Research consultancy
CHAPTER ONE
INTRODUCTION
1.0 Introduction
This chapter outlines the background of the study, the problem statement, the purpose, objectives, research questions, hypotheses, conceptual framework, significance, scope, justification, and operational definitions of terms. The study investigates the relationship between internal controls and NGO funding in Uganda, focusing on Send-A-Cow as a case study. Internal controls are treated as the independent variable, while funding serves as the dependent variable. Internal control is a dynamic and integral process that organizations continuously adapt to improve performance. It involves individuals operating within systems to manage activities, risks, and information, ultimately providing reasonable assurance of enhanced performance.
1.2 Background of the Study
1.2.1 Historical Background
The growth of non-governmental organizations (NGOs) worldwide is linked to gaps in government service delivery. Over time, particularly in developing regions, NGOs have increasingly taken on vital roles in development (Muithya, 2021). Dissatisfaction with government-provided services has led international NGOs, bilateral agencies, and multilateral donors to channel development aid through local NGOs (Wandera et al., 2017). Consequently, the NGO sector has expanded rapidly in developing countries.
Sub-Saharan Africa faces challenges such as inadequate funding, limited resources, insufficient infrastructure, and outdated approaches. NGOs were established in the region to address poverty, political instability, and support vulnerable groups, primarily relying on diverse funding sources such as donors, foundations, corporations, and governments. However, their growth and effectiveness often depend on robust internal controls (Wallace et al., 2007).
In Uganda, NGOs have operated since the 1970s, aiming to deliver essential services. Despite their contributions, many NGOs in Northern Uganda, including the African Youth Network and War Child Canada, have struggled with poor funding, ineffective service delivery, and unmet objectives (Mohammed et al., 2017). This study explores the effect of donor funding on NGO performance in Uganda, using Send-A-Cow as a case study.
1.2.2 Theoretical Background
This study is anchored in Resource Dependency Theory (Pfeiffer, 2003), which examines how organizations manage dependence on external resources. The theory posits that actors controlling critical resources wield power, especially when dependency is high. For NGOs, this often translates to donors influencing program priorities and goals (AbouAssi, 2013). The research focuses on how Send-A-Cow navigates its dependency on donor funding and employs strategies to maintain resource stability and autonomy.
1.2.3 Conceptual Background
The study revolves around two primary concepts: NGO funding (dependent variable) and internal controls (independent variable). NGO funding refers to the financial resources provided to NGOs to support their operations and achieve their objectives (Folger, 2020). Internal controls encompass systems and procedures designed to safeguard assets, ensure compliance with policies, and improve performance (Mohammed, 2014). The research examines the interaction between these variables within the context of Send-A-Cow Uganda.
1.2.4 Contextual Background
The focus is on NGOs in Uganda, with Send-A-Cow as the case study. Established in the early 1930s, Send-A-Cow is a grassroots development organization addressing poverty and malnutrition. Despite efforts to enhance financial accountability, the organization has encountered challenges like reduced funding and income. For instance, funding decreased from £8.3 million to £7.2 million between 2018-2019 due to a decline in grants. This study investigates how internal controls influence funding in NGOs, aiming to address such challenges and enhance performance.
1.3 Statement of the Problem
NGOs are crucial in fostering development and welfare in Uganda. However, financial management challenges, including inefficient budget use, fund mismanagement, and delayed reporting, persist (Muli et al., 2022). For example, Send-A-Cow Uganda experienced funding cuts due to accountability failures, leading to the closure of regional offices. These issues underscore the need for effective internal controls to ensure sustainable funding and improved performance. This research explores the relationship between internal controls and NGO funding in Uganda, focusing on Send-A-Cow.
1.4 Purpose of the Study
The study aims to investigate the relationship between internal controls and NGO funding.
1.4.1 Specific Objectives
The study seeks to:
i) Assess the relationship between the control environment and NGO funding in Uganda.
ii) Examine the relationship between risk assessment and NGO funding in Uganda.
iii) Evaluate the relationship between monitoring and evaluation and NGO funding in Uganda.
1.5 Research Questions
The research addresses the following questions:
i) What is the relationship between the control environment and NGO funding in Uganda?
ii) What is the relationship between risk assessment and NGO funding in Uganda?
iii) What is the relationship between monitoring and evaluation and NGO funding in Uganda?
1.6 Hypotheses of the Study
The study tests the following hypotheses:
i) H₀: There is no significant relationship between the control environment and NGO funding.
H₁: There is a significant relationship between the control environment and NGO funding.
ii) H₀: There is no relationship between risk assessment and NGO funding in Uganda.
H₁: There is a relationship between risk assessment and NGO funding in Uganda.
iii) H₀: There is no significant relationship between monitoring and evaluation and NGO funding in Uganda.
H₁: There is a significant relationship between monitoring and evaluation and NGO funding in Uganda.
