Financial Sustainability of Local NGOs Funded by the Churches Health Association of Zambia in Zambia. A Mixed Methods Survey.

Abstract

<title>Abstract</title> <bold>Introduction:</bold> Local Non-Profit Organisations (LNPO) play an important role of providing services to vulnerable communities especially in rural areas where for-profit organisations do not reach. However, sustainability of the Non-Profit Organisations is often not guaranteed as evidenced by closures of Non-Profit Organisations that were once thriving. This study assessed the financial sustainability of local organisations that are funded by the Churches Health Association of Zambia. <bold>Methodology:</bold> The study used a mixed methods approach which comprised of a desk review, qualitative and quantitative survey. Data analysis of the qualitative component was done using the thematic analysis approach. Quantitative data was analysed using the Statistical Package for the Social Sciences (SPSS) version 22; descriptive and inferential statistics was done by summarization of the findings which included an assessment of the financial position and operational activity of the NPOs and multivariable linear regression. <bold>Results:</bold> A total of 87 participants were interviewed in the survey and 21 participated in the qualitative in-depth interviews. CHAZ's significantly contributed to the financial suitability of the four local NPOs, with its funding heavily relied upon by NPO 2 (up to 99%) and less so by others (8-19%). Operating margins fluctuated widely, with three NPOs averaging negative margins, reflecting financial instability. Cash reserves varied, showing limited liquidity across NPOs. Regression analysis identified Financial Planning and Strategy and Leadership as key contributors to financial sustainability, while Sound Administration negatively impacted it. From interviews, challenges included limited donor funding, restricted domestic resource mobilization, economic instability, and internal issues such as inadequate long-term planning and founder dependency. <bold>Conclusion:</bold> The study highlighted that funding from CHAZ significantly enhances the financial sustainability of LNPOs in Zambia by promoting income diversification and reducing reliance on single funding sources. However, it encourages that there should be a need for the studied LNPOs to expand funding avenues beyond CHAZ to help mitigate risks and longer financial viability. Organizations with positive reserve ratios are financially stable, but those with low or negative reserves face vulnerabilities. Key factors like strategy, leadership and financial planning related to improved financial sustainability.