Financial Management Systems and Human Resource Capacity as Determinants of Project Success in Local NGOs: A Literature Review

Abstract

Abstract Sound financial management and adequate human resource capacity are widely regarded as foundational, though frequently under-resourced, organizational capabilities within local NGOs implementing donor-funded projects. This article reviews literature addressing the relationship between financial management systems, including accountability, reporting, and disbursement mechanisms, and human resource capacity, including staff retention and psycho social well being, and the success of donor-funded NGO projects. The review draws on a comparative global review of donor-funded financial governance, a sector-wide assessment of staff turnover in humanitarian organizations, and empirical evidence on emotional exhaustion and turnover intention among NGO workers, synthesized thematically around financial accountability, disbursement and reporting practice, and human resource retention. Findings indicate that weak financial accountability and limited reporting consistency are recurrent determinants of project under performance, that participatory and performance-based financial mechanisms are increasingly associated with stronger donor confidence, and that high staff turnover, often attributable to resource constraints, burnout, and limited career development, undermines institutional knowledge and project continuity. The review identifies a need for empirical research that examines these two organizational capacities jointly, and in a Malawi-specific context, given the country's heightened exposure to aid volatility.