Influence of Resource Allocation on Organizational Performance in Charitable Non-Governmental Organizations in Nairobi County

Influence of Resource Allocation on Organizational Performance in Charitable Non-Governmental Organizations in Nairobi County

*Mohammed Bashir Abdi, James Nzili, Michael Kiama

School of Business and Economics, Kenya Methodist University

Corresponding Author*

DOI: https://dx.doi.org/10.47772/IJRISS.2024.806141

Received: 30 May 2024; Revised: 10 June 2024 Accepted: 15 June 2024; Published: 12 July 2024

ABSTRACT

This paper sought to examine the influence of resource allocation on the organizational performance of charitable NGOs in Nairobi County. The study applied a descriptive research design. The population for the study was 1427 employees of charitable NGOs in Nairobi County. Stratified random sampling was applied in addition to the Taro Yamane formula to come up with a sample size of 313 respondents. The study gathered data through questionnaires which were administered both physically and online. Data collected was analyzed through both descriptive and inferential analysis. Results revealed a β of 0.496 and a p-value of 0.001, between resource allocation and the organizational performance of charitable NGOs in Nairobi County. The study concluded that resource allocation had a positive and significant influence on the organizational performance of charitable NGOs in Nairobi County. The study recommended prioritization of budgeting for financial resources as a crucial aspect of their operations, ensuring efficient allocation to various programs and activities. Additionally, the study recommended recognition of the importance of a diversified workforce to invest in human resources across all departments. Besides, the study recommended that technological advancements should be embraced by acquiring and utilizing ICT gadgets, hardware, and software to enhance organizational efficiency and service delivery. Lastly, the study recommended that stakeholders should continually evaluate and optimize resource allocation strategies to ensure alignment with organizational goals and ultimately enhance the overall performance and impact of charitable NGOs in Nairobi.

Key Words: Resource Allocation, Organizational Performance, Charitable NGOs, Nairobi County

INTRODUCTION

Resource allocation in NGOs is a multidimensional process which is very important for them to fulfill their functional goals. It comprises the allocation of limited resources such as funds, skilled people, and materials among diverse projects and programs. This isn’t just a disposition to split resources equally but a decision-making strategy to achieve the maximum impact. Efficiency in the use of resources means that every dollar spent brings a positive impact on the mission and purpose of the organization. It’s not only about meeting immediate needs but also long-term sustainability, always considering initiatives consistent with the NGO’s core values and perspective (Mwai et al., 2018). NGOs carry out highly targeted need assessments coupled with programming evaluations to guide their decisions on resource allocation, focusing on areas of highest need and where resources have the most effect. Addressing this would involve looking into issues like the seriousness of the problem, the size at which the problem occurs, the level of its attainability, and its supportability over time. By administering projects in line with these standards, NGOs can ascertain that their limited resources will be used optimally and effectively to confront the most alarming issues that their community is facing (Tun et al., 2019).

Managing resources towards the organizational performance of NGOs is crucial because this cannot be overestimated. When they use their resources optimally, NGOs can subsequently have improved program results, accountability, and rapport with donors as well as those stakeholders involved. Furthermore, resource allocation strategies give NGOs the ability to be flexible and responsive to rising emergencies and changing environments within a short period. Through managing resources appropriately, NGOs can gain more visibility, uplift more number of beneficiaries, and eventually contribute to substantial social alterations (Brass et al., 2018). Resource allocation is not limited to financial plans but incorporates the organization’s full potential to create an impact in the world. Effective resource allocation embraces NGOs becoming more proactive and visionary, which means they must look into the future by anticipating the demands and needs of tomorrow and allocate their resources in a way that optimizes their impact going forward. This may involve investing in capacity-building initiatives, exploring new programmatic areas, or diversifying funding sources to ensure financial sustainability (Ngo et al., 2018).

Global resource allocation practices in NGOs differ because of variations in organizational structures, funding systems, and cultural issues. Larger NGOs with diverse funding portfolios could use their diverse funding sources with ease than small grassroots organizations that are mainly dependent on short-term funding. Nevertheless, this is a common problem for both small and large NGOs that is related to the appropriate use of the resources (Stahl et al., 2020). Successful NGOs often rely on networking, partnerships, and inventive strategies of fundraising to secure enough resources and wisely employ them to implement their envisioned plan and key objectives. Additionally, they emphasize transparency and accountability in the resource allocation process such that stakeholders are involved in decision-making and resources are used in line with the donor’s expectations and organizational priorities. Besides, NGOs are also supposed to be responsive to the needs and priorities of the communities they serve, by making sure that resource allocation decisions consider the relevant local knowledge and intuition (Fan et al., 2021).

The allocation of resources in NGOs in Kenya is faced with particular challenges that result from a volatile economy, political instability, and the scarcity of resources. Lack of government commitment and the exhaustion of donors only make the issues of obtaining enough resources more acute. Furthermore, bureaucracy and corruption have been the issues that have been haunting the efficient distribution of funds, leading to the misapplication and loss of funds (De Waal, & Olale, 2019). Notwithstanding these challenges, NGOs in Kenya navigate the terrain by harnessing partnerships and community initiatives to maneuver impediments and achieve impact through their programs. Moreover, they advocate for reforms of policies and institutions that serve as an enabling platform for NGOs to operate in a conducive way and get the necessary resources they need to tackle the rampant social challenges (Ndungu, & Karugu, 2019).

The failure to properly allocate resources can hinder an NGO’s chances of success and have tangible impacts. Scarce resources might result in program ineffectiveness, staff burnout, and the organization’s downfall. In the absence of a sufficient budget, these NGOs may lack effectiveness in implementing projects. They will end up losing visibility and missing out on great opportunities to be of value to the communities they are serving (Hamouche, 2023). Moreover, poor resource allocation practices can undermine donor trust and jeopardize future funding opportunities. To address these challenges, NGOs must adopt transparent, accountable, and participatory approaches to resource allocation, ensuring that resources are utilized effectively to maximize impact and create sustainable change. This may involve strengthening internal systems and processes, building the capacity of staff and volunteers, and fostering partnerships with other organizations and stakeholders to leverage resources and expertise. By prioritizing strategic resource allocation, NGOs can enhance their effectiveness and make a meaningful difference in the lives of those they serve (Podgorodnichenko, Edgar, & McAndrew, 2020).

LITERATURE REVIEW AND THEORY

Resource Dependence Theory

Resource Dependence Theory (RDT) originated in the late 1970s, primarily through the collaborative efforts of Jeffrey Pfeffer and Gerald R. Salancik. Their seminal work, “The External Control of Organizations: A Resource Dependence Perspective,” published in 1978, laid the foundation for understanding organizational behavior from an external standpoint. RDT emerged as a reaction to earlier organizational theories that predominantly focused on internal factors such as structure, culture, and leadership to explain organizational behavior. Pfeffer and Salancik argued that organizations are not isolated entities but are intricately interconnected with their external environment, relying heavily on external resources for their functioning and survival (Zona et al., 2018).

The core tenets of RDT revolve around the notions of resource dependency and organizational adaptation. Organizations constantly strive to minimize their dependence on external entities by acquiring, controlling, and managing crucial resources. These resources encompass financial assets, technological advancements, expertise, legitimacy, and access to influential networks (Sisneros-Kidd et al., 2019). The theory posits that the external environment exerts significant influence on organizational behavior, necessitating adaptations in strategies and structures to secure a stable flow of resources. Moreover, RDT emphasizes that resource dependencies create interdependencies among organizations, leading to power struggles, negotiations, and alliances as organizations vie to safeguard their interests and acquire essential resources (Craighead, Ketchen Jr, & Darby, 2020).

Understanding the role of resource allocation in the performance of NGOs in Nairobi County requires an appreciation of how resources affect the organization’s performance. In the context of NGOs, RDT offers a valuable framework for comprehending the intricate dynamics of resource allocation and its implications for organizational performance. NGOs, like other organizations, rely heavily on external resources such as funding, partnerships, and support from various stakeholders including donors, governments, and communities to fulfill their missions effectively. By employing RDT, researchers can delve into how NGOs strategically allocate resources to address their needs and objectives, navigate complex external environments, and enhance their performance outcomes (Prasad, Zakaria, & Altay, 2018). Furthermore, RDT sheds light on the role of power dynamics, institutional pressures, and network relationships in shaping resource allocation decisions within NGOs, thereby providing insights into the challenges and opportunities faced by these organizations in managing their resource dependencies and optimizing their performance. Through a thorough examination of resource dependence theory, scholars can gain deeper insights into the intricate interplay between resource allocation strategies and organizational performance in the unique context of NGOs, contributing to a more nuanced understanding of their dynamics and impact in the realm of social change and development (Arhin, Kumi, & Adam, 2018).

Empirical Literature Review

Mbogoh,Mukulu, & Waiganjo, (2019) conducted a study to explore whether the resources within organizations influence the successful execution of projects of NGOs in Kenya. Employing a Cross-Sectional Survey approach, the research focused on employees from various Grass-root Support Non-Governmental Organizations (GSNGOs) across sectors such as Education, Nutrition, Health, Agriculture, and Microfinance. To ensure robust data collection, a combination of tools including questionnaires, interviews, and observations was utilized. Both descriptive (utilizing measures like standard deviation, mean, and percentages) and inferential statistics (employing regression analysis and ANOVA) were applied for data analysis. The findings indicated a significant and positive relationship between organizational resources and project implementation.

Mwai, Namada, & Katuse, (2018) explored how the availability of resources impacts the effectiveness of NGOs. It followed a positivist research philosophy and employed an explanatory and descriptive research design. The target population comprised registered NGOs, with project managers serving as the sample unit. Data collection relied on a questionnaire, and analysis involved both descriptive (e.g., standard deviation, mean, percentages) and inferential statistics (e.g., regression analysis, ANOVA). The findings indicated that the efficiency of organizational processes is influenced by fundraising activities and the allocation of funds to strategic initiatives. However, staff empowerment was found to have a negative impact on process efficiency. The study suggested developing a metric for ranking NGO effectiveness to better categorize them based on their ability to achieve their missions and strategies. Furthermore, it recommended further investigation into why fundraising efforts do not significantly impact stakeholder satisfaction within NGOs.

Kimani, (2022) researched how resource allocation impacts the financial stability of non-governmental organizations (NGOs) in Kenya. Employing a thorough desktop literature review, the study focused on selecting pertinent seminal references and journal articles, all sourced from Google Scholar and restricted to works within the past decade. The investigation unveiled that effective resource allocation demands adept management of both internal operations and external market dynamics, facilitating intricate information processing. Notably, resource allocation empowers organizations to cultivate the necessary capabilities to navigate the ever-evolving and intricate external landscape. The study’s findings underscored a positive correlation between resource allocation and performance levels within healthcare-focused NGOs. Nevertheless, it was noted that Kimani’s exploration did not specifically address charitable NGOs in Nairobi County, thereby exposing contextual gaps in the research landscape.

Otaru, Adeyeye, & Sajuyigbe, (2021) researched to investigate how different financial strategies impact the sustainability of NGOs in Nigeria, focusing on the Minna area. Through purposive sampling, 118 staff members from 50 NGOs were selected for the study.

The research tested three hypotheses using a structured questionnaire and analyzed the data using various statistical methods. The findings indicated a positive and statistically significant relationship between private contributions and NGO sustainability. However, commercial activities showed a positive but insignificant impact, while government funding exhibited a negative correlation with NGO sustainability. Thus, the study suggests that NGOs should prioritize raising awareness about their activities to attract more private contributions, as government funding and commercial ventures may not significantly enhance sustainability.

Mweta, & Musa, (2018) sought to examine the criteria used by NGOs to allocate and utilize funds for their projects and programs. Using a descriptive research design, the study targeted all NGOs operating in Kenya. A sample of 100 NGOs and donor agencies was selected using random sampling across different sectors such as health, education, agriculture, and humanitarian aid.

Data was collected through structured closed questionnaires, and analysis was conducted using multiple regression analysis. The findings, presented through charts, tables, descriptive statistics, and correlation analysis, indicated that factors such as vulnerability, poverty focus and outreach, income disparities, lack of development strategies, absence of strategic planning, weak networking, political interference, insufficient funding, governance issues, operational limitations, and inefficiencies significantly influence fund allocation and utilization by NGOs. The study was however not focused on charitable NGOs therefore raising contextual gap.

DATA AND METHODS

This study applied a descriptive research design, to enable the researcher to answer questions on when? how? Which? When. Utilizing this approach enabled the researcher to investigate the influence of resource allocation on the performance of charitable NGOs in Nairobi County. The study examined 213 NGOs in the county, with a total of 1427 employees as the units of observation. Employing the Taro Yamane formula, a sample size of 313 participants was determined for the study.

n=N/ (1+Ne²) ………………………………………………….………………………equation (i)

n= 1427/ [1+ 1427(0.05²)] =313.

The study used a questionnaire to collect data through electronic and physical administration methods. Primary data gathered was analyzed through descriptive analysis (Mean, standard deviation, frequency, and percentages). Additionally, the study applied regression analysis to determine the influence of resource allocation on the organizational performance of charitable NGOs in Nairobi County.

Y=β₀+β₁+ε …………………………………………………………..…………equation (ii).

Where Y was the organizational performance of charitable NGOs in Nairobi County, β₀ was the constant, β₁ was the coefficient for resource allocationand  was the error term.

RESULTS AND DISCUSSIONS

Response Rate: The study fully administered 313 questionnaires, the researcher was however able to get feedback from 266 questionnaires which represented  an84.98% response rate.

Descriptive Statistics

Descriptive Statistics on Resource Allocation

Table 1 revealed that participants agreed that their organization budgeted for financial resources through budgeting as indicated by a mean of 3.49. Participants also agreed that their organization had employees serving in all departments and doing all jobs required shown by a mean of 4.03. Moreover, participants agreed that their organization had acquired ICT gadgets and used computer hardware and software to perform different functions as indicated by a mean of 3.86. Lastly, participants agreed that their organization had innovations that they considered useful through their research and development team that were important in serving their beneficiaries shown by a mean of 3.86.

Kimani, (2022) was of similar opinion in a research on how resource allocation impacted the financial stability of non-governmental organizations (NGOs) in Kenya. Thorough desktop literature review, the study focused on selecting pertinent seminal references and journal articles, all sourced from Google Scholar and restricted to works within the past decade unveiling that effective resource allocation demanded adept management of both internal operations and external market dynamics, facilitating intricate information processing. The study’s findings underscored a positive correlation between resource allocation and performance levels within healthcare-focused NGOs.

Table 1: Descriptive Statistics on Resource Allocation

Descriptive Statistics on the Performance of Charitable NGOs

Table 2 revealed that participants on average agreed that the amount of funding they had received from donors had been rising in the past five years shown by a mean of 4.05. Additionally, participants revealed that in the past five years, they had managed to complete more projects than any other time before as shown by a mean of 3.85. Moreover, participants agreed that the cost of obtaining finances from the donors had greatly reduced in the past five years (fund-raising efficiency) as indicated by a mean of 3.90. Lastly, participants agreed that they had been able to reach and serve more beneficiaries in the past five years as shown by a mean of 3.78.

Table 2: Descriptive Statistics on the Performance of Charitable NGOs

 Regression Coefficients

Table 3revealed that 24.6% of the variations in the performance of charitable NGOs were explained by resource allocation, as indicated by an r-square value of 0.246.

Table 3: Model Summary

1. Predictors: (Constant), Resource Allocation

Table 4 revealed an F-statistics value of 85.983, along with a p-value of 0.001, indicating that the simple linear regression model used in the study was highly significant in predicting the performance of charitable NGOs.

Table 4: ANOVAa

1. Dependent Variable: Performance of charitable organizations
2. Predictors: (Constant), Resource Allocation

Further results from Table 5 revealed a beta coefficient of 1.919 and a p-value of 0.001 which indicates that the constant in the model was statistically significant in the prediction of the performance of charitable organizations. Moreover, results indicated a beta value of 0.496 and a p-value of 0.001 between resource allocation and the performance of charitable NGOs which implied that resource allocation significantly influenced the performance of charitable organizations because the calculated p-value of 0.001 was less than the critically chosen value of 0.05 aligning with the study by Mbogoh, Mukulu, & Waiganjo, (2019) exploring whether the resources within organizations influence the successful execution of projects of NGOs in Kenya. Employing a Cross-Sectional Survey approach, the research focused on employees from various Grass-root Support Non-Governmental Organizations (GSNGOs) across sectors such as Education, Nutrition, Health, Agriculture, and Microfinance. Both descriptive (utilizing measures like standard deviation, mean, and percentages) and inferential statistics (employing regression analysis and ANOVA) were applied for data analysis with the findings indicating a significant and positive relationship between organizational resources and project performance.

Table 5: Regression Coefficients

1. Dependent Variable: performance of charitable organizations

CONCLUSIONS AND RECOMMENDATIONS

The study concluded that charitable NGOs budgeted for financial resources through budgeting.  Moreover, the study concluded that charitable NGOs had employees serving in all departments and doing all jobs required. Additionally, the study concluded that charitable NGOs had acquired ICT gadgets and used computer hardware and software to perform different functions. Besides, the study concluded that charitable NGOs had innovations that they considered useful through their research and development teams that were important in serving their beneficiaries. Lastly, the study concluded that resource allocation significantly and positively influenced the performance of charitable NGOs.

The conclusions of the study are therefore in support of the Resource Dependence Theory which revolves around the notions of resource dependency and organizational adaptation. The theory suggests that organizations constantly strive to minimize their dependence on external entities by acquiring, controlling, and managing crucial resources which encompass financial assets, technological advancements, expertise, legitimacy, and access to influential networks. The theory also explains that the external environment exerts significant influence on organizational behavior, necessitating adaptations in strategies and structures to secure a stable flow of resources. Moreover, the Resource Dependence Theory emphasizes that resource dependencies create interdependencies among organizations, leading to power struggles, negotiations, and alliances as organizations vie to safeguard their interests and acquire essential resources.

The study recommended that charitable NGOs must prioritize budgeting for financial resources as a crucial aspect of their operations, ensuring efficient allocation to various programs and activities. Additionally, the study recommended recognition of the importance of a diversified workforce with NGOs continuing to invest in human resources across all departments, enabling them to fulfill their missions effectively. Besides, the study recommended that charitable NGOs in Nairobi should embrace technological advancements by acquiring and utilizing ICT gadgets, hardware, and software to enhance organizational efficiency and service delivery. Moreover, the study recommended that charitable NGOs in Nairobi should foster a culture of innovation through dedicated research and development teams for the creation of impactful solutions tailored to the needs of their beneficiaries. Lastly, the study recommended that stakeholders should continually evaluate and optimize resource allocation strategies to ensure alignment with organizational goals and ultimately enhance the overall performance and impact of charitable NGOs in Nairobi.

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