Determinants of financial sustainability of non-governmental organizations (NGOs) in Ghana

Financial sustainability of NGOs has become a global concern in the wake of global financial crisis which has reduced donor funds from developed economies to developing countries. NGOs play an important role in developing countries like Ghana and as such their financial sustainability is very important not only for the NGOs but the Ghanaian economy. The study examined the factors that determine financial sustainability of NGOs in Ghana based on the following variables; sound financial management practices, income diversification, own income generation, good donor relationship and the use of ERPs and Cloud Accounting by NGOs. The study sampled 56 NGO where data was collected through the administration of questionnaires. Data was analysed using various statistical tools such as frequencies, graphs, tables, Kruskal Wallis Test and regression analysis. The results of the study showed that NGOS in Ghana are donor dependent and have little diversification of income as well as less own income generation measures in place. This results show that NGOs in Ghana are not financially sustainable and as such need income generating income measures that will help them to be financially reliable. The results show that sound financial management practices, own income generation by NGOs, diversification of income and good donor relationship are the key determinants of financial sustainability of NGOs in Ghana. The use of ERP systems and cloud accounting had positive effect on NGO financial sustainability but statistically insignificant. The results call for NGOs to take steps to improve these factors in their respective organization if they want to improve their financial sustainability.