The Non-Profit Sector in Kenya - Aga Khan Development Network

Karuti Kanyinga & Winnie Mitullah

Published by:The Institute for Development Studies (IDS)University of NairobiP.O. Box 30197 – 00100GPO Nairobi, KenyaTelephone: (+254 – 20) 247968 or 318262Cellphone: 254-733 524903 or 0722 499706Email: director-ids@uonbi.ac.keURL: www.uonbi.ac.ke/faculties/ids© 2007 Institute for Development Studies (IDS), University of NairobiISBN: 9966 00 0 0This publication is not for quotation without permission as specified inthe Copyright Act, Cap. 130 of the Laws of KenyaViews expressed in this publication are those of the authors and shouldnot be interpreted as reflecting the views of the Institute for DevelopmentStudies (IDS) of the University of Nairobi

AcknowledgementThe idea to produce a publication on basic features of the Non-ProfitSector in Kenya evolved from the realisation that past studies have notprovided a comprehensive picture of the sector. The lack of informationon the basic features of the sector has contributed to the sectorremaining least understood. Not even practitioners in the sector areaware about the size, structure and scope of the non-profit sector inKenya. We embarked on this mission with generous support andadvice of the Aga Khan Development Network (Geneva), throughRichard Holloway, the Civil Society Director. We are grateful toRichard, and Aga Khan Development Network AKDN, for this.Collection and analysis of data on which this publication is based hasbeen a challenging task. Many people helped us in meeting some ofthese challenges. We may not be able to thank all of them here. We aregrateful to Mr Sebastian Njagi, the Project Assistant, for coordinatingcollection of the first set of data and making substantive contributionto our writing. We are indebted to Mr Collins Omondi for assisting inupdating some of the data for this publication. Special thanks to MrAmbani Osogo for coordinating the review of outputs and organisationof forums for receiving comments.We acknowledge the financial support provided by both the FordFoundation and the Aga Khan Foundation in the first phase of theproject under the Johns Hopkins Comparative Non-Profit SectorProject. Thanks are due to Lester M. Salamon for his advice through-Acknowledgementsv

out the first phase of the project, and the subsequent contacts andlinkages that we continue to maintain with the Johns Hopkins Centrefor Civil Society Studies.We gratefully acknowledge the financial support provided by the AgaKhan Foundation to update data and produce this publication. We arein particular grateful to Richard Holloway, the Civil Society Director,Aga Khan Development Network, who facilitated the development ofthis publication. His advice and expert review of various drafts leadingto this publication is most appreciated; he motivated and encouragedus throughout to see light at the end of the tunnel. Special thanks goto Grace Isharaza (Aga Khan Foundation, East Africa) for her supportthroughout the period of producing this publication. Her effort inmaking follow ups on many deadlines that slipped through is onething we are highly appreciative of.None of these people, however, bears responsibility for any errors offact or interpretation that this publication may contain. This is ourresponsibility as the authors of this publication.Karuti KanyingaOctober 2007viThe Non-Profit Sector In Kenya

PrefaceThe Institute for Development Studies (IDS), University of Nairobi, hasbeen engaged in a study to document the size, structure and scope ofthe Non-Profit Sector in Kenya. The project was undertaken under theauspices of the Johns Hopkins Comparative Non-Profit Sector Projectof the Centre for Civil Society Studies (CCSS) at the Johns HopkinsUniversity. This was carried out with funding from the FordFoundation, East African Regional Office, and the Aga KhanFoundation.Although findings of the IDS Non-Profit Sector have been disseminatedthrough several forums and publications, the IDS, with the assistanceof the Aga Khan Foundation has found it worthwhile to producea publication to inform the general public, policy makers, donors,development practitioners and other stakeholders about the structure,scope, size and financing of the sector in Kenya. The IDS hopes thatthis will serve as an important reference point for studies on the sectorin Kenya. These findings, thus, provide an important entry pointto a full understanding of the sector in Kenya, and further form animportant base document for others wishing to study the sector.In Kenya, the last four decades have witnessed significant changes inthe development space. The developmental state occupied much ofthe development space in the 1960s and 1970s; the state was the mainengine of development. Public enterprises led in providing socialdevelopment. This changed from the early 1980s in tandem withPrefacevii

Table of ContentsChapter 1: Introduction 1What about the non-profit sector in Kenya?What this publication is aboutChapter 2: Growth Of The Non-Profit Sector In Kenya 4Explaining growthChapter 3: Size And Scope Of Non-Profit Sector 8Main features of the sectorOutdistances major industriesSimilar to other developing countriesAttracts volunteersHuge membershipMission of improving the welfare of societyChapter 4: Sources Of Revenue And Expenditure Patterns 16REVENUEFees are the dominant revenueNGOs are dependent on external donorsSelf help community groups are self reliantEXPENDITUREExpenditure patternsChapter 5:: Conclusions And Policy Implications 23

List of TablesTable 1: Example of non-profit sector organisations in Kenya 5Table 2: Number of non-profit organisations by seven categories in Kenya(1997-2005) in order of magnitude in 2005 7Table 3: Change in number of NPOs by seven categories (in 1997 and 2005)in order of amount of change 7Table 4: Significance of the non-profit Sector 10Table 5: NPO employment (paid and volunteers) by ICPNO 10Table 6: Non-profit workforce as a share of the economically-activepopulation by different kinds of country 12Table 7: Membership in NPOs in Kenya by ICNPO category 14Table 8: Mission of non-profit organisations 15Table 9: Sources of revenue by fields 19Table 10: NGOs sources of funding 21List of FiguresFigure 1: Overview of annual growth of NPOs (1997 and 2005) 8Figure 2: The Kenya non-profit sector workforce in context 11Figure 3: Distribution of paid employees and volunteers between serviceand expressive activities in Kenya 12Figure 4: Volunteers as a share of the sector workforce, Kenya, developingand transitional countries, and 36 countries 13Figure 5: Distribution of NGOs by sector in 2006 15Figure 6: Sources of non-profit sector funding 17Figure 7: Sources of non-profit revenue, Kenya and elsewhere 18Figure 8: Sources of non-profit revenue in Kenya by field 20Figure 9: Sources of revenue including volunteers 21Figure 10: NPOs expenditure by field 22

IntroductionIt is widely recognised across the world, including Kenya, that the lasttwo and half decades have witnessed unprecedented growth in numberand activities of private non-governmental institutions. Some havedescribed this growth as a ‘global associational revolution’. Some ofthese organisations were formed to complement state services inresponse to the declining capacity of the state to carry out development.Some were formed to provide alternatives to the state in education,in protecting the environment, in health, economic activities, inimproving local water systems, and generally in improving humanwelfare and development.Different terms have been used to define these organisations. In thispublication, the term Non-Profit Organisations (NPOs) is used in general.The term refers specifically to organisations that are private,organised, not primarily commercial (non-profit distributing to directorsor owners), self-governing, and voluntary.What about the non-profit sector in Kenya?Kenya has not been exempt from this ‘global revolution’. From thelate 1980s, the country has witnessed increased proliferation of organisationscarrying out non-profit work. The last three decades have witnessedunprecedented growth in number and activities of these organisations.The volume of resources controlled by the sector has alsogrown, if activities carried out by non-profits are anything to go by.Chapter 1 Introduction 1

The non-profit sector in Kenya comprises a very diverse grouping oforganisations ranging from small welfare and community-based orlocalised traditional welfare associations, to large and secular socialeconomicorganisations. In this study, we have divided NPOs into severaldifferent categories. These are: Non-Governmental Organisations(NGOs); Community Based Organisations and Self-Help Groups,including women and youth groups; Unions; Cooperatives;Foundations; and Trusts.Table 1: Example of non-profit sector organisations in KenyaCategory of NPO Examples of Kenyan organisations in each categoryNGOsCooperativesFoundations/TrustsUnionsCommunity BasedOrganisations andSelf-Help Groups(Women GroupsYouth Groups)Undugu Society of Kenya, Maendeleo ya Wanawake, WorldVision, Plan International,Marua Cooperative Society, Yala Dairy Cooperative Society,Durasi Housing Cooperative Society, Kenya Small Tradersand Entrepreneurs SocietyHeart to Heart Foundation, Africa Wildlife Foundation,Chandaria Foundation, Kenya Gatsby Charitable Trust,Ratansi Educational Trust, Muslim Civic Education TrustMachakos Cooperative Union, Wamuyu HandcraftCooperative Union, Seamen Union of Kenya, LocalGovernment Workers Union, Kenya National Union ofTeachers, Kenya Nut Growers UnionMjini Women Group, Mathare Youth Sports Association,Tharaka Welfare Association, Woodley Welfare Association.Boro Community Based Development Women Group,Thungari Self Help Group,Although NPOs have grown in number, diversity of activities, and inimportance for fostering social change, we do not have sufficient dataabout them to improve our knowledge on their capability for developmentin Kenya. There are no systematic studies determining whattheir capabilities really are. Furthermore, there is little systematicinformation on their basic features. In particular, not much knowledgehas been generated about the actual size, scope and structure of theKenyan NPOs.2The Non-Profit Sector In Kenya

What this publication is aboutThe primary aim of this publication is to set the stage for deepeningour knowledge of the non-profit sector in Kenya. It contains figures onthe growth, scope of activities, revenue and expenditure patterns ofNPOs.This publication is based on findings of a study conducted in collaborationwith Johns Hopkins Non-Profit Sector Project in the periodbetween 2000 and 2001, and updated where possible. It is producedwith support from the Aga Khan Foundation.This is a popular version of a longer document titled “The Non-ProfitSector in Kenya – Size, Scope and Financing” also available from theInstitute for Development Studies (IDS) of the University of Nairobi.Chapter 1 Introduction 3

Growth of The Non-Profit Sectorin KenyaThe non-profit sector has witnessed a huge growth rate throughoutthe post-colonial period. From a few hundreds at independence in1963, the number has increased to thousands of organisations. Table 2shows the growth in the number of non-profit institutions from 1997to 2005. However, we note that there are difficulties obtaining accurateand reliable data on the sector. The National System of Accountsdoes not have systematic data on non-profits. The source of datareported here includes administrative records of various ministries,and it is difficult to ascertain if they are complete and accurate.A review of records for the period between 1997 and 2005 reveals thatthere were about 350,000 ‘registered’ non-profit organisations (NPOs)in the country in 2005. This figure includes those registered under differentlaws and different ministries.4The Non-Profit Sector In Kenya

Table 2: Number of non-profit organisations by seven categories inKenya (1997-2005) 1 in order of magnitude in 20051997 1998 1999 2002 2003 2004 2005Self-help Groups16,20817,80518,65146,28891,139157,458185,722Women Groups85,20597,317107,080122,441127,951133,135135,294Youth Groups3,4263,7654,2835,5389,97810,94511,083Cooperatives7,5008,6699,1519,92810,20410,54610,867NGOs8368311,2542,2802,7893,1854,099Foundations/Trusts171718231212231223Unions67687089939699TOTAL113,259128,472140,507186,795172,375315,596347,387Source: Administrative records of various government agencies/departments(excluding 2000 and 2001 whose records were incomplete).As can be seen, the largest number of NPOs are Self-help Groups, andWomen Groups. These are much more numerous than the other categories.The actual number of NPOs could be well above this figure becausethere is no systematic way of obtaining data on youth groups and selfhelpgroups. Some of the districts have not been providing headoffices with accurate data on annual registration of these groups.Furthermore, there are many groups that are operating without registrationunder any of the legal and administrative regimes. Thesegroups, however, fit the criteria of NPOs in many respects. The figures,therefore, are indicative of what is going on, but do not tell the wholestory on the size of the sector. They are, nonetheless, used here to givean idea about the direction of growth of the sector.1 Data for 2000 and 2001 is missing because of gaps in the records of different governmentdepartments. Moreover, no ministries have any data on organisations that ceased to exist.Chapter 2 Growth of The Non-Profit Sector in Kenya 5

Table 3: Change in number of NPOs by seven categories (in 1997 and2005) in order of amount of change1997 2005 % changeFoundations/Trusts172231311Self-help Groups16,208185,7221145NGOs8364099490Youth Groups342611,083323Women Groups85,205135,294159Unions6799147Cooperatives750010,867144TOTAL113,259347,387307As Table 3 shows, the number of NPOs increased threefold over a periodof eight years. Foundations/Trusts increased 13 times, Self-helpgroups increased 11 times, NGOs increased 5 times, and Youth groupsincreased 3 times.Figure 1: Overview of annual growth of NPOs (1997 and 2005)35%30%25%20%15%10%5%0 1997 - 8 1998-92003-04 2004-05Period (years)Figure 1 shows that the highest growth in number of NPOs was in the2003-2004 period. This is also the period that witnessed the highestgrowth in number of Foundations/Trusts and Self-help Groups. Given6The Non-Profit Sector In Kenya

that this is the period when a new government came to power, it ispossible that the growth was the result of a new political environment.Explaining growthSeveral factors account for the growth of NPOs in Kenya. First is thecountry’s rich tradition of philanthropy and volunteerism, with rootsin the communal relationships of an African society. Harambee (poolingtogether of resources to provide basic services) is an expression ofthis tradition and the spirit of volunteerism. This tradition has valuesthat are the foundation of non-profit initiatives in the country today.Secondly, until very recently, the capacity of the state to provide basicservices has been on the decline owing to sluggish economic growth.When growth was high in the 1960s and 1970s, Kenya had a developmentalstate that was at the centre of service provision. Poor growth inthe 1980s and donor conditionalities occasioned the introduction ofStructural Adjustment Programmes. These subsequently reduced thegovernment’s ability to provide services. NPOs filled the gaps in serviceprovision throughout the 1990s.Thirdly, though not in relation to all the different kinds of non-profits,poor economic management and governance resulted in donorsshifting their attention and increasing funding to NGOs from the early1990s. Increased disbursements through NGOs led to the mushroomingof NGOs, who in turn used local community organisations as theirentry point for development work at the grassroots. This resulted inproliferation of organisations in the development space.Finally, the coming to power of a new government in 2003 evolved anew political environment for registration of organisations. The highnumbers of Foundations, Trusts and Self-help Groups were registeredespecially during the 2003-2004 period.Chapter 2 Growth of The Non-Profit Sector in Kenya 7

Size and Scope Of Non-Profit SectorThe non-profit sector is a significant economic force in Kenya. In2000, the sector accounted for about US$270 million in expenditure.This was equivalent to 2.5 percent of the Gross Domestic product(GDP), whose significance is illustrated in Table 4.Table 4: Significance of the non-profit SectorUS$ 269.7 million in expenditure in 2006 2.5% of the Kenya Gross Domestic Product (GDP)Representing:The equivalent of 177,075 full time paid employeesThe equivalent of 113,873 full time volunteers2.1% of the economically-active population16.3% of those not employed in agriculture42.6% of those employed by the public sectorSource: Organisational surveyIn carrying out their activities, NPOs engage labour on a full time, parttime and volunteer basis. In 2000, the sector had a workforce (bothpaid and volunteer) equivalent to over 290,000 full time workers. Thiswas equivalent to 2.1 percent of Kenya’s economically-active population,and 16.3 percent of its non-agricultural employment.8The Non-Profit Sector In Kenya

We can break this information down by looking at the sub-sectors inwhich the NPO labour works. This is listed under the categories of theInternational Classification of Non-Profit Organisations (see Annex 1:Main NPO Fields and Activities by ICNPO).Table 5: NPO employment (paid and volunteers) by ICPNOICPNO Paid employment VolunteersNo % No %Culture & recreation7,0962.06,4916.3Education & research20,9625.810,0609.8Health7,3502.010,0089.8Social services223,97062.014,29414.0Environment7,8422.23,6563.6Development & housing33,7299.324,12523.6Civic and advocacy9,4342.65,6595.5Philanthropy6360.21670.2International activities00.000.0Religion2,1550.61,5231.5Professional associations1,8370.52,4012.3Others46,47812.923,88723.4Total361,489100.0102,271100.0Source: Organisational surveyMain features of the sectorOutdistances major industriesThe non-profit sector employs 43 people for every 100 peopleemployed in the public sector. In other words, the sector employsalmost half (43%) as many people as the public sector. It also employsmore people than the major industries in the country – utilities, construction,transport and manufacturing, as shown in Figure 2 belowChapter 3 Size and Scope of Non-Profit Sector 9

Figure 2: The Kenya non-profit sector workforce in contextVolunteers and paid staff engage in two basic roles: service and expressive.In the service role, they undertake activities in education, health,social services, development and housing. In the expressive role, theyundertake activities in culture/recreation, professional work, unionwork, civic activities, advocacy, and the environment.In Kenya, both paid staff and volunteers work much more in the serviceactivities than expressive activities. This is common in many developingand transitional countries. The main variation in Kenya is thata much larger share of the workforce is engaged in community developmentand housing than is the average for other countries.Figure 3: Distribution of paid employees and volunteers betweenservice and expressive activities in KenyaSource: Johns Hopkins Comparative Non-Profit Sector Project10The Non-Profit Sector In Kenya

Similar to other developing countriesThe Kenyan non-profit sector workforce is 2.1 percent of the economically-activepopulation. This is larger than those in most other developingand transitional countries, where the figure is 1.9 percent. Indeveloped countries, the non-profit sector workforce constitutes 7.4percent. The Kenyan figure is higher than the developing and transitionalcountry average but much smaller than those in the developedcountries. Consequently, it falls well below the all-country average,which is 4.4 percent. The Kenyan non-profit sector workforce is alsosmaller than those in other African countries, which average 2.5 percentof the economically-active population.Table 6: Non-profit workforce as a share of the economically-activepopulation by different kinds of countryDeveloped countries 7.4%Kenya 2.1%Developing and transitional countries 2 1.9%36 country study 3 4.4.%Source: Johns Hopkins Comparative Non-Profit Sector ProjectAttracts volunteersThe Kenyan non-profit sector not only employs a significant numberof paid workers, but also involves the work of thousands of volunteers.About 114,000 volunteers made up the equivalent of 250 full timeworkers in the sector in 2000. These 114,000 volunteers, both menand women, illustrate the very nature of the sector; volunteerism as animportant component of the sector.The survey data suggests that the actual number of people who volunteeris significantly higher - almost 1 million people, or approximately6 percent of the adult population. On the whole, volunteer participationin Kenya is slightly above the developing and transitional2 Transitional countries is used in the Johns Hopkins Study to refer to Central and Eastern Europecountries – Czech Republic, Hungary, Poland, Romania, and Slovakia.3 The John Hopkins Study has data from the following 36 countries: Netherlands, Belgium, Ireland, US,UK, Israel, France, Norway, Sweden, Australia, Germany, Finland, Austria, Argentina, Spain, Japan,Italy, South Africa, Egypt, Peru, South Korea, Colombia, Uganda, Kenya, Tanzania, Czech Republic,Philippines, Morocco, Brazil, Hungary, India, Pakistan, Slovakia, Poland, Romania, MexicoChapter 3 Size and Scope of Non-Profit Sector 11

country and all country averages. Figure 4 compares Kenya’s share ofvolunteers against other countries.Figure 4: Volunteers as a share of the sector workforce, Kenya,developing and transitional countries, and 36 countriesKenya39%Developing andtransitionalcountries37%35 countries 38%0 10 20 30 40 50Percent of civil society workforceSource: Johns Hopkins Comparative Non-Profit Sector ProjectIn Kenya, the majority of the volunteers are in the development andhousing sub-sector, which accounts for about 23.6 percent of the totalnumber of volunteers. Other sub-sectors with relatively high volunteerismare education and research (9.8%), health (9.8%), culture andrecreation (5.5%) and environment (3.6%). The findings also showthat volunteering is considered a religious and moral obligation. Themajority of the volunteers do so because their religions require themto do so. 4Huge membershipThe estimate for total membership of non-profit organisations inKenya was about 5 million members in 2000, or about 17 percent ofthe national population. The non-profit sector draws a wide range ofmembers distributed among different activity areas, as can be seen inTable 7:4 See The Giving and Volunteering in Kenya. IDS Mimeo12The Non-Profit Sector In Kenya

Table 7: Membership in NPOs in Kenya by ICNPO categoryICPNO Estimated % share inmembershiptotalmembershipCulture & recreationEducation & researchHealthSocial servicesEnvironmentDevelopment & housingCivic and advocacyPhilanthropyInternational activitiesReligionProfessional associationsOthersTotal1,096,882375,949695831,480451,7091,567,722194,4601,691051,811111,034528,5805,212,0122170169304001210100Source: Organisational surveyMission of improving the welfare of societyOrganisations in the non-profit sector engage in a variety of activities.The data from this survey reveals that economic empowerment andimprovement of the welfare of communities are the main objectives ofmany of the organisations. Asked to state the mission of their organisations,half of the organisations (52.2%) mentioned enhancement ofsocial and economic welfare and development of communities as theirmain mission. Still, others cited helping the disadvantaged and providingservices to communities.Chapter 3 Size and Scope of Non-Profit Sector 13

Table 8: Mission of non-profit organisationsMission/activities %Enhancement of social and economic welfareHelping the disadvantaged groupsWomen rights advocacy and empowermentEconomic empowermentHealthcare servicesPromotion of spiritual growthFoster welfare of professionalsCivic education and community awarenessProvide legal aid and awarenessSupport small scale businessSupport small scale farmingTotal52.210.84.34.48.35.83.44.10.82.53.4100Source: Organisational surveySimilar responses were obtained with regard to what organisationsconsidered to be their main activities or programme areas. Economicempowerment and social and religious services dominated (17.6% and15.0%, respectively). About 12.5 percent consider education services astheir main area of engagement. Other significant sectors includecapacity building (8.7%) and business and financial (7.4%).NGOs specificallyThere is a similar pattern of engagement in social development byNGOs.14The Non-Profit Sector In Kenya

Figure 5: Distribution of NGOs by sector in 2006Population & HealthEnvironmentReliefSectorHIV/AIDSChildrenGenderGovernanceMicro-Finance0 100 200 300 400 500 600 700Source: Data from NGO BureauThis shows a very clear picture of the areas in which NGOs work.These are possibly also areas in which donors are prepared to fundNGOs, since NGOs are dependent on donors than other NPOs.Chapter 3 Size and Scope of Non-Profit Sector 15

Sources of Revenue and ExpenditurePatternsTwo important measures of the size of non-profit sector are revenueand operating expenditures. However, because of lack of sufficientdata in these two areas, people have often raised questions aboutwhether the sector is sustainable. This section provides insights on therevenue structure and expenditure patterns of the non-profit sector.The findings show that external sources of funding are not significantin terms of total revenue for the sector, apart from NGOs which relyalmost exclusively on external sources. Fees and charges are muchmore significant as a source of revenue to most NPOs.REVENUEFees are the dominant revenueThe findings show that about 81 percent of the cash revenue of NPOscomes from fees such as property income and membership fees. 14percent comes from all sources of private philanthropy, including individuals,foundations, corporations, and foreign donors. Another 5 percentis from the public sector (Figure 6).16The Non-Profit Sector In Kenya

Figure 6: Sources of non-profit sector fundingGovernment5%Philanthropy14%FeesFees81%GovernmentPhilanthropyCompared to other countries, the Kenyan non-profit sector reliesmuch more substantively on fees and charges. The fees’ share of therevenue is significantly larger than in other developing and transitionalcounties. Figure 7 shows revenue by source in Kenya compared toelsewhere.Figure 7: Sources of non-profit revenue, Kenya and elsewhereFees Government PhilanthropyKenya81%5%14%Developing andtransitionalcountries62%22%16%32 countries 53%35%12%Percent of total civil society organization revenueSource: Johns Hopkins Comparative Non-profit Sector ProjectChapter 4 Sources of Revenue and Expenditure Patterns 17

The sector receives a much smaller share of its revenue from the publicsector than other developing and transitional countries (22%) andalso less than is the case in all 32 countries (35%). The government’scontribution to the sector is relatively small compared to elsewhere.Philanthropic sources of revenue appear to be at the same level withwhat obtains elsewhere.Table 9: Sources of revenue by fieldsICPNORevenue as% of totalnationalrevenueSources (%)Government Philanthropy FeesCulture & recreation7.30.07.892.2Education & research13.612.620.167.3Health2.00.400.099.6Social services15.24.8012.882.4Environment8.419.0032.4048.7Development & housing25.82.506.6090.9Civic and advocacy3.00.0048.6051.4Philanthropy0.70.000.000International activities0.00.000.000Religion1.10.0072.8027.2Professional associations1.70.001.1098.9Others21.10.4010.7089Total100.0Source: Organisational survey, IDS Johns Hopkins Comparative Non-Profit SectorProjectTable 9 shows that the development and housing sectors have thelargest revenue base (25.8%). Social services and education follow with15.2 percent and 13.6 percent, respectively. Environment is also significantcompared to others. However, in the majority of cases, fees dominateas the main source of revenue. Fees account for about 91 percentof revenue in development and housing and about 100 percent in thehealth sub-sector, as we see from the graph below.18The Non-Profit Sector In Kenya

Figure 8: Sources of non-profit revenue in Kenya by fieldFee-dominantFees Government PhilanthropyHealth 100%Professional/Unions99%Culture/Recreation92%Development/Housing91%Social Services82%Education67%Civil/Advocacy51%Environment49%0%0%0%2%5%13%0%19%0%1%8%7%13%20%49%32%Philanthropy-dominantFoundations14%0%86%All fields81%5%14%Percent of total civil society organization revenueSource: Johns Hopkins Comparative Non-Profit Sector ProjectEstimates also show the relative unimportance of the government as asource of revenue for the non-profit sector in Kenya. Apart from environment,education, social services and development, the other subsectorsreceive little or no assistance from the government.This pattern of revenue differs from what is found in other countries.The non-profit sector in Kenya relies much more on fees and duesthan its counterparts elsewhere. As shown in figure 9 the fees share ofthe Kenyan sector is larger than in the developing and transitionalcountries, and in the country averages of the 32 other countries.If we treat contributions of volunteer time as part of philanthropy, thephilanthropy share of civil society support in Kenya increases from 14to 29 percent. This is at par with what obtains in the developing andtransitional country average (32%) and the all-country average (30percent), but below other African countries (on average 46% of thetotal non-profit support).Fees, nonetheless, remain significant, at 67 percent, while governmentsupport remains minimal at 4 percent, much less than developing andtransitional country and much less than the 32 country average.Chapter 4 Sources of Revenue and Expenditure Patterns 19

Figure 9: Sources of revenue including volunteersFees Government PhilanthropyKenya67%4%29%Developing andtransitionalcountries51%17%32%32 countries 42%27%30%Percent of total civil society organization revenueAnalysis by the main fields, however, shows a changed structure. Withthe value of volunteers added, private philanthropy becomes the mainsource of support in three fields: foundations and philanthropic intermediaries(875), health (675), and civic and advocacy activity (625).NGOs are dependent on external donorsOf all the non-profits, NGOs tend to rely exclusively on externalsources of funding. Analysis of 2005 data shows donors as the largestand the main source of their income. NGOs generate only a smallshare of revenue from their own sources. About 1,339 NGOs or 33 percentof the 4,099 NGOs registered by 2005 reported on their sources offunding. The total revenue was about US$285 million. Of this amount,close to 90 percent came from donors. About 6 percent of the revenuecame from ‘own sources’, while private sources (including foundations)and individuals contributed the rest. Table 10 shows the contributionsby source in 2005.20The Non-Profit Sector In Kenya

Table 10: NGOs sources of fundingSource Amount in Ksh % shareExternal donorsOwn sourcesPrivateIndividualsTotals17,893,628,9641,197,656,417819,537,088331,336,42320,242,158,89288.45.94.01.6100.0Source: Compiled from NGOs’ returns, NGOs’ BureauSelf help community groups are self reliantLocal community groups depend largely on their own sources of funding- largely member contributions. Although it is difficult to obtainadequate data on self-help groups, data on women groups for the periodbetween 2001 and 2006 shows that 97 percent of their revenuecame from contributions from members. The government contributedonly 3 percent in the form of grants.EXPENDITUREExpenditure patternsThe non-profit sector in Kenya accounted for US$270 million inexpenditures in 2000. This amount represents 2.5 percent of thenation’s gross domestic product (GDP), as reported below. The expenditureof all NPOs in the country is also estimated at about 2 percentof the total government expenditure in the country.Examining the different fields, the estimates show that developmentand housing is by far the most important component. It accounts forabout 27 percent of the total NPO operating expenditure. The otherimportant sub-sectors, in order of their contribution, are: social services(12%), education and research (11%), environment (11%), cultureand recreation (6%), civic and advocacy (6%), professional associations(2%), health (2%) and religion (2%). Philanthropy and internationalactivities separately account for less than 2 percent of the totaloperating expenses. Sub-sectors not elsewhere classified account forthe remaining 18 percent of the total operating expenses.Chapter 4 Sources of Revenue and Expenditure Patterns 21

Figure 10: NPOs expenditure by field22The Non-Profit Sector In Kenya

Conclusions and Policy ImplicationsThe findings bring out important basic features of non-profit organisationsin Kenya. Significantly, the findings show that Kenya has alarge non-profit sector compared to other developing and transitionalcountries. The sector is an important employer, employing about 2.1percent of the economically-active population. It is about 43 percentof the size of public sector. Furthermore, the workforce in the sectorexceeds that of the country’s manufacturing sector.The sector provides important services to the Kenyan society. Nonprofitactivities are widely spread throughout the country. Most of theorganisations are motivated by the need to promote economicempowerment and social development. Organisations in the sectoraim at responding to societal needs.Sustainability of the sector is not in doubt. The sector is largelydependent on fees and charges. Contrary to popular opinion – basedespecially on absence of data – the sector does not depend entirely onexternal sources of financing. Only NGOs appear to have externaldonors as a significant source of their funding. However, NGOs are avery small component of the whole of the non-profit sector – aboutone percent – and, therefore, their reliance on donors does not affectthe sustainability of the sector as a whole.It is important to underline that there have been no studies on thepotential of the non-profit sector in Kenya. The findings presented inChapter 5 Conclusions and Policy Implications 23

this study constitute an important reference point for future studies onthe sector. Policy makers and practitioners will find this data aninvaluable source of information on the sector.The findings, simply put, tend to give legitimacy to the sector in termsof its contributions to development and employment creation. Thesector has proven to be an important agent in facilitating economicdevelopment, providing social services and empowering differentgroups in Kenya. It is important that this role be fully recognised andutilised by both the government and international development partners.An enabling policy framework for the entire sector, let aloneNGOs, is required to fully tap the potential of the sector.24The Non-Profit Sector In Kenya

Main NPO fields and activities by ICNPOICPNOCulture & RecreationEducation and ResearchHealthSocial servicesEnvironmentActivitiesVisual and performing artsMedia and communicationSports and social clubsCultural shows and entertainmentPrimary and secondary educationVocational trainingAdult educationSocial science researchPolicy researchHospital care, rehabilitation servicesHome-based carePsychiatric treatment and adviceMental health treatmentEmergency medical servicesPublic health educationCare for children, the elderly, and the handicappedEmergency and reliefAssisting refugeesIncome and material supportTemporary sheltersEnvironmental awarenessConservation of natural resources /erosion controlAnimal careEnvironmental beautificationAppendix 25

ICPNODevelopment and HousingCivil and AdvocacyPhilanthropyInternational ActivitiesBusiness and ProfessionalReligionActivitiesEconomic and social developmentConstruction of housesTraining in constructionConsumer protectionLobbying and advocacyCivic education and legal servicesVictim support and rehabilitationGrants and fundraisingPromoting voluntarismCultural exchangesRelief services and disaster managementProfessional exchangesBusiness promotionsPreaching, ceremonies and associations26The Non-Profit Sector In Kenya

The Institute for Development Studies (IDS), Universityof Nairobi, is a multi-disciplinary and a multi-purposeresearch organisation focusing on social-economicissues of development in Kenya and Africa in general. Itwas founded in 1965 to undertake developmentresearch, training, and provide advisory services onissues of development policy, practical and academicconcerns in the public and private domains. TheInstitute provides research and consultancies services tovarious government ministries, development partners,international development agencies, voluntary organisationsand the general public in Kenya.For inquiries contact:The Institute for Development Studies (IDS)University of NairobiP.O. Box 30197 – 00100GPO Nairobi, KenyaTelephone: (+254 – 20) 247968 or 318262Cellphone: 254-733 524903 or 0722 499706Email: director-ids@uonbi.ac.keURL: www.uonbi.ac.ke/faculties/ids