Assessing Effects of International Donor Aid Shifts on Not-for-Profit Organisations’ Sustainability Strategies in Uganda

This research delves into the implications of shifts in international donor aid on the sustainability of not-for-profit organisations in Uganda, framed within resource dependency theory, organisational ecology, strategic management, stakeholder theory and social capital. It critically analyses the impact of changing donor aid modalities, the determinants guiding donor aid allocations, and aid recipient effectiveness on the financial and identity sustainability of NPOs. This study addresses a notable gap in the literature regarding the strategies employed by Ugandan NPOs to navigate and sustain themselves amidst evolving donor aid paradigms. Employing an explanatory sequential mixed-methods approach, the research was conducted through surveys and interviews involving 101 NPOs, achieving a response rate of 75.9%. The sample comprised 60.4% international not-for-profit organisations, 32.7% local organisations, and 6.9% organisations with both international and local affiliations. Notably, most participating organisations were operational for over 20 years, and 87% reported having an existing sustainability strategy. The demographic data revealed a balanced gender distribution among respondents, while the diversity of organisations provided a comprehensive view of donor aid dynamics. Data analysis utilised inferential (logistic regression) and descriptive statistics (charts and tables with frequencies and proportions). The logistic regression analysis uncovered that variations in donor aid modalities, particularly budget support and aid localisation, substantially affect NPO sustainability strategies. Specifically, a unit increase in donor aid localisation correlates with a 0.257 increase in sustainability strategy effectiveness, while a shift towards result-based delivery indicates a 0.512 increase. Conversely, increased donor aid-recipient effectiveness, particularly regarding accountability and value-for-money requirements, is linked to a 0.207 decline in sustainability. These results illustrate the paradox inherent in donor compliance, revealing tensions between NPO alignment with donor priorities and preserving their mission integrity. The findings underscore NPOs’ need to embrace agility and responsiveness to enhance their impact and adaptability to the shifting donor aid landscape, fortifying their resilience and sustainability. Recommended strategies for bolstering NPO sustainability amidst donor aid volatility include adaptive change management, diversification of donor and funding portfolios, cost-containment measures, collaboration and coordination, flexible strategy formulation, accountability, and structured learning and partnerships. While financial sustainability strategies such as revenue diversification and partnerships have demonstrated positive outcomes, the movement towards result-based aid and localised donor allocations poses significant challenges for the long-term viability of NPOs. This study contributes to the discourse on NPO sustainability by empirically evidencing the effects of shifts in international donor aid and providing actionable recommendations for developing robust, localised, and adaptable sustainability frameworks. Further research should explore the impact of private-sector collaborations on the long-term sustainability of nonprofit organisations. Additionally, longitudinal studies could provide deeper insights into this research phenomenon, allowing for a more comprehensive understanding of the evolving dynamics and outcomes of these partnerships.