Effects of Budgeting on Performance in Non Governmental Organizations in Kenya

Abstract

Service excellence is demanded of today’s organizations since financiers and customers/ beneficiaries are increasingly demanding their service requirements and best use of money through the projects they undertake. This offers a unique challenge to NGOs since they are not in the business of making profits and their emphasis is on sticking to the requirements of their donors while at the same time meeting the expectations of their beneficiaries with limited resources. The study thus sought to evaluate the effects of budgeting on performance in non-governmental organizations. The research was conducted through a survey. The study used both primary and secondary data. Questionnaires were structured as the main data collection instrument. Self-administered drop and pick questionnaires were distributed among the target organizations. This enabled the researcher to get adequate and accurate information from people with experience. Before processing the responses, the completed questionnaires were edited for accuracy, completeness and consistency. The data was coded to enable the researcher group it in various categories. It was established that greater budget participation reduces the subordinate propensity to create organization performance only in situations of high task uncertainty, but not in situations of low task uncertainty. Organizational performance is measured by the degree under which an organization is able to utilize their budget and sticking to the limits of budget provision. The design of budgeting system ought to match variations of task characteristics. Giving subordinates the high degree of budget participation would be effective in the situation of high task uncertainty or high task difficulty, but ineffective in the situation of low task uncertainty or low task difficulty. However, the impact of budget participation on organization performance is invariant whatever the degree of task variability may be.