Evaluation of Good Financial Health Management Practices and its contribution to Program Implementation Rate for Small NGOs Supported by Donors in Malawi

Download Article

DOI: 10.21522/TIJMG.2015.02.01.Art012

Authors : Jones Stamalevi


Financial health management practices involves the management of the six key variables according to this research work which includes budgeting and planning, accounting system, internal control, financial reporting, grant management and staffing. Most nongovernmental organizations (NGOs) do not manage these variables and this has been a major obstacle to their programs implementation rate.

The study evaluates the effects of financial health management practices on implementation rate for NGOs. The study utilized a diagnostic research design and it’s a single case study targeted Malawi Girl Guide association (MAGGA) one of the NGO listed and registered in Malawi. Data was obtained through questionnaire and from document analysis of consolidated financial reports of years ending December: 2010, 2011, 2012 and 2013. Both qualitative and quantitative analyses were carried out on the data to determine the relationships between components of financial health management practices and the program implementation rate of the NGO.

The study established that financial health management practices was strongly related to high implementation rate. Implementation rate of an NGO depends upon effective financial health management practices. Furthermore, contrary to the expectation of the researcher, the research has further established that donors also contribute to poor implementation rate by late funding the NGOs supplemented by lack of program monitoring visits, spot check and lack of capacity building for implementing NGOs. These are the major constraints the NGOs face when implementing donor funded programs. The study therefore recommended that NGOs should focus on strengthening financial health management practices and encourage donors to disburse funds on time and make sure to carry out assurance activities like program monitoring, spot check visits, auditing and capacity building to minimise financial risks. 


[1.] Terry Lewis, (2013). Mango Management Accounting for Non-governmental Organisations.

[2.] John L. Colley, JR. , Jacqueline L. Doyle, George W. Logan, & Wallace Stettinius (2003) Corporate governance McGraw-Hill, Executive MBA Series

[3.] (HACT frame work 2014), Accessed on 28 April 2015 at www.gnhc.gov.bt/wp-content/uploads/2012/12/BHUTAN-HACT-REFERENCE

[4.] CIPFA 2013, “Managing Organizations Published by CIPFA Education and training Centre” http://www. cipfa. org/cetc

[5.] Mango's Guide to financial management for NGOs. Accessed on 10 February 2015 at http://www. mango. org. uk/guide/fmincontext

[6.] Magala, C. (2001 ). Management of change in tertiary institutions: The case of Makerere University. Makerere University:

[7.] Harvey, B. H. & Sorkin, H. L. (1988). "Nonprofit accounting and financial reporting. " In T. D. Connors (Ed. ). Then on profit organization handbook. New York: McGraw-Hill, Inc.

[8.] CPA Australia (2011)published by CPA Australia Ltd

[9.] COSO. (1998). Internal Control Integrated Framework. Report of the committee of sponsoring Organizations of Trade way Commission, Jessey: American Institute of CPA. Light Paul C. (2002), Pathways to Nonprofit Excellence. Brookings Institution Press

[10.] Alan Fowler and Rick James, 1994. The role of Southern NGOs in Development Cooperation; occasional paper series#2:INTRAC

[11.] Hope K. (2002), “The New Public Management: A Perspective from Africa”, in K. Mc Laughin, S. Osborne and E. Feline (Eds), New Public Management: Current trends and Future Prospects: London: Routledge

[12.] Alan Fowler, 1999. Distant obligations: speculations on NGO funding and the global market: University of Sussex, Brighton, UK

[13.] Marshall M. (2002), Legitimacy and Effectiveness: Civil Society Organizations’ Rolein Spillane, J. P. & Relmer, T. (2000). “Policy Implementation and Cognition: Reframing and Refocusing Implementation Research”, Review of Education Research, Vol. 72, No. 3 pp 387 – 431.

[14.] Good Governance, Paper presented at the Poverty Reduction Strategies Forum, Austria, October 29–November 1, 2002.

[15.] Tvedt, T. (1998). Angels of mercy or development diplomats? NGOs and foreign aid. Trenton: African World Press

[16.] Cohen J. (2003), Governance by and of NGOs, Institute of Social and Ethical Accountability, UK. Cohen, Krisnamoorthy and Wright (2004), The Corporate Governance Mosaic and Financial Reporting Quality, Journal of Accounting Literature, Vol. 23, pp 87– 152.

[17.] CPA Australia Internal controls for not-for-profit organisations-cpaaustralia.com. au Fowler A. (2000), “Relevance in the Twenty-first Century: The Case for Devolution and Global Association of International NGOs” in D. Eade (Ed).

[18.] León, P. (2001 ). Four Pillars of Financial Sustainability. The Nature Conservancy(2), 4-29

[19.] Keating, Elizabeth & Frumkin (2003), Re engineering Nonprofit Financial Accountability: Towards a More Reliable Foundation for Regulation, Journal of Public Administration Review, Vol. 63, No 1 pp 3-15.

[20.] Moore, M. H. (2000). Managing for value: organizational strategy in for-profit, nonprofit, and government organizations. Nonprofit and Voluntary Sector Quarterly, 29(1), 183-204.

[21.] Leat, D. (1988), Voluntary Organizations and Accountability, Worcester, UK. , Policy Analysis Unit, National Council for Voluntary Organizations.

[22.] Morris, M. H. , Coombes, S. , & Schindehutte, M. (2007). Antecedents and outcomes of entrepreneurial and market orientation in anon-profit context: Theoretical and empirical insights. Journal of Leadership & Organizational Studies, 13(4), 12-39

[23.] Brody, E. (2001 ), Accountability and Public Trust, in the state of America’s Non profit sector, Aspen Institute and Brookings Institution

[24.] Kotloff, L. J. & Burd, N. (2012). Building stronger non profits through better financial management: Early efforts in 26 youth-serving organizations. Public/Private Ventures, The Wallace Foundation

[25.] Murray, Bradshawand Wolpin (1992), Do Non profits Boards make a difference? An exploration of the relationships among the board structure, process and effectiveness, Nonprofit and Voluntary Sector Quarterly.

[26.] Bezjian, J. , Holmstrom, W. , Kipley, D. (2009). Creating not-for-profit organizational legitimacy during periods of economic constraints and diminishing donor resources. The Business Renaissance Quarterly, 4(4), 49-67.

[27.] Kogan M. (1986), Education Accountability: Ananalytical overview, London Hitchinson. Keating, Elizabeth & Frumkin (2003), Assessing Non-Profit Making Financial Measures, Accountability and Evaluation, Non-Profit Sector Research Fund

[28.] Harris M. (1996), “Dowe need Governing Bodies?” in D. Billisand M. Harris (Eds)Voluntary Agencies: Challenges of Organization and Management.

[29.] Eyong T. O. (2001 ), Promoting Good Governance in the Management of NGOs.

[30.] Gale L. C. (2003), Califonia Non-profit Quality Reporting Project, Retrieved 15 August 2004.

[31.] Boice, J. (2004), The Accountability, Accessed on 10 May 2015 at www.afpet.org/contentdocuments/marap04cover.pdf

[32.] Ebrahim, Alnoor, (2003), Accountability in Practice: Mechanisms for Donor NGOs, World Development, Vol 394.