Financial Domain as a Tool in Measuring NGO performace Kenya.pdf - Management 2017 7(3 103-109 DOI 10.5923\/j.mm.20170703.01 Financial Domain as a Tool

Financial Domain as a Tool in Measuring NGO performace Kenya.pdf

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Management 2017, 7(3): 103-109 DOI: 10.5923/j.mm.20170703.01 Financial Domain as a Tool in Measuring Non-Governmental Organizations (NGOs) Performance in Kenya Nasline Akinyi Ouko 1,* , Raphael Nyonje 1 , David Omondi Okeyo 2 1 Departmentof Extra Mural Studies, The University of Nairobi, Nairobi, Kenya 2 Kenya Nutritionists and Dieticians Institute, Nairobi, Kenya Abstract Performance measurement among NGO’s takes critical perspective within the Balanced Score Card (BSC) domain. The BSC emphasizes four dimensions which include customers’ perspectives, financial perspective, internal, business and organization learning dimension. Financial perspectives received least consideration among NGO’s due to their non-profit nature. However, this aspect needs to be given equal priority just like other components. This article attempts to demonstrate the focus given on financial components among NGO’s with livelihood orientation and operating within western Kenya. The study administered 64 questionnaires to all top management of NGO’s. The results revealed four components of financial domains in performance measurement. Accounting processes, audit processes, procurement and asset building, and budget flexibility and adjustment emerged as key issues of finance in performance evaluation base on variance accountability generated by principal axis factor analysis. The study concludes that financial perspective of performance measurement within NGOs would prioritize accounting, audit, procurement and asset building and budget flexibility and adjustment in that order. It recommends that NGO’s and stakeholder need to consider social returns on investment as a quantitative profit equivalent measure of performance. Keywords Performance, NGO, Financial perspective, Accountability 1. Introduction Financial perspective as domain and a measure of performance in the Non-governmental organization (NGO) includes the measurement of operating income, return on capital and economic value added (Hartnett and Matan, 2011). NGOs just like profit companies, must have a solid understanding of their financial situation. Timely data on funding sources; cost of services and overhead costs must be incorporated into the non-profit’s strategic plan to provide a complete picture of the situation. The leadership must be comfortable with the financial statements and budgets which provide solid basis for operations and build confidence with funding, grantors and other sources of revenue. This perspective can also be looked at in the context of financial strategic objectives and financial performance measures that provide evidence of whether or not the company’s financial strategy is yielding increased profitability and decreased costs. This view also captures how the organization must look to the customers in order to * Corresponding author: [email protected] (Nasline Akinyi Ouko) Published online at Copyright © 2017 Scientific & Academic Publishing. All Rights Reserved succeed and achieve the organization’s mission (Ronchetti, 2006). Niven (2008) asserts that the financial perspective of

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