FINANCIAL REPORTING QUALITY AND FINANCIAL SUSTAINABILITY OF NON-PROFIT ORGANIZATIONS IN NAIROBI COUNTY KENYA
Abstract
This study examined the effect of financial reporting quality on financial sustainability of non-profit organizations in Nairobi County, Kenya. The target population consisted of 1388 registered non-profit organizations in Nairobi County, with the financial accountant or their equivalent as the target respondent. A sample size of 311 respondents was selected using stratified sampling and Yamane’s formula. Data was collected through structured questionnaires and analyzed using descriptive and inferential statistics, including means, standard deviations, correlations, and regression analysis with the aid of SPSS version 27. The results were presented in tables and figures, accompanied by relevant interpretations. Regression results showed a significant positive relationship between the accuracy of financial reports and financial sustainability, indicating that improved accuracy in reporting enhances financial stability and long-term sustainability. Transparency in financial reporting has a direct, positive effect on financial sustainability, emphasizing that clear, accessible reports foster donor trust and support long-term financial viability. Strict adherence to financial reporting standards like IFRS positively affects financial sustainability, suggesting that compliance boosts credibility and strengthens donor trust, contributing to long-term stability. Timely financial reporting positively impacts financial sustainability, highlighting that providing up-to-date, accurate financial data strengthens stakeholder trust and encourages continued funding, ensuring financial health. The study found that accuracy, transparency, compliance with IFRS, and timely financial reporting positively influence the financial sustainability of non-profit organizations in Nairobi. It was recommended that organizations improve internal controls, enhance accessibility and clarity of reports, ensure consistent IFRS compliance, and strengthen systems for timely reporting to foster donor trust, enhance credibility, and support long-term sustainability.
Key Words: Financial Report Accuracy, Financial Reporting, IFRS Compliance, Donor Trust
CITATION: Omaru, R., & Miroga, J., Otinga, H. (2025). Financial reporting quality and financial sustainability of non-profit organizations in Nairobi County Kenya. The Strategic Journal of Business & Change Management, 12 (2), 211 – 233. http://dx.doi.org/10.61426/sjbcm.v12i1.3208
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DOI: http://dx.doi.org/10.61426/sjbcm.v12i2.3208
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