Does Revenue Diversification Predict Financial Vulnerability Among Non-governmental Organizations in sub-Saharan Africa?

Abstract

Non-governmental organizations (NGOs) in sub-Saharan Africa (SSA) experience financial challenges that hinder efforts to promote social change and development. Revenue diversification is one adaptive response to these challenges, yet there is a lack of evidence concerning the relationship between revenue diversification and financial vulnerability among NGOs in SSA. Using data from an online survey of NGOs (N = 170), we hypothesized that a greater number of revenue sources is associated with lower probability of financial vulnerability, while a greater level of dependence on international funding is associated with higher probability of financial vulnerability. Results from probit regression models controlling for organizational characteristics indicated partial support for hypotheses. Having four or more types of revenue was associated with 87% lower probability of financial vulnerability compared to having one type of revenue (p < 0.001). Also, NGOs with up to half of their budgets covered by international sources had 17% lower probability of financial vulnerability compared to NGOs with no international funding (p < 0.05). Implications for future research to further explore these relationships are discussed.