Usefulness of Financial Information from Annual Statements of Public Benefit Organisations in Evaluation of Their Performance
Finansowe uwarunkowania rozwoju organizacji gospodarczych. Zarządzanie finansami a efektywność ekonomiczna, eds. Postuła M., Turyna J., 2015, Warszawa: Wydawnictwo Naukowe Wydziału Zarządzania Uniwersytetu Warszawskiego, pp. 178-193, ISBN 978-83-65402-00-4
16 Pages Posted: 9 Dec 2015
Date Written: November 17, 2015
Abstract
Public benefit organisations (PBOs) face a challenge of generating considerable social effects with limited resources. In order to secure external funds they need to provide their donors with performance-related information. The following paper aims at diagnosing whether annual statements of PBOs, and in particular financial information they carry, as well as specialised ratios may facilitate the said communication between organisations and their donors. With a reference to 177 randomly selected statements of PBOs and regarding results of a laboratory experiment it was proved that, despite inconsistencies and mistakes, annual statements influence donors’ decisions which organisation they want to support. On the other hand, finding appropriate performance ratios, considering a restricted use of profitability, liquidity or financial structure analyses, turned out to be a challenge. Nonetheless, measures assessing remuneration levels and valuating voluntary involvement were found useful to diagnose donors’ priorities.
Keywords: donors, financial information, performance ratios, public benefit organisations
JEL Classification: L31, M41
Suggested Citation: Suggested Citation