THE ROLE OF FINANCIAL MANAGEMENT IN ENHANCING NGO SUSTAINABILITY: A STUDY IN PAKISTAN

Abstract

This research examines the function of financial management in maintaining non-governmental agencies (NGOs) in Pakistan, a sector becoming increasingly known for its donations to disaster relief, development, and social work. Although they have a big footprint, most Pakistani NGOs suffer from serious sustainability problems due to weak financial controls, unpredictable budgeting, weak accountability, and overwhelming donor dependency. This research is Efforts at empirical exploration of financial management practices such as budgeting, internal controls, financial reporting, and audit compliance on sustainability in general of NGOs working in Pakistan. As per Resource-Based View (RBV) and Stakeholder Theory, the thesis follows a positivist methodology with a deductive quantitative research approach. A systematic questionnaire was administered to management officers and financing experts of 250 registered NGOs in a wide range such e.g., disaster relief work, education, healthcare. Data were collected through purposive sampling and processed in SPSS and AMOS. Descriptive statistics, reliability analysis, exploratory factor analysis, correlation, multiple regression, and structural equation model (SEM) were utilized for testing the proposed relationships. Answers to analysis reveal that budgeting, internal controls, and financial reporting are highly and was positively related to NGO sustainability, and compliance was a strong predictor. Structural model fit was very good (CFI = 0.94, RMSEA = 0.05), showing that the suggested financial management constructs have a strong impact on sustainability outcomes. Financial transparency was also found to be a partial mediator between financial practices and sustainability, demonstrating that technical controls and ethical accountability are both crucial.

The research enriches both theoretical literature and policy NGO management by providing a quantifiable link between financial management and sustainability. It verifies that effective budgeting processes, strong internal controls, regular reporting, and vigilant audit mechanisms greatly enhance an NGO's capacity to survive, respond, and thrive in uncertain economic conditions. The research further offers an empirically validated framework for financial sustainability measurement in NGOs and practical suggestions for practitioners, policymakers, and international donors who aim to increase the financial resilience of development organizations in Pakistan.

Though the cross-sectional nature of the study and purposeful sampling present some limitations, the findings form a strong basis for conducting future longitudinal and cross-country comparative research. The thesis suggests that a capacity-building model, better financial governance policies, and more investment in financial systems in NGOs should be implemented to build long-term organizational influence and donor trust.