THE IMPACT OF FINANCIAL MANAGEMENT PRACTICES ON FINANCIAL SUSTAINABILITY OF LOCAL NGOs: EVIDENCE FROM ADDIS ABABA

Abstract

Local non-governmental organizations (NGOs) in underdeveloped nations have sustainability issues that force them to cease after a time of operation owing to financial constraints. It is necessary to identify the factors that influence the financial viability of these local NGOs. The study aims to identify the financial management practice aspects influencing the financial sustainability of Addis Ababa-based NGOs. The survey research design was used for the investigation. The study's target population was all local NGOs in Addis Ababa. The intended audience consisted of 936 Addis Ababa-based non-governmental organizations (NGOs). The survey included 215 local non-profit organizations as participants. Simple Random sampling technique was employed to choose one employee from each NGO, yielding a sample size of 215 people. The research relied on original data. The information was gathered using a standardized questionnaire. Cronbach's Alpha was used to quantify reliability in test-retest situations. The data were analyzed using both descriptive and inferential statistics. Tables and figures were used to present the data. According to the findings of the study, revenue source diversification and NGO regulation are important variables influencing the financial viability of local NGOs. The study also suggests that NGO regulation has a detrimental impact on the financial viability of local NGOs in Addis Ababa. The study recommends that local NGOs should develop their revenue-generating projects, should include donors in project execution, and establish suitable communication channels to enhance their connection with contributors and The government should also change the NGO rule to provide local NGOs greater leeway in obtaining financing from outside, as well as making the legislation more flexible in terms of fundraising and expenditures.