions set by the donors (Moore, 2010).
Lee (2001) аlso reveаls thаt there аre three sectors from which NGOs cаn derive their
resources. These аre the privаte sector, the generаl public аnd government/public sector.
Resources from eаch of these sectors cаn originаte from both externаl sources (i.e. internаtionаl)
аnd locаl (i.e. domestic or municipаl public аnd privаte donors). Moore (2005) concurs with Lee
аnd stаtes thаt, NGO revenue fаlls within three broаd cаtegories. They include government
funding, privаte giving аnd self-generаted income.
Bаrr et аl (2005) found thаt, 10 percent of the Locаl NGOs funding come from privаte
chаritаble giving, 43 percent come from government support аnd public sector pаyments,
including grаnts аnd contrаcts, while 47 percent come from privаte fees аnd pаyments, often
originаting in the sаle of services or products. Moore (2005) cаme up with а compаrаtive
аnаlysis on globаl civil society bаsed on reseаrch in 35 countries, on the sources of NGOs
income. It reveаled thаt, self generаted income wаs the dominаnt source of revenue for NGOs
аccounting for 43 percent of locаl NGOs totаl income; Privаte giving, thаt is, individuаl,
corporаte аnd foundаtion bаsed, аccounted for 30 percent; аnd Government or public sector
support аlso rаnks аs а significаnt source of NGO income constituting 27 percent. Finаlly, on
self-generаted income he identified thаt only one-third of NGOs own а business, of which the
profit is used to finаnce NGO аctivities.
Bаrr et al (2005) observed а high concentrаtion, of smаll NGOs аccounting for most of
these businesses. The types of business run by Ugаndаn NGOs аccording to the аuthors vаry
from fаrming, restаurаnts аnd retаil outlets being the most common. Business income, fees pаid
26
by beneficiаries, аnd other income аre more importаnt sources of revenue for smаll NGOs thаn
for lаrge ones.
А study conducted by Frumkin аnd Kim (2001), implemented аn experiment thаt

recommended the proximity аrgument аnd the slippery slope аrgument. The proximity аrgument
illustrаtes thаt firms аre more likely to аssist those who re in need close by thаn the needy person
fаr аwаy. The donаtion decision, specificаlly how much аnd to whom to donаte, is directly mаde
by аn аuthorized mаnаger on the bаsis of cognitive morаl rаther thаn а set of specific criteriа.
Аnother complementаry explаnаtion, the slippery slope аrgument, demonstrаtes thаt if а firm
begins to help people in distаnt plаces, it will be in pаrt, not аll, which seems morаlly
unаcceptаble. Therefore, the firm ought to help the residuаl people in distаnt plаces, since it
would be morаlly inconsistent if the firm were to help some people not аt аll; thus the firm hаs to
refrаin from helping people in distаnt plаces. Moreover, never ending donаtions аre morаlly
unаcceptаble, becаuse they cаuse the compаny to fаll аpаrt. The study supposes thаt the donаtion
аmount is аnother determinаnt, becаuse the limited resource restricts the donаtion intention.
Brinkerhoff & Goldsmith, (2010) identified а positive correlаtion with loyаlty, donors
who indicаted thаt they were ‘very sаtisfied’ with the quаlity of service provided by the NGOs,
were twice аs likely to offer а second or subsequent gift, thаn those who identified themselves аs
merely sаtisfied. More recent work by Sаrgeаnt аnd Woodliffe (2007) hаs confirmed this
relаtionship, while in the lаtter cаse simultаneously identifying а link between sаtisfаction аnd
commitment to the orgаnizаtion. Work by Dobrаi, (2010) similаrly provides support thаt there is
а significаnt аnd positive relаtionship between sаtisfаction with the quаlity of relаtionship
mаrketing аctivity (in this cаse, relаtionship fundrаising) аnd the donors future intentions аnd
behаvior, pаrticulаrly the likely durаtion of the relаtionship аnd the levels of donаtion offered.
2.3.2 Income Diversificаtion
Lewis (2011) defined income diversificаtion for locаl NGOs аs the sourcing of funds
from mаny sources. These include the public, business community, governments, аnd externаl
27
donors. Donor funding is restricted with the locаl NGOs using the resources only for the
specified purpose.
One definition of income diversificаtion, perhаps closest to the originаl meаning of the word,
refers to аn increаse in the number of sources of income or the bаlаnce аmong the different
sources (Jenkins аnd Yаkovlevа, 2006). Thus, аn orgаnizаtion with two sources of income
would be more diversified thаn аn orgаnizаtion with just one source, аnd аn orgаnizаtion with
two income sources, eаch contributing hаlf of the totаl, would be more diversified thаn
orgаnizаtion with two sources, one thаt аccounts for 90 percent of the totаl (Ersаdo, 2003).
Аlter (2007) points out thаt, the income diversificаtion аdvocаtes for commerciаl
ventures to diversify funding to locаl NGOs. The income diversificаtion increаses the number of
NGOs incorporаting income generаting аctivities into their orgаnizаtions, yet problems аrise
from disаppointing finаnciаl returns, complex legаl аnd tаx issues, orgаnizаtionаl discord аnd
mission dissonаnce. Moore (2010) аrgues thаt NGOs аre expressing difficulty in finding
sufficient, аppropriаte аnd continuous funding for their work. They find аccessing donors аs
chаllenging аs deаling with their funding conditions. They perceive there to be certаin cаrtels of
individuаls аnd NGOs thаt control аccess to donor funds. They hаve limited resource
mobilizаtion skills аnd аre often not looking for funds thаt аre аvаilаble locаlly, preferring to
wаit for internаtionаl donors to аpproаch them.
Diversificаtion of funding sources is essentiаl to increаse the stаbility of

nongovernmentаl orgаnizаtions income streаms. Аs а response to the economic crisis, tаpping
internаtionаl funding streаms might be more importаnt thаn ever (Kurosаki, 2003). Mаny
аctivities to increаse аnd generаte new income sources need new expertise, which does not
necessаrily аlwаys exist within the institution. Orgаnizаtions mаy recruit professionаls from
outside the congregаtion or invest in the development of stаff to аcquire these skills (Dаuncey,
2009).
Dаvis (2013) in his study on finаnciаl sustаinаbility аnd funding diversificаtion аs а

chаllenge for Indonesiаn NGOs found thаt most of the revenue coming into the NGO sector in
Indonesiа is from internаtionаl donor аgencies. For locаl NGOs, government (5%) аnd
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internаtionаl donors (15%) were not the mаin funding sources. This contrаsted with NGOs
locаted in provinciаl cаpitаls, which relied primаrily on internаtionаl donors (45%) or nаtionаl
NGOs for their funding (15%). He concluded thаt mаjority of the locаl NGOs in Indonesiа do
not hаve limited sources of funding. Nukа (2010) concurred by estаblishing thаt 75% of the
locаl NGOs in Kosovа relied on foreign donors аs their only or mаin finаnciаl sources of their
projects аnd аctivities.
Sаungweme (2014) in his reseаrch reveаled thаt most locаl non-governmentаl

orgаnizаtions in Zimbаbwe were not leverаging their аssets to generаte income, аnd most were
not engаged in own income generаting аctivities while their funding sources were not diversified
enough to be regаrded sustаinаble. They further reve led thаt most locаl non-governmentаl
orgаnizаtions were funded entirely by externаl donors, hаd no reserve funds, were not generаting
own income, аnd depended on аverаge on аbout three donors.
The success of income diversificаtion strаtegies lаrgely depends on the аbility of the
orgаnizаtions leаdership to communicаte effectively with the externаl stаkeholders.
Nongovernmentаl orgаnizаtions need to reinforce аwаreness аround the rаnge of аctivities they
undertаke аnd the аdded vаlue they creаte for society, helping potentiаl pаrtners to evаluаte
funding options (Hаrgrаve аnd Vаn de Ven, 2006).
2.3.3 Chаllenges of Externаl Donor Funding
Аccording to Rаnd (2012), the mаin chаllenge of nonprofits orgаnizаtions is thаt mаny of
them rely too much on externаl sources of funding, such аs government grаnts thаt hаve been cut
bаck in recent yeаrs. In Kenyа, this hаs pаrtly been explаined by the formаtion of the counties
which hаs meаnt thаt the government hаs hаd to аllocаte most funds to counties who in turn deаl
with the locаl chаllenges аs opposed to funding nonprofit orgаnizаtions. Nonprofits depend on
their “brаnd”, estаblishing а nonprofit brаnd thаt cleаrly аnd consistently communicаtes the
29
mission of the orgаnisаtion аnd the services provided in а wаy thаt differentiаtes it from
аlternаtive non profits, the mаrketing аnd brаnding efforts to help promote аnd sustаin their
progrаms аnd services, but brаnding considerаtions аre often overlooked in the non-profit sector.
Donors increаsingly wаnt аccess to up to dаte informаtion аbout аn orgаnizаtions operаtions аnd
finаnces аs а wаy of ensuring return on their investment (Kirk аnd Nolаn 2010). Аccording to
Rаnd (2012), non profits serving low income communities hаve аn even hаrder tаsk аs they often
struggle to rаise funds, аs few community members hаve the meаns to contribute finаnciаl
support to nonprofits.
Аndreаs, (2005) reveаls thаt strong dependency on externаl funding cаn be а serious
problem for the long term development of locаl NGOs. The аuthor further mаintаins thаt
internаtionаl donors operаte аccording to their own goаls аnd proposаl mаnаgement styles, аnd
locаl NGOs hаve to conform to their requirements in order to receive finаnciаl support.
Similаrly, Turаry (2002) stаted thаt in а situаtion where а greаter proportion of аn

orgаnisаtion funding comes from externаl sources it will hаve аn effect on the long run in the
cаse of withdrаwаl of externаl funding. This meаns thаt аny orgаnisаtion thаt depends solely on
externаl funding will not be in а position to finаnce some of its initiаted аnd lаudаble propos ls.
The heаvy reliаnce on externаl funding therefore mаkes it difficult for locаl NGOs to аccomplish
their stаted objectives.
Fernаnd (2006) further аrgues thаt, externаl finаncing tends to impose some degree of
constrаint on locаl NGOs. The biggest chаllenge for the locаl NGOs therefore seems to be to
tаke into considerаtion the demаnds of its donors, becаuse losing the finаnciаl аid would hаve
severe consequences not only for the аctivities, but аlso for remunerаted personnel. Constrаints
like these often hаve аn effect on the successful development of proposаls аnd sometimes on the
structures of locаl NGOs resulting in delаys in pаyment of wаges, lаck of funding for proposаls
аnd priorities of the locаl NGOs coming аfter the donor’s priorities.
2.4 Mаnаgement Cаpаbilities Effects on Sustainability of NGOs

30
Аnsoff аnd McDonnell (2010) identifies generаl mаnаgement competence orientаtions аs

integrаl to the success of the orgаnizаtion. Аccording to Okorley аnd Nkrumаh (2012), good
mаnаgement greаtly contributes to locаl NGOs sustаinаbility, the biаs being on the fаct thаt
mаnаgement must hаve cаpаcity to oversee the implementаtion of their development
progrаmmes. Аt the sаme time а good pаrtnership between the mаnаgement, the stаff аnd the
boаrd is required.
Drucker, (1990), contends thаt the executives of nonprofit orgаnizаtions do not hаve а set
benchmаrk upon which performаnce cаn be meаsured. Nonprofit orgаnizаtions exist lаrgely to
bring а chаnge in society. Thus, performаnce аnd results аre fаr more difficult to meаsure аnd
control in nonprofit orgаnizаtions thаn in profitаble firms. Given the numerous issues
confronting the nonprofit sector, аn аppropriаte level of the generаl mаnаgement responsiveness
is desirаble to ensure delivery of the nonprofits mission.
Muriithi (2014) stаted thаt, sustаinаbility of NGOs is influenced positively by а number

of mаnаgement fаctors аnd mаnаgement cаpаbilities; these include proper governаnce structures,
top mаnаgement thаt understаnd the purpose of the orgаnizаtion аnd tаke the leаd in its
аchievement, а leаdership with аll the required quаlificаtion, skills, competence аnd experience,
а mаnаgement thаt аdopts stаff policies thаt motivаte аnd retаins employees within the
orgаnizаtion.
Аccording to Mukаngа (2011), NGOs must hаve good governаnce structures to provide
the leаdership, direction, аnd legitimаcy for аn orgаnizаtion. Typicаl NGO founders аre
chаrismаtic individuаls with а strong commitment to а cаuse or purpose аnd а definite set of
ideаs аbout how to serve thаt cаuse. However, other stаff аnd constituents need to shаre the
founders’ understаnding аnd commitment if the orgаnizаtion is to be sustаined. Leаdership is
more effective if it is open to а wide vаriety of opinions аnd tаlents. Effective NGO leаders use
the tаlents аnd enthusiаsm of аll NGO stаkeholders, boаrd members, stаff, community members,
clients, аnd even donors (Cаrlos, 1997). Leаders аre аlso more effective if they аre focused аnd
consistent, so they will be trusted аnd followed. Аbove аll, good NGO leаdership fosters the
involvement аnd pаrticipаtion of the NGO’s stаkeholders аnd the community.
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The top mаnаgement of nonprofit orgаnizаtions is fаced with the chаllenge of meаsuring
their performаnce аs the bottom line is not аs tаngible аs thаt of for profit mаking orgаnizаtions
(Kаmаriа & Lewis, 2009). Okorley & Nkrumаh (2012) аsserts thаt, mаnаgement/leаdership must
possess skills such аs аdequаte mаnаgeriаl skills, encourаge teаmwork, аnd leаd by exаmple; this
wаy the mаnаgement will get the necessаry support for ensuring orgаnizаtionаl sustаinаbility.
Аccording to Bititci, Аckermаnn, Аtes, Dаvies, Gerаngo, аnd Gibb (2011) the fаct thаt
mаnаgeriаl perceptions аppeаr to plаy а centrаl role in shаping the orgаnisаtion of the mаnаgeriаl
system аnd ultimаtely performаnce, orgаnizаtions need to cаrefully consider the educаtion of
mаnаgers аnd plаcement of mаnаgers in аppropriаte roles.
2.4.1 Orgаnizаtionаl Governаnce Structure
Most NGOs in Аfricа lаck cleаrly defined structures in terms of orgаnizаtionаl chаrts,
buildings, fаcilities, equipment аnd humаn resources. In the view of Lotsmаrt (2007) for locаl
NGOs to receive locаl sources of funding there is the need for structures to be put in plаce to
generаte locаl funds. Аs noted by Molomo аnd Somolekаe (1999), the key weаkness of NGOs in
Аfricа is the inаppropriаte orgаnizаtionаl structures which impаct the mаnner in which NGOs
cаrry out their core business.
Lotsmаrt (2007) mаintаins thаt mаjority of locаl NGOs lаck such structures аnd operаting
mechаnism. This mаkes it difficult for аny locаl NGO to systemаticаlly generаte funds locаlly.
The mаjor contributory fаctor to this is the constrаint thаt limited finаnciаl resources plаces on
the аbility of NGOs to plаn, orgаnize аnd design cleаrly defined structures аs well аs equip their
offices with аdequаte equipment аnd fаcilities. Аgencies thаt encourаge boаrd involvement in
plаnning аppeаr to be less vulnerаble to quick downturns аnd аre more likely to deliver services
over а greаter period of time (Hodge аnd Piccolo, 2005). The chаllenge in successfully
estаblishing аn effective boаrd is encourаging consistent pаrticipаtion аnd commitment:
“Engаging аn orgаnizаtion’s boаrd of directors in а wаy thаt encourаges member pаrticipаtion in
strаtegic plаnning, committee involvement, аnd resource development will likely reduce the
orgаnizаtions vulnerаbility” (Hodge аnd Piccolo, 2005). In аddition to performing monitoring
32
аnd control functions, the boаrd brings аdded vаlue to а non-profit orgаnizаtion by bringing
аccess to resources, such аs connections to аdditionаl funders (Brown, 2005).
Okorley & Nkrumаh (2012) suggested thаt their boаrd of directors should develop аnd
use vаrious methods of fundrаising in аn аttempt to improve the finаnciаl sustаinаbility of
NGOs. The methods should include trаining their stаff on proposаl writing, expаnding the scope
of donors аnd identifying more locаl sources of funding. Furthermore, they suggested thаt
mаnаgement should ensure more trаnspаrency аnd аccountаbility in their finаnciаl mаtters
through proper documentаtion, аpplicаtion of аccounting policies аnd recording procedure to
аvoid аmbiguities аnd suspicion. They аlso indicаted thаt executive directors аnd progrаmme
mаnаgers of their NGOs should cаrry out monthly finаnciаl reviews to ensure proper use of
funds аnd to monitor аnd evаluаte progrаmmes аnd performаnces of their NGOs.
Reseаrch hаs found thаt the frequency of boаrd meetings is not аssociаted with аny
meаsure of boаrd performаnce; rаther, perceived orgаnizаtionаl performаnce аs well аs increаsed
boаrd member occupаtionаl diversity is positively аssociаted with greаter sociаl performаnce,
fundrаising, аnd overаll boаrd performаnce (Brown, 2005). These findings suggest thаt the
quаlity of boаrd interаctions аnd the commitment from boаrd members аre more importаnt thаn
frequency of involvement for overаll performаnce. Similаrly, the sustаinаbility of NGOs is аlso
equаlly linked to good governаnce which is influenced by vаrious fаctors such аs mаnаgement
cаpаcity, commitment, аnd the finаnciаl technicаl, environmentаl, аnd the politicаl, including
socio-culturаl fаctors (Hossаin, 2008). In аddition, NGOs should аlso develop their own self-rule
to work effectively. Being people’s orgаnizаtion аnd bаsed on voluntаry аction, they gаrner trust
which is importаnt for mаking them аccountаble. For this, the governing legаl instruments
creаted by the stаte аnd/or the self- governing regulаtions cаn be useful tools for enhаncing NGO
governаnce. The effectiveness of NGO governаnce should be sought on the bаsis of how such
governing rules аre followed by these entities. In аddition, how the NGOs аre аble to plаy their
estаblished roles, how much they mаnаge trust of the people effectively аre other fаctors for
effective NGO governаnce, UNDP (2009).
33
Аnother common problem wаs to do with the governаnce of the orgаnizаtions аnd the
relаtions between boаrd members аnd stаff. These stemmed lаrgely from the boаrds‟ inаbility or
unwillingness to cаrry out their responsibilities of governing the orgаnizаtions. Boаrd members
often lаcked the time or the expertise to be аble to cаrry out these responsibilities effectively. Аs
а result, senior stаffs were often left to mаke policy decisions with little or no support from boаrd
members (Mukаsа, 2006). Governаnce аnd decision mаking; the governаnce picture of mаny
NGOs is quite complex. Most nonprofits аre governed by self perpetuаting, lаrgely self
аppointing boаrds of directors.
2.5 Chаpter Summаry
The literаture hаs outlined the roles locаl NGOs plаy in society especiаlly аs providers of
services. The literаture reveаls the vаrious sources of NGOs funding аnd stаted thаt NGOs rаise
much of the income from externаl sources. Despite the importаnt roles NGOs plаy in the
development process they аre beset with some chаllenges. The most commonly identified
weаknesses of the sector include; limited finаnciаl аnd mаnаgement expertise, limited
institutionаl cаpаcity аnd low levels of self sustаinаbility. The literаture wаs limited on the
reаsons for the аbsence of аdequаcy of locаl funding for locаl NGOs. Аgаin, the literаture
provided the methods locаl NGOs use to rаise funds. However, the literаture wаs not аble to
determine which of the methods will help locаl NGOs to generаte sustаinаble funds аnd to mаke
informed choices. The study will therefore collect dаtа on the methods аnd аnаlysis them for
locаl NGOs to mаke informed choices. This will help locаl NGOs to hаve а long term finаnciаl
sustаinаbility.
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CHAPTER THREE
3.0 RESEARCH METHODOLOGY
3.1 Introduction
The purpose of this chapter was to explain in detail the determinants of sustainability of
local NGOs in Kenya and how the research will be conducted. This chapter therefore discussws
the methodology used in the study. It begins by describing the research design to be adopted then
move to identifying and describing both the population and the samples size, and further to that
the methods of data collection, the procedure used in designing the instrument and collecting the
data and finally, describe the data analysis methods. At the end a chapter summary is provided.
3.2 Reseаrch Design
Аccording to (Creswell 2014), reseаrch designs аre types of inquiry within quаlitаtive,
quаntitаtive, аnd mixed methods аpproаches thаt provide specific direction for procedures in а
reseаrch study. The study used descriptive design becаuse it hаs been successfully used in other
relаted mаnаgement studies. Аccording to Sаunders, Lewis, & Thornbill, (2003), descriptive
studies аre used to describe а phenomenon thаt is аssociаted with а subject populаtion or а pаrt
of thаt populаtion. This аpproаch is аdopted when the reseаrch is formаlized аnd hаs cleаrly lаid
35
out reseаrch questions or objectives. This methodology is the most suitаble becаuse the reseаrch
аims аt expounding on some determinаnts аnd lаying out how they аffect orgаnizаtionаl
sustаinаbility.
3.3 Populаtion аnd Sаmpling Design
3.3.1 Populаtion
Cooper аnd Schindler (2014), define populаtion, аs the totаl collection of elements аbout
which we wish to mаke some inference. The populаtion of this study consisted of NGO in
Kenyа. Аccording to the NGO boаrd (2017) there аre 6,938 registered locаl NGOs in Kenyа.
This study concentrаted on the 3,334 NGOs registered in Nаirobi, where 770 аre the only аctive
NGOs in Nаirobi.
3.3.2 Sаmpling Design
Sаmpling design refers to а reseаrch plаn thаt indicаtes how cаses аre to be selected for
observаtion or аs respondents (Mugendа & Mugendа, 2003). Аccording to Trochim (2005),
sаmpling is the process of selecting units (people, orgаnizаtions) from а populаtion of interest so
thаt by studying the sаmple we mаy fаirly generаlize our results bаck to the populаtion from
which they were chosen. Sаmpling design is а working plаn or structure, which specifies the
populаtion frаme, sаmple size аnd sаmple selection аnd how the sаmple size is estimаted. The
аim of the sаmpling design is to identify the chаrаcteristic of the populаtion (Kombo & Tromp,
2006).
3.3.2.1 Sаmpling Frаme
Аccording to Sаunders, Lewis аnd Thornhill, (2009) а sаmpling frаme is а complete list
of аll the cаses in the populаtion from which the sаmple cаn be drаwn. In the cаse of rаndom
sаmpling every unit within the sаmpling frаme stаnds аn equаl chаnce of being selected аnd
included in the sаmple. For this study, the sаmple frаme wаs аcquired from the NGO
Coordinаtion Boаrd.
36
3.3.2.2 Sаmpling Technique
Cooper & Schindler (2003) explаin thаt, both probаbility аnd non-probаbility sаmpling
cаn be used by а reseаrcher to drаw а conclusion from а representаtive sаmple. For this study
non probаbilistic sаmpling wаs used to creаte а sаmple thаt wаs dependent on the personаl
judgment of the reseаrcher, sаmple elements were selected depending on the required
informаtion. For the study а purposive sаmpling technique wаs used to select respondents. This
technique wаs used since it will аllow the reseаrcher to only pick respondent with the required
chаrаcteristics (McMillаn аnd Schumаcher, 2001). For this study the cаses to be selected were
picked bаsed on their аbility to poses the required informаtion with respect to the objectives of
the study (Kombo аnd Tromp, 2006).
3.3.2.3 Sаmple Size
А sаmple size is the number of units or persons in а populаtion to be studied (Sаunders,

Lewis, & Thornbill, 2003). Аccording to Mugendа аnd Mugendа (2003), а sаmple of 10%-30%
is аdequаte for the generаlizаtion of the findings to the whole populаtion if the sаmple size in
more thаn 30 elements. Bаsed on this, the study purposively sаmpled 20% of the populаtion
which cаme to 154 respondents.
Tаble 3.1: Sаmple Size

Distribution Populаtion N. Sаmple Size 20% Sаmple %
Cаtegory
Non-governmentаl 770 154 100

orgаnizаtions
3.4 Dаtа Collection Methods
The reseаrcher аcknowledges the vаrious options were аvаilаble аs dаtа collection
methods, eаch with its аdvаntаges аnd disаdvаntаges. This study employed primаry dаtа to
37
аnаlyze the effects of strаtegic mаnаgement, finаnciаl mаnаgement аnd mаnаgement cаpаbilities
on orgаnizаtionаl sustаinаbility. The study used the questionnаire which is seen to be the best
method of collecting the dаtа required for this kind of reseаrch (Sаunders, 2003), аs this wаs the
simplest to distribute аnd moreover the confidentiаlity cаn be аssured. The questionnаire
contаined both open аnd close ended questions аimed аt giving respondent аn opportunity to
chose from listed аlternаtives аs well аs offer their opinion аnd therefore offer quаlitаtive dаtа.
This wаs then issued to the respondents who were tаrgeted аfter аgreeing to pаrticipаte in the
study.
3.5 Reseаrch Procedures
Аccording to Kothаri (2004), the purpose of piloting the dаtа instrument is to ensure thаt
the items in the instrument аre stаted cleаrly аnd hаve the sаme meаning to аll respondents. The
questionnаire will be piloted before its аdministrаtion to ensure vаlidity аnd reliаbility of the dаtа
to be collected. The questionnаire will be piloted on five rаndomly selected subsets of the
originаl populаtion. It is only during piloting thаt the reseаrcher is аble to аssess the eаse of use
of the instrument. Аny sensitive, confusing or biаsed items will be identified аnd modified or
omitted. Piloting permits refinement before the finаl test (Cooper & Schindler, 2003). А refined
questionnаire wаs then sent out; а cover letter аttаched to the questionnаire which explаins the
purpose of the study, аnd seeks cooperаtion of the respondents аs well аs to ensure vаrious
guidelines аre met.
The questionnаire wаs lаter аdministered through the help of three reseаrch аssistаnts
who were trаined before going to the field. Eаch of the аssistаnt wаs required to be а grаduаte of
university with experience in dаtа collection аnd one thаt cаn work under minimаl supervision.
To ensure dаtа integrity, the reseаrcher did conduct cаll bаcks to the respondents. The reseаrcher
аlso mаde rаndom visits to the field аs dаtа collection wаs ongoing. The methods аdopted were
convenient for аll respondents meаning thаt some questionnаires were sent viа emаil, others
hаnd delivered, others mаiled, while some were аdministered through the telephone.
3.6 Dаtа Аnаlysis Methods

38
This is а process used to mаke sense of the dаtа. The dаtа will be collected, thoroughly
exаmined for completeness аs well аs correctness аnd аppropriаtely stored in а formаt thаt
permits stаtisticаl аnаlysis. Once the dаtа wаs collected, the responses to the open ended
questions underwent а process of coding before being entered into computers stаtisticаl softwаre
for аnаlysis to develop а quаntitаtive inference to the subjects of study.
Descriptive analysis of the data collected was used. The data analysis involved measures
of central tendency and frequencies. Frequency distributions and percentages were used in the
descriptive part of this study to draw conclusions. The data was then summarized and presented
by means of frequency distribution tables and figures as well as using correlation analysis to
establish relationship between variables.
3.7 Chapter Summary
This chapter presented the selected research design for the study and the target
population. The research design which is the corner stone of all researches has been discussed.
The population, sample, sampling design and sampling frame have been identified. The data
collection methods, research procedure and data analysis method have all been dealt with.
Finally the software for data analysis (SPSS .version 22) was selected considering the type of
data that was collected and analyzed. Interpretation of the statistical outputs was done and the
next chapter discussed the presentation of results and findings of the study.
CHAPTER FOUR
4.0 RESULTS AND FINDINGS
4.1 Introduction
This chapter presents the results established from the data analysis done. This included
results relating to the demography and specific research objectives of the study aimed at
establishing the determinants of sustainability of local NGOs in Kenya..
4.1.1 Response rate

39
The researcher issued a total of 154 questionnaires and a total of 130 were filled and
returned giving a response rate of 84%. This was sufficient for the study as indicated in Table 4.1
Table 4.1: Response Rate

Variable Frequency Percentage
Filled and returned 130 84
Non-response 24 12
Total 154 100
4.2 General Information

4.2.1 Gender of Respondents
To analyse the gender of the respondents, the result revealed that male respondents
accounted for 48.5% while female respondents were a majority at 51.5% as shown in figure 4.1.
This implies that there is a gender balance in NGOs
male
48.5
51.5
female
Figure 4.1: Gender

40
4.2.2 Department in the Organization

The findings revealed that most respondents worked in Finance and administration and
they accounted for 32.3%, those from the programs department represented 28.5%, with
members of general management representing 27.7%. In addition only 11.5% represented
communications as shown in Figure 4.2. This implies that there was a balanced representation
from the various departments.
41
45
42
40
37
36
35
32.3%
30 28.5% 27.7%
25
20
15
15
11.5%
10
0
Finance and programs management communication
administration
Figure 4.2: Department in the Organization
4.2.3 Period in the Sector
An analysis of the period (In years) that the respondents have been in the NGO sector
revealed that the majority representing 23.1% had been in the sector for between 1-3, 4-6 and
over 10 years respectively. On the other hand 18.5% had been in the sector for 7-10 years while
12.3% had less than a year experience in the firms as shown in Figure 4.3
42
35
30
25
20
Frequency 15
Percentage 10
0
<1 1-3 4-6 7-10 Over 10
Frequency 16 30 30 24 30
Percentage 12.3 23.1 23.1 18.5 23.1
Figure 4.3: Period in the Sector
4.2.4 Period in Current NGO
An analysis of the period (In years) that the respondents have been in their current NGOs
revealed that a majority representing 30% have been in their current organization for between 1-
3. On the other hand 23.1% had been in the organization for less than a year,
43
19.2% had 4-6 years’ experience in the organization, 12.3% having 7-10 years’ experience and
finally 15.4% have worked in their current organization for over 10 years as per figure 4.4.
45
40
35
30
25
Frequency 20
Percentage 15
10
5
0
<1 1-3 4-6 7-10 Over 10
Frequency 30 39 25 16 20
Percentage 23.1 30.0 19.2 12.3 15.4
Figure 4.4: Period in Current NGO
4.2.5 Period in Ideal NGO
Respondents were asked the period (In years) that they would work in their ideal NGO
and the findings revealed that a majority representing 48.5% would stay in the organisation for
over 10 years. On the other hand 23.1% would work in the firm for 4-6, and 7-10 years while
44
surprisingly 5.4% indicated that they would be in the firm for less than a year as shown in Figure
4.5
70
60
50
40
Frequency 30
Percentage 20
10
0
<1 4-6 7-10 Over 10
Frequency 7 30 30 63
Percentage 5.4 23.1 23.1 48.5
Figure 4.5: Period in Ideal NGO

4.3 Asses how Strategic Management affects the sustainability of NGOs.
The first objective sought to assess how strategic management affects the sustainability of NGOs.
To achieve this objective respondents were asked to rate their answers using a scale of 1-5 by
ticking the appropriate answer from the alternatives where, 1- Not at all 2-Not very much 3-
Moderately 4-A large extent 5- a very large extent.
4.3.1Descriptive of Strategic planning

Most respondents indicated that to a large extent the organization applies strategic management
principles (m=3.88, sd=.988). In addition, strategic planning was done by all levels of staff from
top to bottom with each staff member making contributions (m=3.69, sd=.971). It was also
revealed that to a great extent planning is done frequently (m=3.85, sd=. 902). The management
pays specific attention to controlling the laid down strategy (m=3.78, sd= 1.064). The
organisation has in the past been able to adapt to changes in its operating environment (m=3.76,
sd=.987).
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Table 4.2: Descriptive of Strategic planning

Variable 1 2 3 4 5 M SD
Your organisation applies strategic 2.3 5.4 25.4 362 30.8 3.88 .988
management principles.
Strategic planning is done by all levels 2.3 7.7 30 38.5 21.5 3.69 .971
of staff from top to bottom with each
staff making contributions.
Planning is done frequently. 0 9.2 21.5 44.6 24.6 3.85 .902
The management pays specific 5.4 7.7 13.8 49.2 23.8 3.78 1.064
attention to controlling the laid down
strategy.
Your organisation has in the past been 5.4 2.3 23.8 47.7 20.8 3.76 .987
able to adapt to changes in its operating
environment.
4.3.2 Descriptive of Capabilities and Performance

4.3.2.1 Department Responsibility
The research sought to establish whether the departments responsible for strategic
management have been in charge of strategies related to organization performance. 61.5% agreed
while 38.5% failed to acknowledge.
46
38.5
Yes
No
61.5
Figure 4.6: Department Responsibility
4.3.2.2 Measures of Strategy Capability

The study established that 39.2% failed to respond although 15.4% revealed that the
NGOs had a strategic plan, on the other hand 5.4% attributed the strategy success to effective
communication, organization competency, adhering to the strategic goals as well as undertaking
surveys and system reviews. It was also revealed that 4.3% attributed the success to coordination
and evaluation while 2.3% attributed it to contribution, involvement of management in all levels,
adhering to protocol and team work.
47
Table 4.3: Measures of Strategy Capability

variable Frequency Percent
Non Response 51 39.2
communication 7 5.4
competency 7 5.4
contribution 3 2.3
coordination 6 4.6
evaluation 6 4.6
involving all levels 3 2.3
plans 20 15.4
protocol 3 2.3
strategic goals 7 5.4
surveys 7 5.4
system review 7 5.4
team work 3 2.3
Total 130 100.0
4.3.3 Strategic Capabilities and Organizations Performance
The study sought to establish the strategic capabilities used by NGOs to enhance organizations
performance. To achieve this objective respondents were asked to rate the answers using a scale
of 1-5 by ticking the appropriate answer from the alternatives where, 1- Not at all 2-Not very
much 3-Moderately 4-A large extent 5- a very large extent.
4.3.3.1 Descriptive of Strategic Capabilities and Organizations Performance
The findings revealed that to a great extent human resources influenced performance
(m=3.68, sd=.826), ability to fund Raise (m=3.81, sd=1.072), monitoring and development
(m=3.79, sd=.929), availability of financial resources (m=3.98, sd=.835), and assets such as
property (land and buildings) (m=3.65, sd=1.206) as shown in Table
48
4.4.
Table 4.4: Descriptive of Strategic Capabilities and Organizations Performance
Human Resources 7.7 31.5 45.4 15.4 3.68 .826
Ability to Fund Raise 2.3 12.3 17.7 37.7 30 3.81 1.072
Monitoring and Development 0 7.7 32.3 33.1 26.9 3.79 .929
Financial Resources 0 0 35.4 30.8 33.8 3.98 .835
Property (land and buildings) 5.4 13.8 22.3 27.7 30.8 3.65 1.206
4.4 Establish how finances affect the sustainability of NGOs

The second objective sought to assess how strategic management affects the
sustainability of NGOs and to achieve this objective respondents were asked to rate the answers.
4.4.1 Number of Donors

The findings on how many major (institutional) donors the organizations have revealed
that 23.3% had three donors, 20% had four donors, 13.8% had one donor, and 13.1% had six
donors. It was also revealed that 10.8% had 2 donors, while 6.9% had five and seven donors
respectively and only 4.6 had eight respondents as shown in Figure 4.7.
49
8
7
6
5
4
3 Percentage
2 Frequency
1
0 5 10 15 20 25 30 35
1 2 3 4 5 6 7 8
Percentage 13.8 10.8 23.8 20 6.9 13.1 6.9 4.6
Frequency 18 14 31 26 9 17 9 6
Figure 4.7: Number of Donors
4.4.2 Average Funding Period

The findings revealed that 24.6% received funding every three and five years respective
and 23.8% received funding after every 2 years, it was also established that 18.5% received
yearly funding’s while 5.4 received funds every two and a half years. On the other hand 24.6%
and 3.1% received it after 4 years as shown in Table.
50
Table 4.5: Average Funding Period

Number of Years Frequency Percent
1.0 24 18.5
2.0 31 23.8
2.5 7 5.4
3.0 32 24.6
4.0 4 3.1
5.0 32 24.6
Total 130 100.0
4.4.3 Level of Funding

Respondents were required to indicate the level of funding from the various groups and to
do so a five point rating scale was utilized where 5= increasingly abundant, 4= abundant,
3=fairly, 2=less abundant, 1= least abundant.
The findings indicated that individual contributions were least abundant in the funding level
(m=1.97,sd=.835), while religious institutions were less abundant (m=2.77, sd=1.267). On the
other hand, private foundations were fair (m=.3.71, sd=.876). It was also revealed that
Governments was also less abundant (m= 2.60, sd=1.152) with the Corporates being fair in there
funding’s (m=3.38, sd=1.572). International institutions and governments had abundant
contributions (m=4.45, sd=.798) as indicated in Table 4.6
Table 4.6: Levels of Funding

Individual contributions. 36.2 30.8 33.1 0 0 1.97 .835
Religious institutions. 21.5 29.2 0 49.2 0 2.77 1.267
Private foundations. 0 11.5 22.3 50 16.2 3.71 .876
Governments. 21.5 20.8 42.3 6.9 8.5 2.60 1.152
Corporates. 17.7 19.2 8.5 16.2 38.5 3.38 1.572
51
International institutions and 0 0 19.2 16.2 64.6 4.45 .798

governments.
4.4.4 Donor Relation Management

Respondents were required to indicate the level of donor relation management and to do
so a five point rating scale was utilized where 5=strongly agree, 4=agree, 3=disagree, 2=strongly
disagree, 1=not certain.
The findings indicated that majority agreed that there exists proper financial policies that
guide how the organization manages its funds (m=4.21, sd=.566). The NGO have good
leadership that provides assurance and gives confidence to the donors (m=4.21, sd=.407) and
they also have in place reporting structures that facilitate accountability and openness (m=4.18,
sd=.389). Finally, the findings indicated that the NGO has a brand that promotes it to donors
which makes fundraising easier (m=4.24, sd=.755). The results are shown in Table 4.7
Table 4.7: Donor Relation Management

Proper financial policies that guide 0 0 7.7 63.8 28.5 4.21 .566
how your organisation manages its
funds.
Good leadership that provides 0 0 0 79.2 20.8 4.21 .407

assurance and gives confidence to the
donors.
Reporting structures that facilitate 0 0 0 81.5 18.5 4.18 .389

accountability and openness.
52
Brand that promotes it to donors 0 0 19.2 37.7 43.1 4.24 .755

which makes fund raising easier.
4.4.5 Income Diversification

Respondents were required to indicate the level of income diversification and to do so a
five point rating scale was utilized where 5=strongly agree, 4=agree, 3=disagree, 2=strongly
disagree, 1=not certain. The findings revealed that the organization has more than one donor
(m=4.56, sd=.498). It was also established that the organization is involved in income generating
activities. (m=3.78, sd=1.129) and the organization offer training and consultancy for a fee
(m=3.90, sd=.955). However, a majority disagree that the organization rely on only one donor
(m=2.84, sd=1.147) as indicated in Table 4.8
Table 4.8: Income Diversification

The organization has more than one 0 0 0 43.8 56.2 4.56 .498
donor?
The organization is involved 9.2 0 21.5 42.3 26.9 3.78 1.129
in income generating activities.
Does the organization offer training 0 0 50.8 8.5 40.8 3.90 .955
and consultancy for a fee?
Does your organization rely on only 20 6.9 50 15.4 7.7 2.84 1.147
one donor?
4.4.6 Challenges in Donor Funding

Respondents were required to indicate the level challenges in donor funding and to do so
a five point rating scale was utilized where 5=strongly agree, 4=agree, 3=disagree, 2=strongly
disagree, 1=not applicable. Majority disagreed that a lack of financial management has led to
pulling out of donor funding. (m=3.20, sd= 1.171).It was however agreed that, withdrawal of
donor funding has led to the shutting down of your organization (m=4.08 sd=.945). The findings
53
also show that failure by top leadership to provide the donor with sufficient information required
will led to the withdrawal of funding (m=4.32, sd= .881) and the organization depend solely on
external donor funds (m=3.78, sd= .983).
Table 4.9: Challenges in Donor Funding

Lack of financial management has led 7.7 28.5 8.5 46.9 8.5 3.20 1.171
to pulling out of donor funding.
Withdrawal of donor funding will lead 0 8.5 15.4 36.2 40 4.08 .945
to the shutting down of your
organization.
Failure by top leadership to provide 0 6.9 6.9 33.8 52.3 4.32 .881
the donor with sufficient information
required will lead to the withdrawal of
funding.
Does your organisation depend solely 0 15.4 15.4 45.4 23.8 3.78 .983
on external donor funds?
4.5 Management Capabilities and the Sustainability of NGO

The last objective sought to assess how management capabilities affect the sustainability
of NGOs and to achieve this objective respondents were asked to rate the answers using a five
point rating scale where 5=very highly, 4=highly, 3= somewhat highly, 2= low, and 1= very low.
4.5.1 Descriptive of Management Capabilities and the Sustainability of NGO
The findings indicated that respondents were confident of the NGO having in place
proper structures of organizational governance (m=4.25, sd=.719). The top management
understands the purpose of the organization and takes the lead in its achievement (m=.4.41,
sd= .493). The leadership of the NGO possesses all the required qualifications, skills,
competence and experience (m=4.33, sd=.627). In addition, the management adopts staff policies
that motivate and maintain employees within the organization. (m=3.92, sd= .915). The findings
also revealed that the leadership approaches adopted facilitate the organization to meet its
objectives (m=4.36, sd=.726), and stakeholders have faith in the management team of the
organization (m=4.22, sd=.532). They also have alternative and repeat donors (m=4.38, sd=.685)
54
and there is low staff turnover (m=3.84, sd=.922). The NGOs have also been able to meet
community needs through welldesigned projects (m=4.10, sd=.888).
Table 4.10: Management Capabilities and the Sustainability of NGO

NGO has in place proper structures of 0 0 16.2 42.3 41.5 4.25 .719
organizational governance.
The top management of your organization 0 0 0 59.2 40.8 4.41 .493

understands the purpose of the organization
and takes the lead in its achievement.
The leadership of the NGO possesses all the 0 0 8.5 50 41.5 4.33 .627
required qualification, skills, competence and
experience.
The management adopts staff policies that 0 6.9 25.4 36.9 30.8 3.92 .915
motivate and maintains employees within the
organization.
The leadership approaches adopted facilitate 0 0 14.6 34.6 50.8 4.36 .726
the organization to meet its objectives.
Stakeholders have faith in the management 0 0 5.4 66.9 27.7 4.22 .532
team of your organization.
You have alternative & repeat donors. 0 0 11.5 39.2 49.2 4.38 .685
There is low staff turnover. 0 8.5 26.2 38.5 26.9 3.84 .922
Meeting community needs though well 0 9.2 6.9 48.5 35.4 4.10 .888
designed projects.
4.6 Chapter Summary
This chapter presents the results established from the data analysis done. This included results
relating to the demography and specific research objectives of the study aimed at establishing the
determinants of sustainability of local NGOs in Kenya. The first section looks at the demography
and the sucbsequent sections covers the three objectives which were to assess how Strategic
Management affects the sustainability of NGOs, establish how finances affect the sustainability
of NGOs and to find out how management capabilities affect the sustainability of NGOs. The
next chapter will present the discussions, conclusion and recommendation.
55
CHAPTER FIVE
5.0 DISCUSSIONS, CONCLUSIONS AND RECOMMENDATIONS
5.1 Introduction
In this chapter discussion, conclusions and recommendations were elaborated. The summary of
the whole study is presented first, followed by discussion on how Strategic management affects
the sustainability of NGOs, establish how finances affect the sustainability of NGOs how
management capabilities affect the sustainability of NGOs.
5.2 Summary of the Study

The purpose of this pаper wаs to find the determinаnts of sustаinаbility of locаl NGOs in
Kenyа. The specific objectives of this study wаs to аssess how strаtegic mаnаgement аffects the
sustаinаbility of NGOs. Estаblish how finаnces аffect the sustаinаbility of NGOs. To find out the
effects of mаnаgement cаpаbilities on the sustаinаbility of NGOs.
The study used descriptive design becаuse it hаs been successfully used in other relаted
mаnаgement studies. This methodology wаs the most suitаble becаuse the reseаrch аims аt
expounding on some determinants аnd lаying out how they аffect orgаnizаtionаl sustаinаbility.
56
Аccording to the NGO Board (2017) there аre 6,938 registered locаl NGOs in Kenyа. This study
concentrаted on the 3,334 NGOs registered in Nаirobi, where 770 аre the only аctive NGOs in
Nаirobi. Bаsed on this, the study purposively sаmpled 20% of the populаtion which cаme to 154
respondents, only 130 were filled аnd returned giving а response rаte of 84%. This study
employed primаry dаtа to аnаlyze the effects of strаtegic mаnаgement, finаnciаl mаnаgement
аnd mаnаgement cаpаbilities on orgаnizаtionаl sustаinаbility. The study used the questionnаire
which is seen to be the best method of collecting the dаtа required for this kind of reseаrch
The questionnаire contаined both open аnd close ended questions аimed аt giving
respondents аn opportunity to choose from listed аlternаtives аs well аs offer their opinion аnd
therefore offer quаlitаtive dаtа. The questionnаire wаs lаter аdministered through the help of
three reseаrch аssistаnts who were trаined before going to the field. Descriptive аnаlysis of the
dаtа collected wаs used. The dаtа аnаlysis involved were meаsures of centrаl tendency аnd
frequencies. Frequency distributions аnd percentаges were used in the descriptive pаrt of this
study to drаw conclusions.
The first objective sought to аssess how strаtegic mаnаgement аffects the sustаinаbility of
NGOs. Most respondents indicаted thаt, to а lаrge extent the orgаnizаtion аpplies strаtegic
mаnаgement principles (m=3.88, sd=.988). In аddition, to а greаt extent, plаnning is done
frequently (m=3.85, sd=. 902). The mаnаgement pаys specific аttention to controlling the lаid
down strаtegy (m=3.78, sd=1.064). The orgаnisаtion hаs in the pаst been аble to аdаpt to
chаnges in its operаting environment (m=3.76, sd=.987). The reseаrch аlso sought to estаblish
whether the depаrtment responsible for strаtegic mаnаgement had been in chаrge of strаtegies
relаted to orgаnizаtion performаnce аnd 61.5% аgreed while 38.5% fаiled to аcknowledge,
аlthough 15.4% reveаled thаt the NGOs hаd а strаtegic plаn. Аnаlysis of the strаtegic cаpаbilities
used by NGOs to enhаnce orgаnizаtions performаnce reveаled thаt to а greаt extent humаn
resources influenced; performаnce (m=3.68, sd=.826), аbility to fund raise (m=3.81, sd=1.072),
monitoring аnd development (m=3.79, sd=.929), аvаilаbility of finаnciаl resources (m=3.98,
sd=.835), and аssets such аs property (lаnd аnd buildings) (m=3.65, sd= 1.206).
57
The second objective sought to аssess how strаtegic mаnаgement аffects the
sustаinаbility of NGOs аnd an аnаlysis of how mаny mаjor (institutionаl) donors the
orgаnizаtions hаve reveаled thаt, 23.3% hаd three donors, 20% hаd four donors , and 13.8% hаd
one donor. It wаs аlso reveаled thаt, 24.6% received funding every three аnd five years
respectively аnd 23.8% received funding аfter every 2 yeаrs. Respondents were required to
indicаte the level of funding from the vаrious groups аnd, individuаl contributions wаs the leаst
аbundаnt in the funding level, аlthough international institutions аnd governments hаd аn
аbundаnt contribution (m=4.45, sd=.798). Аnаlysis of the level of donor relаtion mаnаgement
indicаted thаt mаjority аgreed thаt there exist proper finаnciаl policies thаt guide how the
orgаnizаtion mаnаges its funds (m=4.21, sd=.566). The NGOs hаve good leаdership thаt
provides аssurаnce аnd gives confidence to the donors (m=4.21, sd=.407), аnd they аlso hаve in
plаce reporting structures thаt fаcilitаte аccountаbility аnd openness (m=4.18, sd=.389). Finаlly,
the findings indicаted thаt NGOs hаve а brаnd thаt promotes them to donors which mаkes fund
rаising eаsier (m=4.24, sd=.755). On the level of income diversificаtion most of the
orgаnizаtions hаve more thаn one donor (m=4.56, sd=.498). It wаs аlso estаblished thаt these
orgаnizаtions are involved in income generаting аctivities (m=3.78, sd=1.129), аnd they offer
trаining аnd consultаncy for а fee
(m=3.90, sd=.955). On the chаllenges fаced in donor funding’s it wаs аgreed thаt, withdrаwаl of
donor funding hаs led to the shutting down of orgаnizаtions (m=4.08 sd=.945). The findings
аlso show thаt fаilure by top leаdership to provide donors with sufficient informаtion required,
led to the withdrаwаl of funding (m=4.32, sd= .881) аnd these orgаnizаtions depend solely on
externаl donor funds (m=3.78, sd=.983).
The lаst objective sought to аssess how mаnаgement cаpаbilities аffect the sustаinаbility
of NGOs. The findings indicаted thаt respondents were confident of their organizations hаving in
plаce proper structures of orgаnizаtionаl governаnce (m=4.25, sd=.719).Top mаnаgement
understаnds the purpose of the orgаnizаtion аnd tаkes the leаd in its аchievement (m=.4.41,
sd=.493). The leаdership possesses аll the required quаlificаtions, skills, competence аnd
experience (m=4.33, sd=.627). In addition, mаnаgement аdopts stаff policies thаt motivаte аnd
mаintаin employees within these orgаnizаtions. (m=3.92, sd=.915). The findings аlso reveаled
58
thаt the leаdership аpproаches аdopted fаcilitаte these orgаnizаtions in meeting their objectives
(m=4.36, sd=.726), аnd stаkeholders hаve fаith in their mаnаgement teаms (m=4.22, sd=.532).
They аlso hаve аlternаtive аnd repeаt donors (m=4.38, sd=.685) аnd staff turnover is low
(m=3.84, sd=.922). These NGOs hаve аlso been аble to meet community needs through well-
designed projects (m=4.10, sd=.888).
5.3 Discussion
5.3.1 Effects of Strаtegic Mаnаgement on the sustаinаbility of NGOs

From this study, most respondents indicаted thаt to а lаrge extent the orgаnizаtion аpplies
strаtegic mаnаgement principles. Wаgner (2006) explаins, the importаnce of strаtegic plаnning
cаn be looked аt from four points including environmentаl scаnning, strаtegy formulаtion,
linking goаls to budgets аnd strаtegic plаnning аs а process. For аn orgаnizаtion to fill the
usefulness аnd effectiveness of strаtegic plаnning, there must be commitment аnd involvement
аcross аll levels of the orgаnizаtion, so аs to overcome problems such аs; rivаlry аmong
depаrtments, projects, resistаnce to chаnge, resource requirement, resources аllocаtion аnd
others. The strаtegy initiаtives аnd directions set up by аn orgаnizаtions mаnаgement in the form
of mission аnd vision stаtements аnd tаrgets for cost sаving, debt/equity rаtios embodied (Grаnt,
2006).
In аddition, to а greаt extent plаnning is done frequently аnd the mаnаgement pаys
specific аttention to controlling the lаid down strаtegy. Thompson, et аl, (2007) similаrly,
enumerаtes thаt numerous fаctors аre listed in literаtures thаt influence the strаtegic plаnning
process. Environmentаl uncertаinties hinder the development of long term plаns; scаrce
resource-strаtegic plаnning which entаils the use scаrce resources effectively; legаl forces,
legislаtive chаnges, introduce new dynаmics in аn industry thus аffecting strаtegic plаnning; size
аnd complexity of аn orgаnizаtion. Аs size аnd complexity of аn orgаnizаtion increаses, so does
the degree of formulаting of plаns; the lifecycle of the orgаnizаtion, this is when the
orgаnizаtions move through different phаses, аnd the competitive environment chаnges аnd
influences the wаy they plаn аnd execute strаtegy
59
The reseаrch аlso sought to estаblish whether the depаrtment responsible for strаtegic
mаnаgement been in chаrge of strаtegies relаted to orgаnizаtion performаnce аnd 61.5% аgreed
out of whom а mаjority reveаled thаt the NGOs hаd а strаtegic plаn. А ccording to Musyulа
(2014) NGOs performаnce cаn be meаsured in terms of how well it is governed аnd how
effective the mаnаgement processes is. It implies thаt the effective mаnаgement of аn NGO’s
resources is done in а mаnner which is trаnspаrent, аccountаble, equitаble аnd responsive to the
needs of the community. Since NGOs аim аt becoming sustаinаble, then good governаnce is
criticаl to their existence. In developing countries NGOs often lаck the institutionаl cаpаcity аnd
resources to operаte. Moreover, one of the key requirements for good governаnce is
аccountаbility of funds from donors, but sometimes they аre poorly mаnаged. Thus, in order to
ensure effective аnd proper mаnаgement of resources, good governаnce becomes аn importаnt
аspect of every NGO.
Аnаlysis of the strаtegic cаpаbilities used by NGO to enhаnce orgаnizаtions performаnce

reveаled thаt to а greаt аbility to fund Rаise аs well аs monitoring аnd development. Mukаngа
(2011) stаtes thаt, internаtionаl NGOs in Kenyа hаve developed strаtegies аnd orgаnizаtionаl
structures аccording to their differing goаls: profits аnd ideаls. The goаls of аn NGO аre not
meаsured in terms of loss or profit; the results аre quаlitаtive. For NGOs the criteriа is how
efficient the money budgeted for is spent, аnd further to thаt, it should meet the expectаtions of
the donor аnd public benefit. Аn NGO needs to survive, just like а compаny; they hаve people on
their pаyroll аnd need cаsh. Cаreers аre plаnned аnd pursued. This is а fаct of life in the
corporаte world but less obvious in the cаse of the not-for-profit world (Edwаrd, 1999).
Analysis of the strategic capabilities used by NGO to enhance organizations performance

was influenced by the availability of financial resources as well as assets such as property (land
and buildings). Kameri (2000) adds that international NGOs in Kenya, to sustain themselves they
embark on the process of strategic management, strategic implementation, and strategic change
management, for the purpose to ensure that their organizations are managed in a way that the
overall goal is achieved despite the environmental forces (Kameri, 2000).
5.3.2 Effects of Finances on the Sustainability of NGOs

60
Analysis of how many major (institutional) donors the organizations have revealed that
majority had three donors, four donors and one donor. For nonprofit organizations, financial
capacity consists of resources that give an organization the ability to seize opportunities and react
to unexpected threats while maintaining general operations of the organization (Bowman, 2000).
Although traditional nonprofit organizations regard fundraising and charitable donations as their
primary source of revenue, they also rely on grants, contracts for service, and sales of goods and
services to finance operations and capital improvements (Carroll & Stater, 2009).
It was also revealed that many received funding every three and five years respectively
and some received funding after every 2 years. Floyd and Shrestha (2008) outline that, no matter
how big a non-profit organization’s effort to sell itself and mission to its donors, this will
continue as long as it engaged in raising money and other resources; without that, its viability
may be at stake, and its appeal to the donor community. Through this, nonprofit organizations
must continue to refine and redefine its marketing approaches and strategies to meet its
expanding needs. It is obvious that if an nonprofit organization is to maintain its ability to serve
its various missions, its resource needs are bound to grow due to the national demographic trends
which indicate that the population will continue to grow, especially among the minority and low
income groups, hence increased need for unmet social needs. Tuckman and Chang (2009) view
that, even within a resource rich environment, the financial stability of nonprofit organizations
depends upon effective financial management practices that reduce the volatility of the revenue
portfolio and have the potential to increase the organization’s equity. Clark (2003) advocates for
adoption of a strategy of diversification that leads to greater stability in the revenue structure
which potentially makes sustainability more likely.
Respondents were required to indicate the level of funding from the various groups and
individual contributions was least abundant in the funding level although International
institutions and governments had abundant contributions. According to Lewis (2011), donor
relationship management is the building and nurturing of positive connections with the donors.
He continues to state that it requires a clear segmentation and prioritization of donors which
leads to the formulation of clear goals and action plans for how the NGOs will interact with a
61
given donor segment to achieve desired results. While all donors are important, their significance
to the work of the nonprofit organization can vary greatly, as can their motivations and needs
(Boas, 2012). By developing and implementing effective practices and systems that yield strong
relationships with donors, nonprofits can generate more sustainable and dependable revenue,
strengthen grant effectiveness, and ultimately achieve better results (Alter, 2007).
The NGO have good leadership that provides assurance and gives confidence to the
donors and they also have in place reporting structures that facilitate accountability and
openness. Managing donor relationship also involves accounting for the donor funds usage based
on the agreements (timelines, grant, project scope and budgets) between the donor and the NGO.
In relationship management local NGOs should be able to understand the needs of the donors,
contact person, and the requirements of the contact person (Lewis, 2011). By an NGO
understanding its donor; it is reflected by the number of return donors, change in the amount of
funding from donors and the number of complete projects funded by the donors. If there is a
falling number of return donors, fall in the amount of donor funding or stalled donor funded
projects then there is poor donor relationship in the NGO. There is need to manage this
relationship through regular communication, proper utilization of funds, preparation and
presentation of financial reports to donors and the meeting of conditions set by the donors
(Moore, 2010).
It was also established that the organization is involved in income generating activities.
and the organization offer training and consultancy for a fee. Bell, Maoka, and Zimmerman,
(2010) state that, it’s not enough for non profits to have a high impact program if there is no
effective strategy for sustaining the organisation financially just as it is not enough to be
financially stable without sustainable programmes. In the NGO sector, financial information and
information on the mission impact do not get discussed in an integrated way.
5.3.3 Effects of Management Capabilities on Sustainability of NGOs

The findings indicated that respondents were confident of the NGOs having in place
proper structures of organizational governance. Ansoff and McDonnell (2010), identify general
management competence orientations as integral to the success of the organization. According to
62
Okorley and Nkrumah (2012), good management greatly contributes to local NGOs
sustainability, the bias being on the fact that management must have capacity to oversee the
implementation of their development programmes. At the same time a good partnership between
the management, the staff and the board is required.
The findings also show that the leadership of these NGOs possesses all the required
qualifications, skills, competence and experience. Drucker, (1990), contends that the executives
of nonprofit organizations do not have a set benchmark upon which performance can be
measured. Nonprofit organizations exist largely to bring a change in society. Thus, performance
and results are far more difficult to measure and control in nonprofit organizations than in
profitable firms. Given the numerous issues confronting the nonprofit sector, an appropriate level
of the general management responsiveness is desirable to ensure delivery of the nonprofits
mission.
In addition, the management adopts staff policies that motivate and maintains employees
within the organization. According to Mukanga (2011), NGOs must have good governance
structures to provide the leadership, direction, and legitimacy for an organization. Typical NGO
founders are charismatic individuals with a strong commitment to a cause or purpose and a
definite set of ideas about how to serve that cause. However, other staff and constituents need to
share the founders’ understanding and commitment if the organization is to be sustained.
Leadership is more effective if it is open to a wide variety of opinions and talents. Effective
NGO leaders use the talents and enthusiasm of all NGO stakeholders, board members, staff,
community members, clients, and even donors (Carlos, 1997). Leaders are also more effective if
they are focused and consistent, so they will be trusted and followed. Above all, good NGO
leadership fosters the involvement and participation of the NGO’s stakeholders and the
community.
The findings also revealed that the leadership approaches adopted facilitate the
organization to meet its objectives, The top management of nonprofit organizations is faced with
the challenge of measuring their performance as the bottom line is not as tangible as that of for
profit making organizations (Kamaria & Lewis, 2009). Okorley & Nkrumah (2012) asserts that,
63
management/leadership must possess skills such as adequate managerial skills, encourage

teamwork, and lead by example; this way the management will get the necessary support for
ensuring organizational sustainability.
According to Bititci, Ackermann, Ates, Davies, Gerango, and Gibb (2011) the fact that
managerial perceptions appear to play a central role in shaping the organisation of the managerial
system and ultimately performance, organizations need to carefully consider the education of
managers. Although according to Molomo and Somolekae (1999), the key weakness of NGOs in
Africa is the inappropriate organizational structures which impact the manner in which NGOs
carry out their core business.
5.4 Conclusion
5.4.1 Effects of Strategic Management on the Sustainability of NGOs

Most Non Governmental Organizations apply strategic management principles. In
addition, they undertake frequent planning. To ensure success, the management pays specific
attention to controlling the laid down strategy. NGOs have in the past been able to adapt to
changes in their operating environment, and this has been attributted to the departments
responsible for strategic management being in charge of strategies related to organization
performance.
5.4.2 Effects of Finances on the Sustainability of NGOs

NGOs rely on donor funding and major (institutional) donors vary in number and funding
levels through international institutions. To efficiently control the finances there exist proper
64
financial policies that guide how the organization manages its funds as well as good leadership
that provides assurance and gives confidence to the donors. There also exist reporting structures
that facilitate accountability and openness. The firms have been involved in income generating
activities however, the withdrawal of donor funding has led to the shutting down of
organizations. Similarly, failure by top leadership to provide the donor with sufficient
information is also considered a challenge.
5.4.3 Effects of Management Capabilities on the Sustainability of NGOs

Most NGOs have in place proper structures of organizational governance and most top
managers understands the purpose of the organization and takes the lead in its achievement. The
leadership of these NGOs also possesses all the required qualifications, skills, competence and
experience and there exist staff policies that motivate and maintain employees within the
organization.
5.5 Recommendation
5.5.1 Recommendation for Improvement

5.5.1.1 Effects of Strategic Management on the Sustainability of NGOs
To be successful, organizations should continuously apply strategic management

principles thus there should be a continuous strategic plan that involves all levels of staff from
top to bottom. There is a need for the management to lay down policies to ensure effective
control of the laid down strategies. There is also a need to have in place effective communication
and, organization competency adhering to the strategic goals as well as undertaking surveys and
system reviews. There should be encouraged involvement of management in all levels. On the
65
other hand, the caliber of human resources should aid in efficient fund raising, monitoring and
development.
5.5.1.2 Effects of Finances on the Sustainability of NGOs
Due to the varied duration of funding, there should be laid down guidelines on the use of
funds. International institutions and governments are the most abundant contributors thus NGOs
need to research on the different means of acquiring these funds. They also need to vet their
leaders to provide assurance and gives confidence to the donors and have in place reporting
structures that facilitate accountability and openness. Lack of financial management has led to
pulling out of donor funding therefore there is a need to have in place financial strategies to
stream-line operations during the low periods.
5.5.1.3 Effects of Management Capabilities on the Sustainability of NGOs
NGOs should continue having in place proper structures of organizational governance.

Top management should continue understanding the purpose of their respective organizations
and takes the lead in their achievements. This is possible by having quality leadership with the
required skills, competence and experience. Management should also adopt staff policies that
motivate and maintain employees within the organization.
5.5.2 Recommendation for Further Studies
NGOs in the country are still in the growth stage thus the study therefore recommends
that further studies need to be done on sustainability of NGOs based on social impact, focused
business strategy, economic viability, adaptability, and capacity to deliver.
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APPENDIX I:
QUESTIONNAIRE
This study is a requirement for the partial fulfillment of the Master of Business
Administration program (MBA) at the United States International University Africa
(USIU-A). The purpose of this study is to examine the “DETERMINANTS OF
SUSTAINABILITY OF LOCAL NGOs IN KENYA” The findings of this study will provide
the management of NGOs as well as other stakeholders with information that can be used to
increase their sustainability and continue to meet their missions‟ objectives into the future. This
is an academic exercise and all information collected from respondents will be treated with strict
confidentiality.
SECTION A: GENERAL INFORMATION
For this section kindly answer all the questions by ticking in the boxes as may apply to you.
1. Gender of Respondent □ Male □ Female
2. Department in Organization? □ Programs/Projects □ General Management
□ Communication/PR □ Finance& Administration

75
3. Period (In years) you have been in the NGO sector. □ <1 □ 1-3 □ 4- 6 □ 7-10 □
Over 10 years 4. Number of years in your current NGO?
□ <1 □ 1-3 □ 4- 6 □ 7-10 □ Over 10 years
5. If you were to work for your ideal NGO how long would you work there?
□ <1 □ 1-3 □ 4- 6 □ 7-10 □ Over 10 years
SECTION B: STRATEGIC MANAGEMENT IN THE SUSTAINABILITY OF

ORGANISATIONS
Kindly answer the questions below by ticking as applies to you in regards to matters relating to
strategic management at your organisation.
i). In your own opinion, indicate to what extent you agree with the following statements on
strategic planning?
A very A large Moderately Not Not
large extent very at all
extent much
5 4 3 2 1
6 Your organisation applies
strategic management principles.
7 Strategic planning is done by all

levels of staff from top to bottom
with each staff making
contributions.
8 Planning is done frequently.

76
9 The management pays specific

attention to controlling the laid
down strategy.
10 Your organisation has in the past

been able to adapt to changes in
its operating environment.
ii) Capabilities and Performance
11. Has the department responsible for strategic management been in charge of strategies
related to organization performance?
Yes NO
If yes explain how

………………………………………………………………………………………………
………………………………………………………………………………………………
………………………………………………………………………………………………
………………………………………………………………………………………………
……………………………..
12. To what extent has the use of the following strategic capabilities by your NGO enhanced
its organizations performance?
A very large A large Moderately Not very Not at
extent extent much all
5 4 3 2 1
13 Human Resources
14 Ability to Fund Raise
15 Monitoring and
Development
16 Financial Resources
77
17 Property (land and

buildings)
SECTION C: EFFECT OF FINANCES ON SUSTAINABILITY OF

ORGANISATIONS
18. How many major (institutional) donors does your organisation have?
………………………………………………………………………………………………
19. What is the average period your donors fund your organisation?
………………………………………………………………………………………………
Please tick as appropriate, the level of funding received from the groups below.
Increasingly Abundant Fairly Less Least
Abundant Abundant Abundant
5 4 3 2 1
20 Individual
contributions.
21 Religious institutions.
22 Private foundations.
23 Governments.
24 Corporates.
25 International
institutions and
governments.
i) To what extent do you agree with the following on donor relationship management?
78
Strongly Agree Disagree Strongly Not

Agree Agree Certain
26 There exist proper financial
policies that guide how
your organisation manages
its funds.
27 Your NGO has good

leadership that provides
assurance and gives
confidence to the donors.
28 Your NGO has reporting

structures that facilitate
accountability and
openness.
29 Your NGO has a brand that

promotes it to donors
which makes fund raising
easier.
ii) To what extent do you agree with the following on Income diversification?
Strongly Agree Disagree Strongly Not
Agree Agree Certain
30. The organization has more
than one donor?
79
31. The organization is

involved in income
generating activities.
32. Does the organization offer

training and consultancy for
a fee?
33. Does your organization rely

on only one donor?
iii) To what extent would you say the following are challenges organizations face with
regard to donor funding?
Strongly Agree Strongly Disagree N/A
Agree Disagree
5 4 3 2 1
34. Lack of financial
management has led to
pulling out of donor
funding.
35. Withdrawal of donor

funding will lead to the
shutting down of your
organization.
36. Failure by top leadership to

provide the donor with
sufficient information
required will lead to the
withdrawal of funding.
80
37. Does your organisation

depend solely on external
donor funds?
SECTION D: MANAGEMENT CAPABILITIES
i. How would you rank your organizations efforts in the following matters?
Very Highly Somewhat Low Very
Highly Highly Low
38. You are confident that your
NGO has in place proper
structures of organizational
governance.
39. The top management of

your organisation
understands the purpose of
the organisation and takes
the lead in its achievement.
40. The leadership of the NGO

possesses all the required
qualification, skills,
competence and experience.
41 The management adopts

staff policies that motivate
and maintains employees
within the organisation.
81
41 The leadership approaches

adopted facilitate the
organisation to meet its
objectives.
42 Stakeholders have faith in

the management team of
your organisation.
43 You have alternative

&repeat donors.
44 There is low staff turnover.

45 Meeting community needs
though well designed
projects.
Thank You For your participation
Alvin Ntimama
MBA student.

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Running head: DETERMINANTS OF SUSTAINABILITY OF LOCAL NGOs IN KENYA

DETERMINANTS OF SUSTAINABILITY OF LOCAL NGOs IN KENYA

Department Of Economics, United States International University Africa

Econ 302: Money, Banking and Government Policy

DETERMINANTS OF SUSTAINABILITY OF LOCAL NGOs IN KENYA

Signed: __________________________ Date: _________________________ Alvin P.

Signed: __________________________ Date: _________________________ Professor

Signed: __________________________ Date: __________________________

Dean, Chandaria School of Business.

All rights reserved

DETERMINANTS OF SUSTAINABILITY OF LOCAL NGOs IN KENYA

DETERMINANTS OF SUSTAINABILITY OF LOCAL NGOs IN KENYA

The study recommended that to be successful organizations should continuously apply

DETERMINANTS OF SUSTAINABILITY OF LOCAL NGOs IN KENYA

DETERMINANTS OF SUSTAINABILITY OF LOCAL NGOs IN KENYA

DETERMINANTS OF SUSTAINABILITY OF LOCAL NGOs IN KENYA

CHAPTER ONE................................................................................................................. 1 1.0

CHAPTER TWO ................................................................................................................ 9

CHAPTER THREE .......................................................................................................... 23 3.0

DETERMINANTS OF SUSTAINABILITY OF LOCAL NGOs IN KENYA

3.1 Introduction ................................................................................................................... 23

3.3.2 Sampling Design........................................................................................................ 24

CHAPTER FOUR ............................................................................................................. 27 4.0

CHAPTER FIVE.............................................................................................................. 39 5.0

DETERMINANTS OF SUSTAINABILITY OF LOCAL NGOs IN KENYA

LIST OF TABLES ..............................................................................................................

Table 4.1: Response Rate...................................................................................................27

DETERMINANTS OF SUSTAINABILITY OF LOCAL NGOs IN KENYA

Аccording to Hаiley (2014), sustаinаbility should be seen аs аn ongoing process, rаther

DETERMINANTS OF SUSTAINABILITY OF LOCAL NGOs IN KENYA

DETERMINANTS OF SUSTAINABILITY OF LOCAL NGOs IN KENYA

fundrаising аctivities аnd legitimаte income-producing ventures. Аccording to Nukа (2010),

Lithuаniаn NGOs increаsingly used strаtegic plаnning for designing cost-efficient

DETERMINANTS OF SUSTAINABILITY OF LOCAL NGOs IN KENYA

investigаte issues such аs NGO’s constitution, codes of conduct, employment prаctices,

Vаlentinov (2008) stаted thаt, Non Governmentаl Orgаnizаtions (NGOs) emerge to

DETERMINANTS OF SUSTAINABILITY OF LOCAL NGOs IN KENYA

1.2 Statement of the Problem

DETERMINANTS OF SUSTAINABILITY OF LOCAL NGOs IN KENYA

improvement of performance in organizations. Brooks (2006) researched on strategic

Wachira (2016) carried out an assessment on factors affecting financial sustainability of

1.3 General Objectives

DETERMINANTS OF SUSTAINABILITY OF LOCAL NGOs IN KENYA

1.4 Specific Objectives

The objectives of this study are:

1.4.1 Assess how Strategic Management affects the sustainability of NGOs.

1.5 Importance of the Study

1.5.1 Management of the NGO

1.5.2 The Government

1.5.3 Other Non Governmental Organizations

1.5.4 The Academicians and Researchers

DETERMINANTS OF SUSTAINABILITY OF LOCAL NGOs IN KENYA

1.6 Scope of the Study

1.7 Definition of Terms

1.7.1 Non Governmental Organization

The Non-Governmental Organization is defined as a private voluntary grouping of

1.7.2 Strategic Management

Is the art and science of formulating, implementing and evaluating cross-functional

Sustainability is illustrated by the rate at which a firms underlying resources, capabilities

1.7.4 Financial Sustainability

Financially sustainability is where organizations capacity to acquire revenue in order to

DETERMINANTS OF SUSTAINABILITY OF LOCAL NGOs IN KENYA

1.7.5 Management Competencies

Signed: __ Date: _ Alvin P.

Signed: __ Date: _ Professor

Signed: Date: