Effect of Budgetary Controlson the Performance of Non-governmental Organizationsin Kenya

Abstract

This study addresses the critical intersection of budgetary controls and the performance of non-governmental organizations (NGOs) in Nairobi County, Kenya. Given the pivotal role of NGOs in social development, understanding the impact of budgetary controls on their performance is crucial for informed decision-making and effective resource allocation. The study is grounded in agency theory, goal-setting theory, and stakeholder theory, providing a robust theoretical framework for examining the relationships between budgetary controls and NGO performance. The primary objective of this research is to investigate the influence of budgetary planning, cost control, participatory budgeting, and monitoring and evaluation on the performance of NGOs. The study adopts a quantitative approach, employing a cross-sectional research design to collect primary data. The target population comprises 1388 NGOs in Nairobi County, with a sample of 93 NGOs selected through simple random sampling. The study relies on a 5-point Likert scale questionnaire as the primary data collection tool, targeting the heads of finance in each selected NGO. The collected data undergoes rigorous analysis, encompassing descriptive, correlation, and regression analyses. Correlation analysis reveals significant positive relationships between performance and each independent variable, emphasizing the interconnectedness of budgetary controls and organizational success. The regression analysis further supports these correlations, with a high R-squared value of 0.923, indicating a strong model that explains 92.3% of the variability in organizational performance. The standardized coefficients highlight the individual contributions of budgetary planning, cost control, participatory budgeting, and monitoring and evaluation, with monitoring and evaluation emerging as the most influential factor. In conclusion, this study underscores the pivotal role of effective budgetary controls in shaping the performance of NGOs in Nairobi County. The findings affirm the positive impact of strategic budgetary planning, cost control measures, participatory budgeting, and systematic monitoring and evaluation on organizational success. Recommendations for policy and practice include the prioritization of robust budgetary planning, strengthened cost control measures, promotion of participatory budgeting, and investment in effective monitoring and evaluation practices. The study advocates for tailored strategies that consider the specific needs and contexts of NGOs in Nairobi County. Suggestions for further research emphasize the exploration of moderating factors, comparative analyses across diverse regions, in-depth investigations into the mechanisms of participatory budgeting, and longitudinal studies to track the dynamic nature of the identified relationships over time.