Financial sustainability is viewed as the condition in which an organization is able to execute its work programs for various activities within a certain period without diminishing its future ability to spend. This concept is based on analyzing its ability to meet its future obligations or what is known as Condition Solvency. If the organization wishes or is forced to expand its spending in the short term, it must be able to finance itself through its own resources to ensure that it performs its tasks effectively and efficiently, and to enable it to face any risks or undesirable impacts, whether current or future, especially regarding the growth of its financial capacity and its development.

This concept is also based on the fact that the budget of any organization may be subject to a range of risks due to underlying weaknesses or due to its inability to absorb the effects of financial and economic shocks, whether local or global.

The relationship between the corrective measures taken by the organization and their impact on financial sustainability is linked through several indicators such as grants and foreign aid, net local revenues as a proportion of total general revenues and grants, or the grants to support the budget and net local revenues as a proportion of current spending, and overcoming the current deficit as a proportion of nominal GDP. Today, non-profit organizations emphasize their commitment to strategies aimed at relying on local revenues to finance their public spending, especially those that control the mechanisms and timings of their entitlement, represented by tax and non-tax revenue items, as opposed to gradually reducing foreign grants and aid in order to achieve the condition of solvency.

These measures and actions lead to an increase in local revenues, as the measures taken by organizations today regarding increasing net local revenues encompass two main pathways:

1- The first pathway: Raising the collections of local tax revenues:

In collaboration with governments that increase the income tax rates on the highest income brackets at varying rates, similar to the General Authority of Zakat and Income which expands the coverage of major taxpayers ensuring the inclusion of all taxpayers achieving relatively high annual incomes and revaluating new regulatory sectors of properties and increasing the rates of value-added tax.

2- The second pathway: Raising the collections of clearance:

This involves deducting part of the higher value debt between two parties, both of whom are creditors and debtors at the same time, by forming clearance items that exceed two-thirds of net local revenues and cover about half of current spending. Due to the role represented by this item and its importance in any plan aimed at creating a sustainable financial resource for both the organization and the government, alongside creating a joint database that would activate oversight with organizations helping to reduce tax leaks in this item, on one hand, and foreign grants and aid on the other.

Organizations weave the substitutionary relationship between net local revenues, achieving balance and harmony with the steps taken by governments with their declared strategy relying on self-resources instead of external support.

Consequently, grants and aid decrease as a proportion of total general revenues and grants, while the index of net local revenues including clearance rises in opposing directions, leading to an increase in the share of local revenues as a percentage of total general revenues and grants, against a decrease in the share of foreign grants and aid.

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