Exploring the funding challenges and financial sustainability trends of selected non-profit organisations in South Africa

Abstract

Non-profit organisations are constantly concerned about their ability to continue implementing their programmes in a sustainable manner. This is so their work in addressing socioeconomic challenges can continue to benefit the vulnerable members of society. Their interventions require sustainable donor funding from, which they often have no control over, and organisations can find themselves financially vulnerable, so that the sustainability of their organisations is at risk. This research aims to understand the factors that affect and influence the financial sustainability of non-profit organisations. It explores the approaches that NPOs have pursued in order to become financially sustainable. Recognising financial sustainability as one of the key contributors towards organisational sustainability, the report covers the role of governance structures in enabling organisations to be financially sustainable. Senior managers from ten non-profit organisations operating in South Africa were interviewed. Qualitative research methods were applied to conduct data collection and analyse the interview responses, using an empirical interpretivist philosophy. The researcher used Atlas.ti software to analyse and develop findings. The results indicated that non-profit organisations prefer to have a combination of long term donor funding, a capacity to develop income generating sources, and a good reputation that allows them to attract collaboration partners in order to deliver on their missions. The results also showed that there is a need to develop strong governance structures that enable the organisations to recruit resourceful board members that can provide an oversight on organisational strategy and control, participate in their fundraising efforts, and enable the organisation to invest in ideas for income generation by increasing the risk appetite of the organisation. A preliminary framework is presented that can be used by organisations to design financial sustainability strategies. The research concludes by proposing recommendations for non-profit organisations, academic literature and management of non-profit organisations, as well as recommendations for future research