The financial management of donor funds : a case study of Namibian non-governmental organisations

Abstract

The purpose of this study is to look at the financial management of donor funds by Non-Governmental Organisations (NGOs) in Namibia, looking at more specifically, the relationship between the three cost categories, namely personnel cost, administration cost, and activity related cost, and how the relationship affects performance. The study therefore highlighted how an influence on the relationship between the three cost categories could have an effect on the overall results of any program. The study also looked at the sustainability of the various organisations which are donor funded.

Twenty organisations from which twenty programs were drawn were sampled for the purpose of this study. One program was selected from each organisation. Each program was assessed for a period of three years based on how the funds were spent amongst the three different cost categories for those three years. Each total cost of each cost category was expressed as a percentage of the program’s total cost for that specific financial year. This allowed a fair comparison of one financial year to the other, one cost category to the other, and one program to the other program. The computed percentage of each of the cost categories showed just how much of the donor funds were spent on the program activities, personnel, and administration costs.

The study found that the administration cost was in most cases directly related to either personnel or activities cost. The personnel and activity cost had an indirect relationship, when one increased, the other decreased. The personnel cost was in most cases over estimated in the first year of the program and the activity cost was in most cases under estimated. An increase or decrease in the number of personnel or the volume of activities carried out seemed to have a great influence on the amount of money spent on the administration costs.