Financial accountability and donor’s trust in Non-Governmental Organizations (NGOs) in Uganda

Abstract

Although a lot of effort and resources have been put in the financial trainings and accountability, Donors trust has not increased and as a result most donors have withdrawn their support in terms of funds in the last 5 years from 2003-2007(UNDP report 2005,Tranparency international report 2003). Projects have collapsed or are operating at a loss and a number of activities have fallen. The low donor’s trust in NGOs may be attributed to poor financial accountability in NGOs and low involvement of stakeholders. The purpose of this research was to investigate the relationship between financial accountability and Stakeholder’s involvement in NGO, to examine the relationship between transparency and Donor’s trust in NGO, and to examine the relationship between accountability and Donor’s trust in CBO. The study used cross sectional research design to adequately address the study findings. This kind of research design allows the researcher to conduct the study within a short and specific period of time. This study also used a quantitative approach. The results from the study revealed the fact that financial accountability and stakeholder involvement are positively related. These results imply that the stakeholders are more likely to be involved in transactions with NGOs once they perceive the NGO to be accountable. The findings also reveal the fact that the NGOs don’t give accountability in an independent environment but on the other hand, they operate in a social and institutional environment in which they have to convince the other stakeholders to participate in helping them achieve their interests. The study concludes that stakeholder involvement has a lot to do with the financial accountability of the NGOs and the more the NGOs exhibit higher levels of accountability, the more the stakeholders are likely to express an interest in participating, contributing and being identified with the activities of the NGO. Stakeholders out there give good information to donors about the functionality of the organisation and this creates a picture of trust from donors. Controls are necessary to control the resources of these NGOs since the financial accountability is very essential for funding the operations of the NGOs. All other elements of financial accountability are likewise important for the sustenance of the NGO.