A survey of management perception on the usefulness of zero based budgeting: Evidence from non governmental organizations in Kenya

Abstract

Budgeting process is a key activity in the life of any organisation which should be accorded the seriousness it deserves as it guides the activities of the organization. Proper planning, preparation, adherence and control are some of the major processes that should be followed as laid down in the estimates. Budget systems need to be transparent and participatory thus organisations need to have budgetary policies that are clear and well understood by all staff at different levels. The study sought to establish the managerial perception on the usefulness of Zero Based Budgeting among nongovernmental organizations in Kenya. This study adopted a descriptive survey design. The population of the study constituted all Non- governmental Organizations (NGOs). A sample of 300 Non-Governmental Organizations (NGOs) was drawn from the NGOs based in Nairobi using stratified sampling method. The study collected data using a questionnaire. The data was analyzed by generating descriptive statistics. From the findings, the study concludes that zero based budgeting is very useful in Non Governmental Organizations in Kenya given that it has flexibility, communicate corporate goals, cost minimization and knowledge sharing. The study revealed the bases of budgeting was the most important factor that affects the managements’ perception and effectiveness of Zero Based Budgeting in NGOs followed by organization structure and then frequency of budgeting. The study recommends that in order to enhance the effectiveness of Zero based budgeting in the NGOs, the management should put in place measures to solve the Zero Based budgeting problems such as enhancing better understanding of zero based budgeting behaviour and institutional dynamics among the staff, developing strong financial integration with performance management and quarterly revision of financial plan to redirect resources at frequent intervals.