The Effect of Accountability on Financial Sustainability of Local NGOs: The Case of NGOs Operating in Addis Ababa

Abstract

The main aim of this study was to determine the effect of accountability on financial sustainability of local NGOs operating in Addis Ababa. Specifically, the study determined the effect of financial planning, financial monitoring and evaluation and financial controls on financial sustainability of local NGOs in Addis Ababa. The study is guided by resource mobilization theory, agency theory and fraud theory. The study adopted descriptive research design and data were collected using primary means through the use of questionnaires. The study target population were the 936 local NGOs operating in Addis Ababa. Simple random sampling technique were used to identify 215 local NGOs as the respondents. Data were collected by use of questionnaires and analyzed using descriptive statistics and inferential statistics. The collected data were analyzed using both quantitative and qualitative data analysis methods. The study found out that the independent variables Financial Control, Financial Planning and Financial Monitoring and Evaluation had positive and significant effect on NGO financial sustainability. Accountability was found to have a positive and significant effect on NGO financial sustainability. The study concluded that large number of local NGOs were not sustainable a problem which could be addressed through NGOs improving their accountability practices. The study recommended that the management at the local NGOs to work towards improving accountability practices with the aim of enhancing financial sustainability of the NGOs.