Adaptive Capability and the Financial Sustainability of Kenyan Non-Profit Organizations

Abstract

Non‑profit organizations (NPOs) in Kenya continue to experience financial sustainability challenges due to declining donor funding and growing competition for limited grants. Although adaptive capability is theorized to help organizations adjust to changing environments, its specific contribution to financial sustainability within the Kenyan nonprofit sector remains underexplored. This study examined how adaptive capability influences the financial sustainability of Kenyan NPOs. A descriptive correlational design and quantitative cross‑sectional survey were used to collect data from senior leaders of registered NPOs across multiple sectors. Stratified random sampling generated a sample of 323 organizations, and 233 valid responses were obtained through a structured online questionnaire. Data were analyzed using ordinal logistic regression to determine the relationship between adaptive capability and financial sustainability. The findings showed that adaptive capability had a significant positive influence on financial sustainability. Organizations with low or moderate adaptive capability were substantially less likely to achieve higher levels of financial sustainability compared to those with strong adaptive capability. These results indicate that the ability to maintain flexible organizational systems, use information systems and market analysis effectively, and respond quickly to changing market conditions is essential for strengthening financial resilience. The study highlights the importance of building adaptive capability as a core organizational competency and underscores the need for strategic support that enables NPOs to operate with greater flexibility in responding to change.