An Investigation into the Financial Sustainability Strategies for NGO's in Zambia; A Case Study of ABT Associates Zambia

Abstract

Purpose – This dissertation has got the primary aim of examining the possibilities of local non-governmental organizations to be financially sustainable. This is done with the help of a case study of Abt Associates – an American NGO operating in Zambia. Research design/methodology – The study uses a mixed methods approach that contains qualitative, quantitative data and the case study approach. This is done with the help of secondary data from Abt Associates and primary data based on the responses of the respondents. Based on these, the findings of the research are derived. Findings – The study finds that most of the NGOs have problems of maintaining financial sustainability because their source is funding is primarily from international donors. In case the donor withdraws the funds or the program comes to the end, the local NGO goes into voluntary liquidation. The study goes on to recommend ways in which the NGOs can improve their liquidity position by diversifying their sources of funding and by utilizing some of the non-traditional sources of funding on the market like debt instruments or income generating activities. Limitations – It would definitely have been advantageous to include more NGOs and apply more liquidity ratios unlike just the Donor Dependency Ratio and the NGO Survival Ratio. The other limitation was the limited knowledge of respondents on the theories and practice of financial sustainability. However, these limitations did not compromise the accuracy and validity of the findings. Recommendations – The primary recommendation coming out of this study is that NGOs should diversify their sources of financing in order to achieve financial sustainability. They also need to be dynamic in their operations, i.e. to change their mandate to be in line with the global social business environment. The NGOs should also be constantly monitoring their liquidity levels so as to assure continuity of operations. Value – The primary contribution of this study is to alert NGOs about maintaining financial sustainability and bringing to their attention the necessity of continuity of programs in spite of some donors withdrawing their funding or the winding up of some programs.