Financial Planning Practices and Donor Retention Rate of Education-Centered Non-profit Organizations in Nairobi City County, Kenya

This study examines the influence of financial planning practices on donor retention rates in education-based non-profit organizations (NPOs) in Nairobi City County. These organizations are vital in addressing educational disparities in underserved regions, but they have faced increasing donor retention challenges, particularly since 2019. This study relates the need to uncover financial planning practices' effect on the donor retention rate of education non-profits in Nairobi City County. It aimed to evaluate the correlation between budgeting practices and donor retention rates, determine how financial forecasting strategies affect donor retention rates, investigate the effect of cash flow management methods on donor retention rates, and examine the association between risk management approaches and donor retention rates. The study, grounded in stewardship, social exchange, and resource dependency theories, sampled 85 finance and fundraising officers from 109 targeted education-based NPOs. Data were collected through open— and closed-ended questionnaires. Three diagnostic tests were performed before the inferential analysis: the normality, multicollinearity, and heteroscedasticity tests. Descriptive and inferential techniques guided the analysis of data after collection with the help of Excel and SPSS software. The data was analyzed using the Pearson correlation. Multiple linear regression analysis was used as the decision rule for testing the study's hypothesis. The decision rule specified that the null hypothesis rejection or acceptance was established on the coefficient's signage. The findings reveal that all three financial planning practices significantly and positively affect donor retention. The study concludes that effective financial management practices are essential for donor retention and recommends implementing comprehensive financial frameworks. Further research is encouraged to explore these dynamics in other non-profit sectors.