Analyzing the effectiveness of the budgetary process in NGOs: a case of Infectious Diseases Institute

Abstract

A budget is a management's plan, in structured form, which projects the desired outcome of financial activity for a specific set of resources, for a fixed period. According to Horngren, C. T. (2000), budgeting is a process that involves; setting budgetary standards and performance targets, collecting actual cost and revenue information, monitoring and reporting variances on a routine and regular basis and taking corrective action where necessary in the achievement of organizational objectives.

The purpose of the study was to analyse the effectiveness of the budgetary process in NGOs using Infectious Diseases Institute (IDI) as a case study. The respondents were selected using purposive and simple random sampling techniques. Descriptive and analytical research designs were used to explore the respondents’ feelings and attitudes with regard to the effectiveness of budgeting process at IDI. Data was gathered through Questionnaires and interview guides.

The major findings from the research study indicated that the budgetary process at IDI was less effective since some of essentials of a sound and effective budgetary process are not fully observed. The findings indicated that feedback on budget variances is not provided promptly and timely which delays corrective actions. The finding also indicated some challenges of the budgetary process at IDI which include; adhoc changes in project demands /scope, poor budget forecasts leading to budget inaccuracies, Budgets are in most cases influenced by the donors, lack of proper monitoring and review and lack of clear guidelines/policies and procedures followed during budgeting.

The study recommended proper and adequate communication of the budgeting activities at all levels to allow easy flow of information between departments, improving the information feedback on how the actual results are progressing compared with the budgeted and strengthening the expenditure tracking to reduce budget overruns as possible measures of improving the effectiveness of the budgetary process as well as to achieve the set organization targets.