Effect of Financial Management Policy Implementation on Financial Performance of Ngos in Nairobi County

Abstract

Financial management policies are used by organizations as tools for ensuring that their finances are managed in proper manner in all areas of their operations. Lack of implementation of proper management policy exposes NGOs to threats like loss of assets, production of financial reports which are incorrect and unreliable for decision making purposes. This may also lead to application of accounting policies by an organization which are not consistent with the applicable governing laws and regulations. However NGOs that have implemented proper financial management policies are generally known to record improved financial performance. Therefore, the overall objective of this study was to establish the effect of financial management policy implementation on financial performance of Non – Governmental Organizations in Nairobi County. The study adopted a descriptive research design. A sample of 45 NGOs was selected from a population of 1,775 NGOs in Nairobi County both local and international. Data was obtained through the use of questionnaires and analyzed using both descriptive and inferential statistics. Multiple regression analysis results showed that financial planning (β = 0.541), financial monitoring (β = 0.644), accounting records (β = 0.148) and internal controls (β = 0.504) affects an organization financial performance. The study recommends that managers should be trained on how to conduct more efficient financial monitoring by placing emphasis on all important aspects of monitoring in order to reap the full benefits of financial monitoring in their organizations. A feedback system should be put in place ensuring corrective measures are taken to enable organizations respond urgently to emerging risks.