Assessment of the Financial Performance Transparency of Public Benefit Organisations

Abstract

Research purpose. The aim of the research is to assess the transparency of financial performance of public benefit organisations (PBOs). Methodology. To achieve the aim and to accomplish the tasks set, general-scientific methods were used: the monographic method, the method of document analysis and the graphical method. A statistical analysis method – descriptive statistics – and a sociological research method – surveying – were used as well. Findings. Since 1 October 2014 when the Public Benefit Organisation Law came into force in Latvia, the number of PBOs has been increasing every year. On 1 January 2018, the number of organisations with valid PBO status had reached 2,775. To get an insight into the opinions of Latvian PBOs on the disclosure of financial information, a questionnaire was developed. The survey was attended by 201 respondents. The questionnaires revealed that 64.68 percent of the respondent organisations had a website or a web page on a social network, although only 21.89 percent of these respondents' websites contained some sort of financial information. In parallel with the PBO survey, a society survey was conducted to get an overview of the public opinions about the need to make PBO financial information freely available. The survey was attended by 116 respondents. The results indicated that although the PBO attitude to the disclosure of financial information was considered to be reserved, the public saw the need for such information. In view of the insufficient availability of financial information in the country and the low activity of PBOs themselves in voluntarily disclosing their financial information on their websites, it is necessary to carry out activities that supplement free-access information resources and/or motivate the organisations themselves to provide free access to such information. Practical implications. Based on the experience of other European countries, the Ministry of Finance has to consider amending the PBO Law to oblige PBOs to publish their annual financial and performance reports on their websites or in an equivalent way, thereby contributing to the transparency and accountability of the PBOs towards the society.

Supervision and Control over the Activities of Public Benefit Organizations in the Aspect of Centralization

“…Within this catalogue should also be indicated, in reference only to organizations with the status of public benefit organizations, the Head of the Public Benefit Committee, who took over the supervisory powers of the minister competent for social security rights in the correct use with the law, just like it is in the majority of other European countries 65 is supervised through two major information sources -annual financial reports containing financial information and annual performance reports (previous year performance reports and future activity plans), that contain qualitative or descriptive information 66 . The Public Benefit Commission in is a collegial institution, which equal numbers shall include officials, as well as representatives of associations and foundations 67 .…”

NGO online disclosures index in the presence of auxiliary information

“…Online dissemination of accountability related information can provide opportunities for mutual information exchange between stakeholders, e.g., via a typical tool like a public blog on the NGO's website [18]. It has been previously shown that the public is interested in understanding the impact of the nonprofit sector; for instance, Voitkane & Jakusonoka [19] analyzed the voluntary disclosure of financial information on the websites of public benefit organizations in Latvia. Despite the fact that 47% of the respondents in their survey showed interest in retrieving online information through an organization's website, only 22% of the organizations share financial data [19].…”

“…It has been previously shown that the public is interested in understanding the impact of the nonprofit sector; for instance, Voitkane & Jakusonoka [19] analyzed the voluntary disclosure of financial information on the websites of public benefit organizations in Latvia. Despite the fact that 47% of the respondents in their survey showed interest in retrieving online information through an organization's website, only 22% of the organizations share financial data [19]. Realizing the importance of the internet as an online tool for dissemination of information, researchers have designed indices to monitor the quality of information shared online by the NGO.…”