Theory of Change as a Strategic Framework for Strengthening Financial Sustainability in Non-Profit Organisations: Evidence from Nama Foundation.

Abstract

Non-profit organizations (NPOs) play a vital role in addressing complex social challenges, yet many continue to struggle with financial sustainability due to dependence on short-term donor funding and limited organizational capacity. Although the Theory of Change (ToC) is widely recognized as a framework for program planning and evaluation, its application to organizational financial sustainability remains insufficiently explored. This study examines how the NAMA Foundation operationalizes the Theory of Change as a strategic framework for strengthening the financial sustainability and institutional resilience of partner civil society organizations (CSOs). A qualitative case study design was employed using virtual audit interviews, document analysis, and organizational assessment based on NAMA's Financial Sustainability Assessment Framework. Findings indicate that while the assessed CSO demonstrates strong governance, strategic planning, and organizational management, significant weaknesses remain in financial risk management, fund accessibility, and the conversion of income-generating initiatives into sustainable revenue. The study identifies four strategic priorities for long-term sustainability: strengthening financial governance and risk management, enhancing partnerships and resource mobilization, achieving operational self-sufficiency, and institutionalizing evidence-based organizational learning. The findings extend the Theory of Change beyond its conventional use in program evaluation by demonstrating its value as an organizational framework linking governance, financial management, and strategic learning to long-term financial sustainability. The paper contributes both theoretically to the expanding Theory of Change literature and practically to non-profit managers, capacity-building organizations, and policymakers seeking more sustainable models of organizational development.