Financial Management in Religious Non-Profit Organizations: A Mission Based Approach to Ratio Analysis

Abstract

Religious non-profit organizations (RNPOs) exist to provide a variety of programs and services. They have an important niche in a wide range of social, human, education, health, and community services to their stakeholders. The reason for RNPOs’ existence is its mission and thus, mission becomes the central thrust for RNPOs’ existence and operations. Therefore, it is appropriate to focus on the financial management of RNPOs in their association with mission based approach to ratio analysis. A mission based approach to ratio analysis for RNPOs is one of the ways for a long way of having the financial performance measures for RNPOs. Such analysis through the use of ratios helps identifies the financial performance of RNPOs in actual faith of mission. The measures of financial performance concerning performance efficiency ratio (PER) and operating expense ratio (OER) were constructed in this study. The ratios were generated for 60 RNPOs and were considered a good measure of the efficiency in which the organization fulfilled its mission. Index Terms financial performance, measurement, ratio analysis, religious non-profit organization.