Fiscal Foundations: Assessing Financial Management as a Driver for NGO Institutional Development in East Africa

Abstract

Purpose: This study evaluated the effect of financial management on the institutional development of non-governmental organisations (NGOs) in Kenya, Uganda, Tanzania, and South Sudan for the period 2015–2021. Methodology: A concurrent mixed-methods design was adopted. The quantitative component employed a cross-sectional survey of 476 respondents from 28 NGOs across four countries (94.4% response rate), analysed using descriptive statistics, Pearson correlation, multiple regression, and ANOVA. The qualitative component comprised 48 in-depth interviews, analysed using thematic analysis. Findings: Financial management components collectively explained 53.9% of the variance in institutional development (R² = 0.539, F = 184.267, p < 0.001). Financial reporting emerged as the strongest predictor (β = 0.287, p < 0.001), followed by strategic budgeting (β = 0.234, p < 0.001), financial controls (β = 0.198, p = 0.001), and donor compliance (β = 0.176, p = 0.006). Organisational age, budget size, and staff size significantly moderated these relationships (p < 0.001). Qualitative findings revealed a persistent tension between donor compliance demands and strategic financial autonomy. Conclusion: Financial management has a significant positive effect on institutional development but is constrained by donor-driven short-termism and limited strategic capacity. Recommendations: NGOs should shift from defensive compliance to strategic financial planning; donors should invest in core funding; and policymakers should establish harmonised reporting standards.