Institutional Capacity as a Moderator of Funding and Financial Sustainability in Kenyan Public Universities

This study examines whether institutional capacity conditions the relationship between four funding channels and financial sustainability in Kenyan public universities. A quantitative explanatory cross-sectional survey covered all 35 public universities. Of 210 questionnaires distributed to finance, research, and consultancy/income-generating-activity officers, 195 usable responses were analysed using descriptive statistics, Pearson correlation, and hierarchical moderated multiple regression. Institutional capacity was positively associated with financial sustainability (r = .500, p < .001). The main-effects model explained 59.3% of the variance, while the interaction model explained 63.7% (ΔR² = .045, p < .001). Only the research funding × institutional capacity interaction was statistically significant (β = .127, p = .016). Institutional capacity therefore has a direct positive association with financial sustainability and selectively strengthens the research-funding relationship. Universities should prioritise grant-management, budgeting, compliance, reporting, partnership-management, and indirect-cost-recovery capabilities.