Budgeting process and financial performance of nongovernment organizations in Uganda

Abstract

This study investigated the relationship between budgeting process as independent variables and financial performance as a dependent variable in non-governmental organizations (NGOs) in Uganda. It specifically examined the relationship between: budgeting and NGO financial performance; budgetary control and NGO financial performance and the effect of donor policy on the relationship between budgeting process and NGO financial performance. The wide spread concern about many NGOs’ failure to achieve expected financial performance targets as argued by Moore (2005) prompted the researcher to investigate the cause of poor financial performance of many NGOs in Uganda. The study employed a correlation research design which sought to establish the contribution of budgeting process on financial performance of local NGOs in Uganda. It used quantitative and qualitative approaches due to the need to collect both numerical and qualitative data. Thus, questionnaires and interview guide were the major data collection instruments used. From a total population of 22 stakeholders, a sample size of 12 participants was purposively selected. Frequencies, percentages, and correlations analyzed quantitative data while qualitative analysis involved summarizing information into meaningful themes. The study found significant positive relationships between budget Planning and NGO financial performance (r = .122), budgetary control and NGO financial performance (r = .667), and budget implementation and NGO financial performance (r = .744) It was concluded that donor policy compromises the contribution of budgeting and budgetary control on NGOs’ financial performance. Thus, it is recommended that NGO should diversify their revenue sources to reduce their dependence on donor funding and also improve their budgeting and budgetary control systems