Social Mission, Governance Practices and Financial Sustainability in Kenyan Non-Profit Microfinance Institutions

Abstract

Introduction – The study explores the link between social mission intensity and financial sustainability of the non-profit microfinance institutions (NGO-MFIs) in Kenya and the moderating effect of governance practices.                                                                           

Methodology – The study adopted a quantitative correlational research design focusing on NGOs- MFIs in Kenya. The primary data was collected through structured questionnaires for management staff, and secondary data was obtained from audited financial statements. The poverty alleviation programs, hunger and food security reduction programs/activities, health sector service provision, and non-financial service provision were incorporated as social mission intensity indicators. SPSS was used for descriptive and inferential analyses, and hierarchical regression analysis was used to investigate the moderation effects.   

Results – Results found that social mission intensity is a positive factor that affects the financial sustainability of NGO-MFIs in Kenya. Additionally, governance practices matter in mitigating the adverse impacts of social mission intensity on financial sustainability and in strengthening the financial institutions' capability to deliver both social and financial outcomes.

Discussions – Management, board members, regulatory bodies and development partners’ guidance must ensure that the social mission goals are structurally linked to effective corporate governance systems. Future research should be extended to other developing economies and other financial service sectors to deepen the understanding of the relationship between the depth of social mission and financial sustainability.

Keywords:       Social Mission Intensity, Governance Practices, Financial Sustainability, NGO-MFIs.