Financial sustainability in non-governmental organizations: A case study of community action for health

Abstract

This study examines the determinants of financial sustainability in non-governmental organizations (NGOs) operating in resource-constrained environments, using evidence from Uganda's healthcare sector. We analyze Community Action for Health (CAfH), an NGO delivering essential health services in the Karamoja region, to identify factors affecting long-term financial viability. Using a mixed-methods approach combining surveys, interviews, and financial data analysis (N=200), we find that excessive donor dependency, limited revenue diversification, and weak organizational capacity significantly impact financial sustainability. Our results show that 60% of operational funding comes from a single donor, creating substantial organizational vulnerability. We demonstrate that resource mobilization effectiveness is constrained by inadequate leadership skills (75% of staff lack financial management expertise) and limited community economic capacity (90% of beneficiaries unable to provide financial support). The study contributes to the literature on NGO financial sustainability by providing empirical evidence from a developing country context and proposing a framework for assessing and improving financial resilience in donor-dependent organizations. Our findings have important implications for NGO management, donor strategies, and policy development in the Global South.