Financial sustainability of local NGOs funded by the Churches Health Association of Zambia in Zambia

Local non-profit organizations (LNPOs) play an important role in providing services to vulnerable communities, especially in rural areas where for-profit organizations do not reach. However, the sustainability of non-profit organizations is often not guaranteed, as evidenced by the closures of non-profit organizations (NPOs) that were once thriving. This study assessed the financial sustainability of local organizations that are funded by the Churches Health Association of Zambia. The study used a mixed methods approach, which comprised a desk review, qualitative, and quantitative surveys. Data analysis of the qualitative component was done using the thematic analysis approach. Quantitative data was analyzed using the Statistical Package for the Social Sciences (SPSS) version 22; descriptive and inferential statistics were done by summarization of the findings, which included an assessment of the financial position and operational activity of the NPOs and multivariable linear regression. A total of 87 participants took part in the survey, while 21 participated in qualitative in-depth interviews. The results show that CHAZ significantly contributed to the financial sustainability of the four local NPOs, particularly for NPO-2, which relied on CHAZ for up to 99% of its funding. In contrast, the other NPOs depended on CHAZ to a lesser extent, with contributions ranging from 8% to 19%. Cash reserves and self-sufficiency ratios varied, showing limited liquidity and low self-sufficiency across NPOs. Regression analysis showed own income generation and Strategy and Leadership as significant contributors to financial sustainability. From the qualitative interviews, challenges included limited donor funding, restricted domestic resource mobilization, economic instability, and internal issues such as inadequate long-term planning and funder dependency. The study highlighted that funding from CHAZ significantly enhances the financial resilience of LNPOs in Zambia by promoting income diversification and reducing reliance on single funding sources. Organizations with positive reserve ratios are financially stable, but those with low or negative reserves face vulnerabilities.