Factors Influencing Corporate Governance Practice among Non-Governmental Organizations in Kenya

A Research Project Report Submitted to the Chandaria School of Business in Partial Fulfillment of the Requirement for the Degree of Masters in Business Administration (MBA)This study examined the factors that influence corporate governance practice among the NGOs in Kenya. The study was guided by the following research questions: How do board characteristics and roles influence corporate governance practices in NGOs? How do external pressure from donors and stakeholders influence corporate governance practice in NGOs? How does globalization influence corporate governance practice in NGOs? A survey research design was used to conduct this study. For this study, the target population was 2,354 active NGOs registered and operating in Kenya. A sample was obtained from the population for purpose of this study. The study used primary data through administering of questionnaires to 120 respondents that were sampled for the study. Out of this sample size, 87 responded. The respondents were identified through non-probability sampling. Descriptive statistics were used to describe the variables. The analysis of the data was done using the Statistical Package for Social Sciences (SPSS). The study found out that the characteristics and the roles of the board influence the governance of the organizations on matters of accountability, financial management and adherence to the laid down laws. Stakeholders and donors influence the governance of the organizations through their concerns and their influence on the use of their funds, monitoring of the activities and performances of the organizations. Lastly globalization was found to influence the financial, accounting and reporting practices of the organizations. The major conclusion of the study was that most NGOs practice corporate governance and are influenced by characteristics and roles of the board through enhancing compliance with the law, recruitment, appointments and setting remuneration for the executive director; stakeholders through monitoring the activities and use of funds by the organizations and finally globalization pressure from best practice around the world through adoption of universal systems. The study recommends that NGOs should enhance its corporate governance practice by ensuring the board memberships positions are advertised when they fall vacant, communities are continuously engaged in the activities of such NGOs and feedback sought. It is also recommended that NGOs adapt organizational structures and board size and composition that are moving towards acceptable global standards in order to ensure efficiency and accountability