ASSESSMENT OF FOREIGN CURRENCY RISK AND OTHER FACTORS THAT AFFECT CIVIL SOCIETY ORGANIZATIONS PERFORMANCE IN GEORGIA

Abstract

Civil society organisations (CSO) play an important role in social value creation. With funds provided by donors, they implement a great variety of projects. The main purpose of the study was to identify the most important factors that directly or indirectly affected organisational performance over the past few years, reducing the spending capabilities of Georgian civil society organisations. A survey involving interviews was conducted with 24 CSOs that were implementing a total of 52 projects with the support of 15 different donors. To assess exchange rate risks that reduce spending capabilities, historic simulation and scenario analysis method was adopted. The results show that exchange rate volatility, inflation, and the COVID-19 pandemic were the most important factors that affected project performance. The effect of inflation was undoubtedly negative, exchange rate fluctuation was mostly negative, while the restrictions associated with the COVID-19 pandemic had some positive implications. Performance and risk factors that influence civil society organisations are poorly studied (in contrast with for-profit companies), and this fact makes the current study especially interesting and significant for CSO management, donor organisations and policymakers.

Keywords

• donor-grantee relationships
• ngo financial management
• covid-19
• international funding
• project management