WORKING CAPITAL MANAGEMENT APPROACHES IN WELFARE NON-PROFIT ORGANISATIONS IN SOUTH AFRICA.

The non-profit organisations (NPOs) sector constitutes a significant portion of the South African economy. However, they have recently faced financial challenges, leading to the closure of several organisations that provide critical services to vulnerable communities. A key factor contributing to this problem is the internal financial control measures employed by these organisations and their suitability to the rapidly changing economic environment in which they operate. This study examines the working capital management approaches employed by welfare organisations and their impact on liquidity status. To achieve this, a stratified random sample of 626 organisations from all nine provinces of South Africa was surveyed using an electronic questionnaire. The data collected included the working capital approach utilized and the organisation's liquidity status. Data analysis was conducted using statistical software to investigate the relationship between the three different working capital approaches: aggressive, moderate, and conservative, and the resulting liquidity status. The results indicate that 54.5% of the sample population adopted a conservative approach, achieving a meagre liquidity status of 0.5% of greater than 1. In contrast, 10.9% and 34.3% adopted aggressive and moderate approaches, respectively, and achieved a 72.1% and 77.9% liquidity status of greater than 1. These findings suggest that the majority of the sample population is employing an ineffective approach to working capital management. As such, corrective measures are necessary to enhance the financial stability and sustainability of NPOs in South Africa.