Financial Management Capacity, Accountability, Own Income Generation, Revenue Diversification and Financial Sustainability in Charities Of Malaysia

Abstract

Malaysian charities have been reported to face problems in raising funds in the face of the current challenging economic environment. Some evidence has been provided by past research, in for-profit organisations, on the influence of accountability, financial management capacity, own income generation and revenue diversification on financial performance. This study examines their impact on non-profit financial sustainability, utilising as sample 212 active charities in 2017. The quantitative approach is adopted whereby data on financial management capacity, accountability, own income generation and revenue diversification, and their inter-relationships, were tested for strength and influence of the relationships, if any, with financial sustainability. Analysis of data was performed using the structural equation modeling method using lavaan on R. Global fit values (RMSEA = 0.00; SRMR = 0.04) showed a good model fit and standardised residuals justified retaining the model at the pairing levels of the observed variables; as such the original model is retained and not respecified. The findings suggest positive and significant indirect relationships between financial management capacity and accountability with the financial sustainability, as mediated by revenue diversification and own income generation. The implications and contributions arising from the findings are also discussed.

Determining the Construct Validity and Reliability of Philanthropic Behaviour Scale using Rasch Model

“…On another note, in the Islamic banking sector, the Islamic banks of the Gulf Cooperation Council (GCC) were reported to engage in corporate social responsibility (CSR) even more when their financial performance (also connected to financial stability) improved (Platonova, Asutay, Dixon, & Mohammad, 2018). Similarly, enterprises, organisations, and communities in Malaysia (Cheuk et al, 2021) and the United Kingdom (UK) (Bingham & Walters, 2013;Brammer & Millington, 2008) also tend to engage in CSR or charitable behavior when their financial health is stable or performing.…”

Financial Accountability of Dayah in Aceh Province: Its Meaning and Practice

“…From this verse, we can deduce that all parties involved have an obligation to ensure that all relevant transactions are recorded and that all parties involved have access to accurate information about the current state of affairs. This is performed in anticipation of unpleasant situations, such as those involving external organizations, and as evidence that managers fulfilled their responsibilities in accordance with the vision and mission of the organization (Cheuk, 2021).…”

“…They documented the evidence of receipt, storage, and payment to the persons concerned, which the treasurer subsequently reported to the dayah leadership. Meanwhile, for governmentfunded operations, dayah's leadership and treasurer always create, evaluate, and correct an LPJ (Responsibility report), which is then immediately forwarded to the government (Cheuk, 2021).…”