FINANCIAL PRACTICES AND PROGRAM EFFICIENCY OF NON-GOVERMENTAL ORGANIZATIONS IN NAIROBI CITY COUNTY, KENYA
Martin N. Mutua - PhD Fellow, Accounting and Finance Department, School of Business, Kenyatta University, Kenya
Prof Ambrose O. Jagongo (PhD) - Associate Professor, Accounting and Finance Department, Kenyatta University, Kenya
ABSTRACT
The increasing demand for accountability and efficient utilization of donor funds has intensified pressure on non-governmental organizations (NGOs) to enhance program performance. In Kenya, particularly in Nairobi City County, NGOs continue to face challenges related to financial management practices, which undermine program efficiency in resource-constrained and donor-dependent environments. Program inefficiencies have been linked to weak financial systems, poor resource allocation, and limited organizational capacity. While external funding uncertainties persist, financial practices remain a critical internal mechanism that NGOs can leverage to improve program outcomes. This study aimed to investigate the effect of financial practices on program efficiency among NGOs operating in Nairobi, Kenya. The specific objectives were to examine the effects of liquidity management, budgeting practices, financial reporting quality, and financial sustainability on program efficiency, as well as to assess the mediating role of resource allocation efficiency and the moderating role of organizational capacity in this relationship. The study was anchored on Agency Theory, Pecking Order Theory, and Financial Accountability Theory.