EFFECT OF WORKING CAPITAL MANAGEMENT PRACTICES ON SUSTAINABILITY OF NON-GOVERNMENTAL ORGANIZATIONS IN NAIROBI COUNTY

Abstract

The non-governmental organizations play a significant role in the economic developments and social wellbeing in the economy of a given country. This study aimed at establishing the effect of working capital management practices on Sustainability of NGOs in Nairobi County. The study was guided by the operating cycle theory, and the theory of economic regulation. It was anchored on a positivist paradigm philosophy. The study employed descriptive research design. A sample of 286 out of a target population of 1000 senior program managers and chief executive officers was obtained using stratified random sampling. A pilot study was conducted on 15 senior program managers and chief executive officers from NGOs within Nairobi County. Reliability was tested using the Cronbach coefficient. Primary data was collected from sampled officers using structured questionnaires, while secondary data was obtained from the audited financial statements of the NGOs and publications by the NGO coordination board. 172 questionnaires were found to be satisfactorily completed for analysis yielding a 60.14% response rate. The data was summarized and presented in tables and charts. Statistical Package for Social Scientists (SPSS) was used for data handling and analysis. The descriptive statistics included frequencies, percentages, means, modes and standard deviations. Inferential statistics included hypothesis testing using Chi Square test for independence to test whether the rating was dependent on the age of the NGOs, modelling using correlational and linear regression analysis and Analysis of Variance (ANOVA). For regression analysis, the normality of the response variable (NGO sustainability) data was confirmed using the Shapiro-Wilks test, while other diagnostic tests included Variance Inflation Factors (VIFs) and Pearson’s Correlation analysis to assess collinearity, coefficients of determination, t and F statistics. In assessing sustainability of NGOs, the current ratio, the donor dependency level, and the survival ratio were computed.