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BOLUWATIFE AWOFADEJU BSC PROJECT
1. THE EFFECTS OF BUDGETING AND PERFORMANCE
MEASUREMENT ON THE CONTINUAL EXISTENCE OF
COMMUNITY DEVELOPMENT ASSOCIATIONS
(A CASE STUDY OF MAGODO RESIDENTS’ ASSOCIATION- MRA)
BY
BOLUWATIFE NATHANIEL AWOFADEJU
09/03/ACC/0624
A PROJECT SUBMITTED TO THE DEPARTMENT OF
ACCOUNTING, COLLEGE OF SOCIAL AND MANAGEMENT
SCIENCES (COSOMAS), CALEB UNIVERSITY, LAGOS
IN PARTIAL FULFILMENT OF THE REQUIREMENTS FOR
THE AWARD OF BACHELOR OF SCIENCE (B.Sc.) DEGREE IN
ACCOUNTING
JUNE, 2013
2. ii
APPROVAL
This is to certify that this research work has been carefully assessed and approved
as having met the partial requirements of a Bachelor of Science (B.Sc.) Degree in
Accounting, from the department of Accounting and Finance, Caleb University,
Lagos, Nigeria
------------------------------ --------------------------
Dr. A. M. Onaderu Date
Project Supervisor
------------------------------ --------------------------
Dr. A. M. Onaderu Date
Head of Department
3. iii
DEDICATION
This work is dedicated to the Almighty God, for His grace and loving kindness
I also dedicate it to my parents: Engineer Oladayo Awofadeju and Mrs. Blessing
Jesutunmida. It is also dedicated to my entire family, friends and loved ones. I
appreciate your love, support and care. May you all be rewarded by the Almighty
God.
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ACKNOWLEDGEMENT
When kindness cannot be returned, it should be appreciated. A number of people
have helped to make this project research and writing successful. So their kind
gestures ought to be appreciated. My sincere gratitude goes to my supervisor Dr.
A.M. Onaderu (FCA) who took his time in the in-depth supervision of this work;
made sure that it came to a successful and smooth completion, and for his utmost
contribution towards the fulfillment of my dreams of getting my becoming a
graduate in accounting.
My profound gratitude also goes to my lecturers who have taught me over the
years: Dr. Kajola, (FCA), Dr. Lawrence (FCA), Dr. Alexander (FCA), Dr. Mrs
B.O Njogo, Mr. Mike, Mr Adediran, Mr Olabisi Jayeola (FCA), and so many
others whom though I may not mention, but I am very grateful to you all.
This write-up is not enough to appreciate my dear parents. Their desire to see me
become greater than them through their love, care, and trainings cannot be
overemphasized. I thank God for giving me such wonderful parents and pray that
they live to reap the fruits of their labour in Jesus name.
I cannot forget my big cousins: Mr. & Mrs Ajayi (Big Segs & SD), Uncle Tope,
Aunty Tolu, Fiyinfoluwa and Similoluwa, Tobi & Ike, the Akinyemis (Lekan,
Tobi, Toyin and Florence). God bless you all for your love and care.
I also appreciate the immense contributions of the Management and Staff of
Magodo Residents’ Association (MRA), Magodo – Lagos in allowing me to use
their association as the case study for this project; and also provided all necessary
information to make it a success. God bless MRA.
Asides from that I am indeed grateful to the entire staffs (teaching and non-
teaching) of Caleb University, permit me to mention a few names like: Professor
Nosa Owens-Ibie, Mr Adekunle (College Officer, COPAS), Mrs. Oko (Registrar)
and all other persons who I might not have put in the list. Thank you all for your
support and encouragement during my academic journey in Caleb.
Myspecial gratitude also goes to my mentor and guide, Mr Olorunfemi. Thank you
for your kindness, prayers, advice and support for me as a father to his son.
To my friends and classmates who have always been there with encouragements,
supports and advice: Benson Bobby Uche, Odufuye Morakinyo, Odesanya
Omowonuola, Kolapo Olubunmi, Omole Emmanuel Obaloluwa, Akinrinmade
5. v
Pelumi, Alufoge Foluso, Lawal Oladotun, Adeyemo Basirat, Olusola Olarewaju,
Abraham Seth, Omopariola Omotola, Udeogu Dubem and others, including all the
students of Caleb University Accounting and Finance department (graduating set
of 2013). God bless you all.
Above all I thank the Almighty God for everything I am, and will be to His glory.
6. vi
TABLE OF CONTENTS
pg
CHAPTER ONE: INTRODUCTION
1.1 Background of the Study - - - - - - - - - 2
1.2 Statement of the problem - - - - - - - - - 4
1.3 Aims and Objectives of the Study - - - - - - - - 5
1.4 Research Questions - - - - - - - - - - 6
1.5 Research Hypothesis - - - - - - - - - - 6
1.6 Research Design and Methodology - - - - - - - - 7
1.6.1 Research Design - - - - - - - - - 7
1.6.2 Sampling and Sampling Procedure - - - - - - - 8
1.6.3 Data Collection Procedure - - - - - - - - 8
1.6.4 Data Analysis Techniques - - - - - - - - 8
1.7 Significance of the Study - - - - - - - - - 9
1.8 Scope of the Study - - - - - - - - - - 9
1.9 Limitations of the Study - - - - - - - - - 10
1.10 Definition of Terms - - - - - - - - - - 11
1.11 Plan of the Study - - - - - - - - - - 12
CHAPTER TWO: LITERATURE REVIEW
2.0 Introduction - - - - - - - - - - - 13
2.1 The Concept of Budgeting - - - - - - - - - 14
2.2 Objectives of Budgeting and Budgetary Control: - - - - - - 15
2.2.1 The Concept of Budgetary Control - - - - - - - 15
2.3 The Concept of Community Development and
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Community Development Associations: - - - - - - - 17
2.3.1 Objectives of Community Development Associations- - - - - 19
2.3.2 Characteristics of Community Development Associations - - - - 20
2.4 Theoretical Literature Review: - - - - - - - - 22
2.4.1 Definition of Good Budgeting - - - - - - - - 22
2.4.2 The Main Types of Budgets - - - - - - - - 22
2.4.3 Budgetary Control - - - - - - - - - 24
2.4.4 The Multiple Functions of Budgets: - - - - - - - 25
2.4.4.1 Advantages of Budgeting and Budgetary Control - - - - 26
2.4.4.2 Disadvantages of Budgeting and Budgetary Control - - - - 27
2.5 The Budgetary Process of Community Development Associations (CDA’s): - - 27
2.5.1 Specific budgets relating to Community Development Associations (CDA’s) - 30
2.5.2 Steps in making a community development association’s budget - - - 32
2.6 Performance Measurement in Non-Profit Organisations: - - - - - 32
2.6.1 Performance Audit - - - - - - - - 32
2.6.2 Steps in Performance Measurement - - - - - - 34
2.6.3 Quantitative Measures of Performance Appraisal - - - - 34
2.6.5 Non-financial metrics and their mission - - - - - - 35
2.6.6 Problems with Performance Measurement in
Community Development Associations - - - - - - 37
2.6.7 Possible solutions to the problems of Performance Measurement - - - 38
2.7 Methodological Literature Review - - - - - - - - 39
2.8 Empirical Literature Review: - - - - - - - - - 44
2.8.1 While measure performance? - - - - - - - - 47
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2.8.2 Eight purposes for measuring performance - - - - - - 49
2.8.3 The relationship between economy, efficiency and effectiveness - - - 49
CHAPTER THREE: RESEARCH DESIGN AND METHODOLOGY
3.1 Introduction - - - - - - - - - - - 51
3.2 Study Area/Establishment: - - - - - - - - - 52
3.2.1 Overview of Magodo Residents Association (MRA) - - - - - 52
3.2.2 Aims and Objectives of Magodo Residents Association (MRA) - - - 53
3.2.3 Financing in Magodo Residents Association (MRA) - - - - - 54
3.2.4 The Organisational Structure of Magodo Residents Association (MRA) - - 54
3.2.5 The Budget Process of Magodo Residents Association (MRA) - - - 55
3.3 Re-statement of Research Questions: - - - - - - - - 57
3.3.1 Re-statement of Research Hypothesis - - - - - - - 58
3.4 Research Design: - - - - - - - - - - 58
3.4.1 Sources of Data and Data Collection Procedures - - - - - 58
3.4.2 Research Methods - - - - - - - - - 60
3.5 Sampling, Estimation and Sampling Techniques: - - - - - - 60
3.5.1 Population of the Study - - - - - - - - 62
3.5.2 Estimation of Sample Size - - - - - - - - 63
3.5.3 Model Specification and method of data analysis - - - - - 64
3.5.4 Variables in the model - - - - - - - - - 65
3.5.5 Interpretation of variables - - - - - - - - 66
3.5.6 Explanation of more terms - - - - - - - - 67
3.6 Limitations of the Methodology - - - - - - - - 72
11. ABSTRACT
Nonprofit organisations, as well as many charitable institutions, are a necessity to helping those
in need in any country. Many of these institutions take on the structure of corporations with a
hierarchy that goes from CEO’s on the top all the way down to local management. One of the
jobs of these management positions is to form a budget. This plan of action is needed to
maximize the utilization of all funds and get the most benefit of any money in the organisation.
The process of forming and implementing the budget of any organisation whatsoever is very
crucial and must be done in the most organized and detailed manner as possible, especially the
budget and budgetary control process of non-profit concerns which differ from the different
types of non-profit concern that is put into consideration. For the purpose of this study, our focus
would be on the budget and budgetary control process of community development associations,
plus the performance measurement or appraisal techniques used to test for the authenticity and
efficiency of the utilization of their funds. These entities duly serve as a pivot key for improving
the social and environmental welfare of the populace and neighborhood communities (whether
rural or urban) that is closest to their location or area of establishment. They are the first point of
call that can be of easier and faster assistance to community dwellers in need of social,
educational, financial and environmental help and aid. Therefore it is significant to note that
without a detailed and comprehensive budget for a community development association, it
simply means that such organisation lacks control and responsibility. The budget is therefore
useful in the management of the association’s money and the prioritization of the entities
spending. It also serves as a checkpoint to impulsive buying and a tool that is used to keep cash
flow in balance. In all, this study is designed and structured into five chapters: the first being the
introductory notes which simply gives a brief explanation of what financial management,
budgeting and budgetary control is, and including the merits and limitations involved in the
budgetary control process of non-profit concerns especially that of community development
associations and other neighborhood assisters. This eventually forms the background of the
subject matter thereby justifying the need for the study. Chapter two presents related literature
concerning budgeting and budgetary control systems and also provides a thorough analysis of the
budget preparation, control system, zero-based and incremental budgeting system, budget types
and audit procedures that are done in community development associations with due emphasis to
that of the case study in concern- The Magodo Residents’ Association. Chapters three and four
that present and fully examine the financial data gotten from our case study out of which
different statistical techniques and tools were used to understand the reason for variances or
differences in the data that were analyzed. The concluding notes in chapter five reflect on the
summary, conclusion, recommendations that are based on the findings of the study.
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CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND OF THE STUDY
The proper preparation, monitoring and coordination of the budget and budgetary control process
of any organisation (whether private or public) forms a major part of the responsibilities of the
organisation’s financial manager and if this is done correctly, orderly and accurately, then it
would certainly result into having a significant effect on the organisation’s overall profitability
and efficiency. This goes to prove the fact that budgeting, budgetary control and budget
preparation in any entity whatsoever should be considered a top most priority in the
organisation’s planning and control process.
A budget is thus defined as a financial and quantitative statement, prepared prior to a defined
period of time, of the policy to be pursued for the purpose of attaining a given objective. The
Chartered Institute of Management Accountants (CIMA) also defines a budget as “a plan
quantified in monetary terms, prepared and approved prior to a defined period of time, usually
showing planned income to be generated and or expenditure to be incurred during that period
and the capital to be employed to attain a given objective”.
According to Black Baud (2011), budgeting forms a major part of the financial management
practice and policies of an organisation and it is done differently in both the profit-making
sectors and non-profit/not-for-profit sectors of a country’s financial system. Taking for example
these days that managers in the not-for-profit sector sound an awful lot like managers in the
profit sector. As these managers are faced with dwindling resources that must be effectively
utilized to accomplish their organisation’s goals and objectives, they also talk about flattening
management, surveying customers, educating donors, and creating strategic alliances. Other
issues that they discuss relates to packaging, delivery, cost-cutting, total quality management
13. 3
(TQM) and so on. They do this because of the various functions that their not-for-profit
organisation performs. These functions vary based on the type of not-for-profit organisation that
is put into consideration like that of a charitable establishment, charitable financial assister, non-
governmental groups and organisations, civil society groups, neighborhood assisters, religious
groups and organisations and public-sector establishments.
Out of the different examples stated above, the closest within ones vicinity are the neighborhood
assisters who consist of community development groups and associations. These entities are set
up not to buy/manufacture or to sell/provide goods and services that will earn them profit but to
do good to the society through welfare activities. These organisations are also called non-trading
concerns/non-profit organisations because if one is to observe them from the book-keeping point
of view, the aim of such organisations is the pursuit of some interest other than financial benefit.
A thorough analysis of community development associations usually shows that these entities
lack the financial flexibility of a commercial enterprise because they depend on resource
providers that are not engaging in an exchange transaction. The resources they provide are
always directed towards providing goods or services to a client or the general public other than
the actual resource provider. Thus it is paramount that the association must demonstrate its
stewardship of donated resources or money given to them from the organisations external
environment, this proves the fact that donations that are received are directed for the specific
purpose for which they are to be expended for. That purpose is either specified by the donor or
implied in the not-for-profit’s stated mission.
The financial management and reporting activities of a not-for-profit concern must emphasize
stewardship for these donated resources. The staff must be able to demonstrate that their income
was used as directed by the donor. The shift to an emphasis in external financial reports on the
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donations the organisation receives has made the use of fund accounting systems even more
critical in the budget and financial management practice of a non-profit concern.
Budgeting and cash management are two areas of financial management for non-profit concerns
especially community development associations that are extremely important for them. The
organisation must pay close attention to whether it has enough cash reserves to continue to
provide services to its clientele. Cash flow can be extremely challenging to predict, because an
organisation relies on revenue from resource providers that do not expect to receive the service
provided. In fact, an increase in demand for a not-for-profit’s services can lead to a cash
management crisis. It is difficult to forecast contribution revenue in a reliable manner from year
to year. For that reason, the control of expenses is an area of increased emphasis. This therefore
reaffirms the fact that budgeting is a critical activity for any not-for-profit concern no matter the
type of not-for-profit concern it is.
1.2 STATEMENT OF THE PROBLEM
According to Chika (2010), the main problem with budgeting is that it relies on data from the
past and present, and will only enable predictions and forecasts to be made out for the future. At
the same time, numerous pressures in the job may impose constraints upon managers, which
affect the quality of information they collect. The problem can be numerous; clearly, nothing can
be forecasted with absolute certainty, but no matter the financial and marketing researches that
take place, every organisation has to take risks. Though accounting information may reduce the
unpredictability of event in the future. It will never eliminate it. All these can interrupt the
system of budgetary control:
1. If the actual results are completely different from the target, the budget can lose its
significance as a means of control. Whereas a fixed budget is not able to adapt to
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changes, a flexible budget will recognize changes in behavior and can be amended to fall
into line with changing activities
2. Following a budget too rigidly can restrict an organisation’s activities. On the other hand,
if a manager realizes towards the end of the year that his or her department has under
spent its budgeted expenditure, he or she might go on spending spree
3. If budgets are imposed upon managers without sufficient consultation, they may be
ignored
Poor communication between the directors and managers (i.e. the decision makers) and staffs of
the non-profit concern makes budgeting exercise futile. Apart from poor communication, the
following are other problems that are associated with the budgeting process:
Too many people involved in the process
The fact that budgets are usually outdated by external events
Budgets are difficult to revise
If these problems are solved and adequate measures are put in place to tackle them, then such
organisation can have a hitch free budgetary process that would aid the effective management of
the affairs of the organisation.
1.3 AIMS AND OBJECTIVES OF THE STUDY
The following are the objectives of this study:
1. To prove that the preparation of budgets serve as an effective guide to the growth of
community development associations.
2. Showing how the preparation of a budget serves as a means of controlling and
synchronizing the association’s personnel’s and their functions.
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3. Highlighting whether any significant change in the budget and budgetary control system
of a community development association affect the growth and development of the
organisation as a whole.
4. To prove that a thorough performance appraisal of the effective usage of the associations
budget provides enough data that would reflect the true position of the entity and its
ability to continue to exist in order to perform its due functions and responsibilities.
1.4 RESEARCH QUESTIONS
Adequate budgeting, budgetary control and performance measurement techniques in community
development associations should be able to answer the following research questions:
1. Does the preparation of budgets serve as an effective guide to the growth of community
development associations?
2. How does the preparation of budgets serve as a means of controlling and synchronizing
the association’s personnel’s and their functions?
3. Does any significant change in the budget and budgetary control system of a community
development association affect the growth and development of the organisations as a
whole?
4. Does a thorough performance appraisal of the effective usage of the associations budget
provide enough data that would reflect the true position of the entity and its ability to
continue to exist in order to perform its due functions and responsibilities?
1.5 RESEARCH HYPOTHESIS
Hypothesis1
H0: Budgets and budgetary control are not effective guides to the growth of community
development associations.
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H1: Budgets and budgetary control are effective guides to the growth of community
development associations.
Hypothesis2
H0: Performance measurement for a community development association does not show the
position of the association as regards the effective utilization of its resources. It is not a
tool that can be used for proper monitoring and control of the association’s resources.
H1: Performance measurement for a community development association shows the position
of the association as regards the effective utilization of its resources. It is therefore a
proper tool that can be used for proper monitoring and control of the association’s
resources.
1.6 RESEARCH DESIGN AND METHODOLOGY
1.6.1 RESEARCH DESIGN
The objective of this study is to examine the effect of good budgeting, budgetary control and
performance measurement system on the continual existence of non-profit organisations
especially that of community development associations. And in order to do justice to this
research work, two different methods were used to elicit the required information, they are:
1. Method one (Oral Interview).
2. Method two: Through details and further investigations that will be gotten from
textbooks, journals, websites, and other relevant documents or materials one would be
able to easily clarify the body responsible for the budget of the community development
association.
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1.6.2 SAMPLING AND SAMPLING TECHNIQUES
The sample to be used for this study would be taken from the budget of the community
development association.
1.6.3 DATA COLLECTION PROCEDURES
The information in this project contains details that are collected from the following sources of
data:
1. Primary source.
2. Secondary source.
Primary sources- This is based on personal data that are derived from the result of the
survey analysis conducted on the budget of the community development association.
Secondary sources- This contains information that are gathered from some published
and even unpublished materials culled from different authors’ textbooks, some project
reports, government publications, technical journals, newspapers, e.t.c.
1.6.4 DATA ANALYSIS TECHNIQUES
Linear regression analysis is the statistical tool that would be used to analyze the data that would
be retrieved from the case study of this research work. In addition, the statistical technique of
linear regression analysis is used in estimating the relationship and effect between budget and
budgetary control changes, organisational growth and continuity and the performance
measurement systems of community development associations (CDAs). This technique is
employed in obtaining the numerical estimate of the coefficient of the linear regression equation.
This estimation technique is relevant to the objective of this research project because it has been
used in the study of a wide range of statistical relationships with satisfactory results.
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1.7 SIGNIFICANCE OF THE STUDY
The study of budgeting and budgetary control is of great importance to community development
associations (CDAs) because the preparation of a budget helps in the delegation of
responsibilities to each top official and it induces the early consideration of basic policies of the
organisation. It also ensures that adequate liquid resources are made available at any time and it
helps to define the goals and objectives of the organisation which would serve as a benchmark
for evaluating the subsequent performance of the organisation.
The existence of a budget leads to a better control of current operations aided by regular,
systematic monitoring and reporting of activities. Where budgetary control is in operation, cost
consciousness is always increased and through this means waste, losses and inefficiencies will be
reduced, the organisation would also be able to take corrective actions to improve the existence
of a variance or adverse situation that would occur in its budget or the final details that would
result from the organisation’s performance report. A budget also provides a means of
communicating the associations’ goals and plans to all its members (present and intending). In
addition, a budget serves as an instrument for uncovering the potential bottle necks of
theorganisation before they occur.
1.8 SCOPE OF THE STUDY
Budgeting and budgetary control process could have been extended to cover the whole of the
accounting and financial areas of the various organisations which are entities that exist in
Nigeria. But this study is limited to a non-profit making organisation and the targeted area to be
used for this study will be The Magodo Residents Association (MRA), Magodo G.R.A, Phase 2,
Lagos state, Nigeria.
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1.9 LIMITATIONS OF THE STUDY
Chika (2010) suggests that though budgeting and budgetary control have many impressive and
far reaching advantages, they also have certain limitations and pitfalls which the association must
consider. Some of the factors limiting the study of budgeting and budgetary control in
community development associations are that there is no proper documentation of the accounts
of the association; also, the budgetary system requires the co-operation and participation of all
members of the associations’ board of which there could be the existence of conflicts and
misunderstanding amongst various parties of the association.
Lucy (2002) also suggested that the basis for the success of the association is in the absolute
adherence and enthusiasm of the association’s board for the budget. This is really very important
but most often budgetary control has failed because some of the members of the board have paid
lip services to its execution. Other scholars’ belief is that the process of installing a proper
budgetary control system takes time; this would eventually make the board to be very impatient
and lose interest because its expectation would be too much for the association to accomplish
within a short time. Some community development associations have budgetary systems that do
not fully explain to the appropriate officials with proper guidance being given to them when
necessary, the overall budgeting and budgetary control process of the organisation.
In addition to this, adequate and appropriate training and education for these officials and other
staff on the fundamental steps, methods and purposes of a budgetary control system are not given
to them, this inhibits the contributions and efforts that these individuals would be able to put into
the budgeting and budgetary control system of the organisation and the achievement of the
organisation’s goals and objectives as a whole. It is also necessary to point out the fact that a
budgetary control system does not fully eliminate or take over the role of administration in the
21. 11
organisation hence the board/top officials should not feel confined or restricted to performing
their functions in relation to a particular area or major goal; rather, the budget and budgetary
control system should be designed to provide detailed information which will guide them to
operate with strength and vision towards the achievement of the organisation’s goals. A budget
also represents an ordinary tool that may not be effective without closer supervision. In
conclusion, the existence of a budget may encourage interdepartmental conflicts among
divisional heads or managers as every single department/unit of the organisation would want to
have a substantial share or amount of the resources of the organization.
1.10 DEFINITION OF TERMS
BUDGET- According to Lucy (2002), “a budget is a quantitative statement, for a defined
period of time, which may include planned revenue, expenses, assets, liabilities, and cash
flows, which provides a focus for the organisation, aids the co-ordination of activities and
facilitates control”.
BUDGETING- According to Collins (2009), “budgeting is the act of preparing a
budget”.
BUDGETARY CONTROL- According to the Chartered Institute of Management
Accountants (CIMA), “budgetary control is the establishment of budgets relating the
responsibilities of executive to the requirements of a policy and the continuous
comparison of actual with budgeted results, either to secure by individual action the
objectives of that policy or to provide a basis for its revision”.
RESPONSIBILITY CENTRE- According to Drury (1996), “a responsibility centre is a
unit of a firm where an individual manager is held responsible for the unit’s
performance”.
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PERFORMANCE MEASUREMENT- This is a process for collecting and reporting
the performance of an individual, group or organisation. It can involve looking at
process/strategies in place, as well as whether outcomes are in line with what was
intended or should have been achieved.
1.11 PLAN OF THE STUDY
This study is divided into five chapters. The first chapter provides the background of the subject
matter justifying the need for the study. Chapter two presents the related literature concerning
budgeting, budgetary control system and performance measurement practices in community
development associations. The research methodology, which includes the research design,
sources of data, model formulation, estimation techniques and so on are stated in chapter three
while data presentation and analysis would be made in chapter four. Final comments would be
made in chapter five and it would reflect the summary, conclusion and recommendations based
on the findings of the study.
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CHAPTER TWO
LITERATURE REVIEW
2.0 INTRODUCTION
A budget can be defined as a comprehensive and a formal plan that estimates the probable
expenditures and income for an organisation over a specific period. It is a financial and
quantitative statement prepared prior to a defined period of time of the policy to be pursued for
the purpose of attaining a given objective.
According to the Chartered Institute of Management Accounting (CIMA)‘‘A budget is a plan
quantified in monetary terms, prepared and approved prior to a defined period of time, usually
showing planned income to be generated and or expenditure to be incurred during that period
and the capital to be employed to attain a given objective’’. Budgeting periods are very common
but the most common period of time is usually one year. Within this year, there may be monthly
or quarterly budget reviews made. This term budget is popularly applied to that portion of money
allocated for a specific purpose for example, the labour budget, the procurement budget, etc.
There can be as many as those individual budgets as the complexity of the organisation. These
individual budgets are parts of an overall budget which is commonly referred to as the master
budget. There are three main parts to any organisation’s budget and they include:
The review of the previous year
The estimate of income and expenditure for the current year
A feature of the budget that is now sometimes criticized is that there is no continuity from one
budget to another; each financial year is completely self -contained. Budgeting is a familiar and
very important type of short range plan, a plan that expresses in numerical terms (either in naira,
e.t.c) how the resources of an organisation can be distributed to attain a desired profit. Since
24. 14
working out a budget force the organisation to determine how much money will be coming in
what cost will be entailed, it simultaneously becomes a controlling as well as a planning
operation. Since the budget is a guideline to what will take place over a lengthy period of time, a
great deal of careful thought must go into its planning. Consequently, the master (or operating)
budget, which is an overall estimate of revenue, cost and expenses, is based on several sub-
budgets, including the sales budget, the production budget and the cost of goods sold budget.
2.1 THE CONCEPT OF BUDGETING
Budgeting is the whole process of designing, implementing and operating budgets. The main
emphasis to be noted for is in an organisation’s short-term budgeting process which involves the
provision of resources to support plans which are being implemented. Since budgets are such
valuable tools for planning and control of finances, budgeting affects nearly every type of
organisation from governments and large corporations to small businesses as well as families and
individuals. Intelligent budgeting incorporates good organisational judgment in the review and
analysis of past trends and data pertinent to the organisation. This information assists the entity
in making informed decisions that would aid the growth and development of the organisation and
the achievement of the organisation’s goals/objectives. Although budgeting can be time-
consuming and costly for any organisation, it can also provide a variety of benefits, including an
increased awareness of costs, a coordination of efforts toward company goals, improved
communication, and a framework for performance evaluation.
The concept of budgeting varies from one organisation to another, this further states that the
process of budgeting could occur in either a profit making firm or a non-profit concern. A profit
making organisation/firm can be defined as an organisation that operates to provide goods and
services to customers with a view or a motive of making profit from its activities while a non -
25. 15
profit organisation can be defined as an organisation that solely works to provide services as well
as operations without any aim of making profits. The surplus money that the non-profit
organisation gets is not distributed among the owners or the shareholders and other people
associated with the organisation. These organisations are generally exempted from income taxes
and thus are not at all obligatory to any authority to pay anything in the form of income or
property taxes, etc. But for the purpose of this study, our emphasis would be on budgeting and
performance measurement systems of community development associations.
2.2 OBJECTIVES OF BUDGETING AND BUDGETARY CONTROL
Budgets have a number of benefits for nonprofit organisations like that of community
development associations. First, a budget helps such organisation to be able to focus on short and
long-term strategic goals, which are generally connected to the availability and timing of
financial resources. This means that budgets are produced to give a detailed operational plan for
the different sectors and facets of the organisation.
In addition, the association’s board uses the budget in its oversight of operations. When the
board approves a budget, it is approving the use of resources for specific purposes. A budget is
also a financial control that sets spending limits and attempts to keep costs in line with revenues.
Even if the board and administrators choose not to develop a budget for their own purposes,
there are third-party stakeholders who require a formal budget before considering grant
applications, making pledges, gifts and bequests, and extending credit. To these stakeholders, a
budget provides a measure of accountability, transparency and good faith.
2.2.1 THE CONCEPT OF BUDGETARY CONTROL
Horngren et al. (2008), view budgetary control system as “a logical integration of technique for
gathering and using information to make planning and control decisions, for motivating
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employee behaviour, and for evaluating performance.” It is however important to note that, for
the purpose of this study the definitions that perceive control as a feedback mechanism, that
monitors, evaluates and compares actual results with standards for corrective action so as to
achieve set objectives are considered.
Using a control model (organisational control) in figure.1.1, management control through
budgeting is explained. In figure 1.1, it is evident that budgeting is the core of both planning and
control function of the organisation’s board. Furthermore, Meign & Meigs (1981), explain that
another use of budget for control purpose is in evaluating performance. They argue that
organisational plans are carried out by people, thus, control is exercised not over operations,
revenue, costs, but over the persons responsible for those operations and the related revenue and
expenses (see for example, Otley, 1978). Relying on financial measures alone is insufficient to
ensure that strategy will be executed successfully. The solution to this is to measure and evaluate
every unit manager using multiple measures, non-financial as well as financial (Anthony &
Govindarajan, 2004 cited in Amalokwu & Lawrence, 2008).
More so, it is important to note that, the non-profit environment is ever changing and highly
competitive, therefore fixed budget is not desirable. Instead, flexible budgeting technique and
forecasting should be adopted. From fig. 1.1, it is also important to note that, at the control
phase, strategic, operational objectives and budgetary planning can be revised if necessary. This
is to reflect the changes in the environment (Hansen et al., 2003; Frederick 2001). In other
words, control system can be feedback or feed forward system; the former is based on past data
and the latter on planned data (Wickramasinghe & Alawattage, 2007).
More importantly, for budgets to serve as effective control tools, the following prerequisites are
essential: organisational goals and objectives; well defined organisational structure; sound
27. 17
accounting information system; well defined responsibility centres; proper cost classification and
coding; performance measures; prompt access to external information; efficient information
technology.
Figure 2.2.1: Budgetary control process and budgeting
Source: Adapted from Anthony & Dearden 1980, cited Wickramasinghe & Alawatage
(2007), modified
2.3 THE CONCEPT OF COMMUNITY DEVELOPMENT AND
COMMUNITY DEVELOPMENT ASSOCIATIONS
From the earliest periods of human history, communities have sought to improve their lot
through self-help efforts otherwise known as community development activities; as such
community development constitutes a part of the overall development strategy. Hence, the theory
of community development is derived from a general theory of development. Due to the secular
28. 18
character of the African society, specific programs and strategies are usually designed to address
the problem of underdevelopment and poverty. One of the enduring and flourishing heritages of
traditional African society is their involvement in community development efforts.
It has been an indigenous mechanism and technique employed by the people to identify their felt
needs, choose what they want and take cooperative action to satisfy their needs. These
community development efforts are today organized on a wider scale and are not limited to
village level alone but have become part of people’s lives at the village, local government, state
and national levels. This explains why they are tied up with such ideals as ultimate control by the
people, a substantial degree of freedom by individuals and groups, a considerable amount of
government decentralization and widespread citizenship participation.
Okwakpam (2010) believes that the main concept of community development is that the
community should help itself by providing its felt needs. This is the reason why individuals in
Magodo G.R.A, Lagos (our case study) have embarked on self-help development projects such
as the construction of roads, markets, health centres or hospitals, schools, bridges, water supply
projects, town halls or civic centres and electricity projects. Indeed entities (corporate or
individual) have, through various forms of informal education, sought to perpetuate training in
self-help and self-reliant programs. Right from a tender age, the spirit and purposes of mutual
work get inculcated in the people through practical work experience, communal projects and
tales extolling the virtues of self-help. Elders in the community also teach the young through
systematized apprenticeship and through the guilds and skills in agriculture, art and craft so that
the community members are appropriately equipped to change and control their own
environments for the better.
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Human needs are insatiable and the government alone cannot meet them. Various efforts have
been made by government, voluntary and international organisations to transform their
communities in recent times. One of the strategies being employed is best carried out under the
umbrella of community development associations to provide the needs of communities in the
areas of welfare service, environmental sanitation, health services and provision of other
infrastructures to make life meaningful for them. It is the coming together of people living within
a given community with the sole aim of identifying their felt needs and agreeing on the ways,
means and moves towards the realization of such identified needs.
Community development associations are a forum for people to articulate their views, aspirations
and community needs. It is primarily aimed at helping people within a local community to
identify their social needs, to consider the most effective ways of meeting these and to set about
doing so, as far as their available resources permit. Hence it aims at building up and preserving
society that pre-supposes and reinforces a common direction of interest and co-operation in order
to achieve shared aims.
2.3.1 OBJECTIVES OF COMMUNITY DEVELOPMENT ASSOCIATIONS
Community development associations have multiple objectives which are difficult to define. A
major problem with many CDA’s is that it is extremely difficult to define their objectives at all.
In addition they tend to have multiple objectives, so that even if they could be clearly identified it
is impossible to say what the over-riding objective is. More general objectives for community
development associations include:
Surplus maximization (equivalent to profit maximization).
Revenue maximization (as for a commercial business).
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Usage maximization (as in leisure centre swimming pool usage).
Usage targeting (matching the capacity available, as in the National Housing Scheme-
NHS).
Full/partial cost recovery (minimizing subsidy).
Budget maximization (maximizing what is offered).
Producer satisfaction maximization (satisfying the wants of staff and volunteers)
2.3.2 CHARACTERISTICS OF COMMUNITY DEVELOPMENT
ASSOCIATIONS
Although the precise line between a for-profit and a non-profit organisation like that of a
community development association is fuzzy, the following definition is adequate: A nonprofit
organisation is one whose goal is something other than earning a profit for its owners. Usually its
goal is to provide services. This definition corresponds approximately to that found in most state
statutes.
The definition also emphasizes a basic distinction between the two types of organisations- a
distinction that is the cause of many management control problems in nonprofit organisations. In
a profit company, decisions made by management are intended to increase (or at least maintain)
profits. Success is measured, to a significant degree, by the amount of profit the organisation
earns. By contrast, in a nonprofit organisation, decisions made by management ordinarily are
intended to produce the best possible service with the available resources.
Success in a nonprofit organisation is measured primarily by how much service the organisation
provides and by how well these services are rendered. More basically, the success of a nonprofit
organisation is measured by how much it contributes to the public well-being.
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Since service is more vague and a less measurable concept than profit, it is more difficult to
measure performance in a nonprofit organisation. It is also more difficult to make clear-cut
choices among alternative courses of action in such an organisation; relationships between
service costs and benefits, and even the amount of benefits, usually are hard to measure. Despite
these complications, management must do what it can to assure that resources are used
efficiently and effectively. Thus, the central problem is to find out what management control
policies and practices are useful for the nonprofit organisation.
The distinction between for-profit and nonprofit organisation is not black and white. A for-profit
company must render services that its customers find adequate if it is to earn a profit. A nonprofit
organisation must receive funds from operating revenues or other sources that are at least equal
to its expenses if it is to continue to render services. Thus, the distinction is not based on the need
for funds, per se, but on the predominant attitude toward the uses of funds. Nor does the
distinction relate solely to the types of services provided. Some hospitals, medical clinics,
schools, even religious organisations, even though the services they provide often are thought of
as being provided by community development associations and other nonprofit organisations.
Moreover, in addition to proprietary (i.e., for-profit) hospitals, an increasing number of nonprofit
hospitals are being managed by for-profit companies. Other characteristics of community
development associations are:
1. The absence of a profit measure.
2. Different tax and legal considerations.
3. Greater constraints on goals and objectives.
4. Less dependence on clients for financial support.
5. A tradition of inadequate management controls.
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2.4 THEORETICAL LITERATURE REVIEW
2.4.1 DEFINITION OF GOOD BUDGETING
A study by Finney (1993) defined a good budgeting process as one that provides information and
focuses on outcomes. It provides the right climate for good decisions, excellence and controls all
activities, and is intelligent and timely for organisations. It can also directly aid down-sizing,
integration of new acquisitions, pricing and “reengineering” activities that are poorly performed
or wrongly budgeted. Campbell (1985) further added that the recognition of both technical and
behavioural aspects of budgeting is essential if organisational goals are to be achieved.
The second definition indicates that good budgeting processes have both special behavioural and
technical characteristic implications. However, this study only discusses the behavioural aspects
of budgeting which arise from the technical aspect of the budgeting processes followed as a
result of government constraints. The behavioural characteristics of good budgeting practices
will be identified from the business literature. As Campbell (1985) stated, every budgeting
system (business and public sector) must be customized and its success measured by the extent
to which it can provide necessary motivation for individuals in order to maximize their
contribution in achieving organisational goals. This provides an indication that there is no
significant difference in terms of behavioral aspects between business and public sector
budgeting.
2.4.2 THE MAIN TYPES OF BUDGET
FIXED & FLEXIBLE BUDGET
According to Chika (2010), a fixed budget is a budget that is designed to remain unchanged
irrespective of the volume of output or turnover attained. That is, it is a single budget with no
analysis of cost. The major purpose of a fixed budget is at the planning stage when it serves to
33. 23
define the broad objectives of the organisation where there is no analysis of cost into fixed and
variable. The fixed budget is unlikely to be of any real value for control purpose except if the
level of activity turned out to be exactly as planned. While a flexible budget is a budget which by
recognizing different cost behavior patterns, is designed to change as the volume of activity
changes for control purpose, it is vital that flexible budgeting is used only by comparing what the
cost should have been with the expenditure incurred at the actual activity level.
A flexible budget often reflects increases or decreases in business activity throughout an
organisation. In some organisations, changes may be greater in some departments and smaller in
others. In some departments ability to produce more units are there without incurring high
additional costs. In another cost increase or decrease in direct proportion to production increase
or decrease. The flexible budget attempts to deal with this situation with a fair degree of
accuracy. It keeps the expense to the level of activity possible and so facilitates the control of
expenditure and comparison of expense with revenue or volume of production.
In order to be able to prepare flexible budgets with some degree of accuracy, it is necessary to
classify overhead cost into fixed, variable and semi-variable. With variable cost, a specific sum
per unit of output or standard hour is set and so total variable cost is obtained by multiplying the
unit cost by units or hours.
OTHER TYPES OF BUDGET
The specific types of budget to be prepared by any type of organisation (whether a profit or non-
profit concern) will depend on so many factors such as the nature, size, complexity, operation,
etc. of the organisation. But in practice, the following types of budget are common:
CASH BUDGET: A cash budget involves detailed estimate of anticipated cash receipts
and payments for the forth coming year or period. This is because while it may be
34. 24
possible for an organisation to exist and continue to survive without profit, the existence
of an organisation is doubtful without liquidity. A cash budget identities potential period
of cash deficit or cash surplus to the organisation. This will therefore assist the
organisation in dealing with the adverse effect of cash squeeze (lack of cash) by
arranging for an overdraft facility or to maximize the benefit associated with surplus fund
through short-term investment.
MASTER BUDGET: The master budget also known as profit plan is a comprehensive
set of budgets covering all phases of an organisation operations for a specified period of
time. The master budget is the principal output of a budgeting system. It is a
comprehensive profit plan, that tie together all phases of an organisation’s operations. It
comprises many separate budgets, which are interdependent. They are:
i. Operational budget.
ii. Financial budget.
OPERATIONAL BUDGET: This type of budget shows how operations will be
carried out to produce an organisation’s goods and services. The essence of
operational budget is for the organisation to be able to meet the demand of its goods
and services.
FINANCIAL BUDGET: This budget shows how an organisation will acquire
financial resources during the budget period.
2.4.3 BUDGETARY CONTROL
According to the Chartered Institute of Management Accountants (CIMA), “Budgetary control is
the establishment of budgets relating the responsibilities of executives to the requirements of a
policy, and the continuous comparison of actual with budgeted results, either to secure by
35. 25
individual action the objective of that policy or provide a basis for its revision”. Budgetary
control occurs whereby actual state of affairs can be compared with that planned for by the
management, so that appropriate action may be taken to correct adverse situation that may occur
before it is too late. It is also used to fix responsibility. A budget system serves the needs of an
organisation’s board in respect of the judgments and decisions it is established to make and to
provide a basis for the management functions of planning and control. Developing a budget is a
critical step in planning any economic activity. This includes business, governmental agencies
and individuals.
Therefore governmental units and other non-profit concerns/organisations of all types and at
every level must make financial plans to carry out routine operations, to plan for major
expenditures and to help in making financial decisions. On this background, every organisation
no matter its nature has a plan for the future, simply because the success of any organisation
depends on the level of plan that is put into the organisation.
2.4.4 THE MULTIPLE FUNCTIONS OF BUDGETS
Aside from all of these, there are other objectives of budgeting and budgetary control in
community development associations which include the following:
1. CO-ORDINATION- To bring together and reconcile into a common plan the actions of
the different parts of the organisation
2. COMMUNICATION- To provide a definite line of communication so that all the parts
will be kept fully informed of the plans that the policies, and constraints to which the
organisation is expected to conform
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3. MOTIVATION- To influence managerial behaviour and motivate managers to perform
in line with the organisational objectives.
4. CONTROLLING- To assist managers in managing and controlling the activities for
which they are responsible.
5. PERFORMANCE EVALUATION- To evaluate performance by providing a useful
means of informing managers of how well they are performing in meeting targets that
they have previously helped to set out.
6. CLARIFICATION OF AUTHORITY AND RESPONSIBILITY- To make it
necessary to clarify the responsibilities of each manager who has a budget. Also to
authorize the plans contained in the budget so that management by exception can be
practiced (ability to give a subordinate a clearly defined role with the authority to carry
out the tasks assigned to him).
2.4.4.1 ADVANTAGES OF BUDGETING AND BUDGETARY CONTROL
1. Budgetary control establishes a basis for internal audit by regularly evaluated
departmental results.
2. Communication is increases throughout the firm and coordination should be improved.
3. An effective budgetary control system will allow people to participate in the setting of
budgets, thereby providing a motivational impact on the work force. Individual and
corporate goals are aligned.
4. It enables areas of efficiency and inefficiency to be easily identified as it uses variance
analysis to prompt remedial action where necessary.
5. The budget provides a yardstick against which the performance of the organisation can be
evaluated.
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2.4.4.2 DISADVANTAGES OF BUDGETING AND BUDGETARY
CONTROL
1. Budgets are perceived by the work force as pressure devices imposed by top executives
or officials. This can have an adverse effect on labour relations.
2. It can be difficult to motivate an apathetic work force.
3. Variance analysis in budgeting is just often due to changing circumstance and poor
forecasting due to managerial performance.
4. The pressure in the budgeting system may result in inaccurate record keeping.
5. In budgetary control it is important to match responsibility with control; otherwise a
manager will be defoliated. Costs can only be controlled by a manager if they occur
within a certain time span and can be influenced by that manager. A problem arises when
a cost can be influenced by more than one person.
2.5 THE BUDGETARY PROCESS OF COMMUNITY
DEVELOPMENT ASSOCIATIONS (CDA’s)
In community development associations, the annual budgeting process compares budgeted and
actual inputs, but does not provide information on efficiency with which activities have been
performed, or the effectiveness in achieving objectives. The aim of planning, programming and
budgeting systems is to enable the management of the CDA to make more informed decisions
about the allocation of resources to meet the objectives of the organisation. The planning,
programming and budgeting system involves the following stages:
a. Establishing the overall objectives.
b. Identifying the programs to achieve these objectives.
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c. Determining the costs and benefits of the programs so that budget allocation can
be made on the basis of cost- benefits of the different programs.
Many of the principles of budgeting apply to both CDA’s and profit-seeking organisations, but
there is a key difference. In profit-seeking organisations, their budgets relatively focus on the
relationships between inputs (expenditures) and outputs (sales and profits). In CDA’s, outputs
are much more difficult to measure; so therefore traditionally budgeting has been concerned with
making sure that for each expenditure heading actual spending does not exceed the budget
authorized cash limit. This has been criticized for concentrating on what the money is spent on
rather than what is obtained for the money.
Another problem for CDA’s is that many of their activities and the level of costs are determined
elsewhere and thus are much less controllable. Take, for example, the budget for a Locally
Managed School. A major item, often accounting for 70% of costs, is teachers’ salaries. The
level of salaries is determined nationally and legislation and norms largely govern the number of
teachers. As a consequence, a high proportion of costs are not controllable to any significant
degree at the school level. This and many other reasons constitute different reasons while an
effective budget and budgetary control process is needed to be established in the non-profit
organisation.
A budget is the financial description of an action plan outlining how the non-profit organisation
will use its money, based on knowledge and assumptions against which it will measure its actual
performance. It is therefore important for such organisation to be honest about what it can
manage in its income and expenditure, so that it would be able to develop a realistic budget
which would enable it to weather the unexpected throughout the year. Therefore the
organisation’s budget should be drafted as an appendix to the organisation’s mission and
39. 29
programs. It should be prepared more as an internal guiding resource than an external reporting
requirement. The general thumb rule to making a realistic budget is to be conservative when
estimating income but liberal when estimating the expenses of the organisation. Budgets are a
tool and a means to an end. They are used for planning and control.
Planning considers the physical and human resources required. Budgets may be in monetary and
non-monetary terms such as dollars, number of personnel, service units, space, number of donors
and size of contribution, and volunteers required. Programs and services should be prioritized.
The starting point for a budget is prior year figures. Budgets should be flexible and adapt to
changes as needed. The financial effects of alternative plans may be shown. It is an approved
plan for raising funds and spending. Budgets are primarily for internal use. The longer the time
period of the budget, the more uncertainties that is involved.
The budget must be able to conform to the long-term goals and objectives of the CDA.
Budgeting includes a comprehensive integrated plan for all phases of the CDA’s operations such
as responsibility centres, programs, and activities. It shows how the units contribute to the
overall organisation. There must be goal congruence. It is a coordinated effort. A monthly budget
is better than a quarterly budget so as to reduce the time lag before corrective action may be
implemented. Budgets should be participatory to encourage teamwork. The budget preparer
should work closely with managers and employees to assure budgeted figures are realistic and
accurate, and useful for control. Budget participants might include community leaders, funding
sources, and regulatory agencies. If the budget is being prepared for the first time, one must
obtain information from similar CDA’s, and one must also try to contact foundations,
government, funding agencies, and consultants. The budget has a total column for the whole
CDA and separate columns for the budget for each responsibility unit. Revenue and cost norms
40. 30
depend on quantitative and qualitative measurements. Budgets should distinguish between
restricted and unrestricted sources and uses of funds. Any expected transfers between restricted
and unrestricted, or vice versa should be presented. Restricted funds must be used for the specific
purposes stated. To do otherwise is a contractual violation. Restricted funds may be restricted by
donors or the board of directors for a special reason. Performance budgeting relates the input of
resources to the output of services for each unit of the CDA. It shows work performance and
efficiency. Quotas may be set such as for donor contributions based on fund raising costs.
Budgets may be used by external parties. Bankers may request budgets in support of credit
applications so as to gauge the CDA’s future financial status and its ability to pay back the loan.
Prospective donors may insist on reviewing budget amounts before making a contribution. They
may also want to see variance reports for prior periods between the budget and actual amounts.
The method used to present budget reports depends on the purposes management wants them to
serve. They may present year-to-year comparisons, expenditures as percentage of revenues,
expenditures and revenues as a percentage of budgeted amounts, or any of several variations.
Detailed supplementary information that will not be used should be avoided because it requires
cost and time to obtain.
2.5.1 SPECIFIC BUDGETS RELATING TO COMMUNITY
DEVELOPMENT ASSOCIATIONS (CDA’s)
According to Farris (2009), budgets may be classified based on their flexibility in planning and
control. Strategic budgeting is a form of long-range planning based on identifying and specifying
organisational goals and objectives. The strengths and weaknesses of the organisation are
evaluated and risk levels are assessed. The influences of environmental factors are forecast to
derive the best strategy for reaching the organisation’s objectives.
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A flexible budget is appropriate when operating costs are variable at different activity levels or
when it is difficult to estimate service demand. Budgeted figures are adjusted to actual activity. It
allows for variation from original estimates by revising revenue, cost, and cash flow forecasts
based on changing circumstances. On the other hand, a fixed (static) budget is set at a fixed
amount not subject to change during the budget period. It may be used when costs are highly
predictable. Such budgets may be applied to such areas as fund raising, research, and capital
expenditures. A line-item budget (LIB), also called incremental budget, may also be prepared.
LIBs are simple and widely used. They emphasize the past. Historical amounts are adjusted at a
predetermined rate. For example, the inflation rate may be used to adjust figures upward.
Projected increases are referred to as increments. The increment adjustment may be applied to
some or all items. This process aids in making meaningful comparisons over the years. Of
course, budget figures may be downwardly adjusted if appropriate, such as in a recessionary
environment. The line-item budget lists the source of revenue and categories of expenses (object
accounts). It is done by organisation unit rather than by program. Where did the money come
from, how much, where did it go, and how much was spent? Also a budget made for a particular
program as opposed to the overall organisational budget would be called a “Program budget”. It
is also necessary to note that as CDA’s vary considerably in size, structure and objectives it is
inevitable that the budgets prepared also vary. However a major influence on budgeting for
CDA’s also comes from the typical budgets prepared in Local Authorities and Government
Departments. These typically include:
1. The Capital Budget covering capital expenditure during the year;
2. The Revenue Budget, covering the ‘running costs’ of the authority;
3. The Personnel Budget;
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4. The Cash Budget usually combining short-term cash control and longer-term financing
sources (including grants, taxes, sales, e.t.c)
The budgets become the key tool of financial management, as control is exercised during budget
preparation and during the operating period.
2.5.2 STEPS IN MAKING A COMMUNITY DEVELOPMENT
ASSOCIATION’S BUDGET
Budgeting in a community development association is generally made in the following manner:
1. Estimation of overall expenses or program expenses (in case of program budget).
2. Estimation of potential income sources- for example: fund raising campaigns, drives,
grants, endowments, e.t.c.
3. Matching expenses to potential income source- The income and expenses estimated as
above need to be matched. If there is a likely deficit, it could mean reducing budgeted
expenses or searching out for new sources of income.
4. Board review and approval- This involves a formal adoption of the budget by the board
thus recognizing the expected deliverable.
5. Periodical evaluation of the budget- To access the achievements versus the target and
to review the budget, if necessary. This is the last but the most important aspect, without
which the entire budgeting exercise would be futile.
2.6 PERFORMANCE MEASUREMENT IN NON-PROFIT
ORGANISATIONS
2.6.1 PERFORMANCE AUDIT
One must note that a budget is a useful tool for performance evaluation of different community
development associations, companies, e.t.c. Actual results will be compared to budgeted results.
These comparisons will help identify strengths and weaknesses, areas for improvements, and
43. 33
potential staffing changes. But, the process for performance appraisal is far more complex than
simply comparing budget to actual results, this process is known as VARIANCE ANALYSIS.
Performance measurement is practically done by performance audits (formerly known as value-
for-money audits) and it answers these questions:
i. Are programs being run with due regard for economy, efficiency, and environmental
impact?
ii. Does the organisation have the means in place to measure their effectiveness?
Performance audits do not question the merits of organisations’ policies rather they examine the
organisation’s practices, controls, and reporting systems with a focus on results. They seek to
determine whether its programs are being managed with due regard for economy, efficiency, and
environmental impact, and whether there are measures in place to determine their effectiveness.
Traditionally a corporate auditor has been concerned with the certification of accounts. He would
apply necessary auditing procedures to express an opinion on the financial position of an
organisation. Performance auditing can be defined as:
"An assessment of the activities of an organisation to see if the resources are being managed with
due regard for economy, efficiency and effectiveness and accountability requirements are being
met reasonably."
While the Chartered Institute of Management Accountants (CIMA) also defined performance
auditing as:
“An investigation into whether proper arrangements have been made for securing economy,
efficiency and effectiveness in the use of resources”. (Note: Economy, Efficiency and
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Effectiveness are known as the 3E’s). Effectiveness is concerned with whether the organisation
is achieving its objectives.
Efficiency is concerned with relationships between inputs and outputs.
Economy is concerned with seeing that the minimum quantity and quality of resources are used
to achieve the desired outputs. The emphasis is on reducing costs or inputs.
2.6.2 STEPS IN PERFORMANCE MEASUREMENT
In outline form, performance measurement involves the following steps:
i. Find out the objectives of the CDA, department or system being examined. What is it
trying to achieve?
ii. Examine the systems and controls used to achieve the objectives. How are the objectives
achieved? How are the achievements monitored and measured?
iii. Document in detail the system/department being audited. This includes the identification
and evaluation of the key controls.
iv. Verify and test the system in operation. Are the controls too strong or too weak? Is there
scope for cost savings (economy)?
v. Examine the efficiency of the system. Are too many resources being used? Are the
performance indicators used the best for monitoring efficiency? (Links with Step 2).
vi. Appraise the effectiveness of the organisation. Does the system meet its objectives?
(Links with Step 1).
2.6.3 QUANTITATIVE MEASURES OF PERFORMANCE APPRAISAL
Unit cost measurements like ‘cost per patient day’ or ‘cost of borrowing one library book’ can
fairly easily be established to allow organisations to assess whether they are doing better or
45. 35
worse than their counterparts. Efficient measurement of inputs and outputs is illustrated in three
different situations as follows:
(a)Where input is fixed
Actual output
Maximum output obtainable for a given input
(b)Where output is fixed
Minimum input needed for a given output
Actual input
(c) Where input and output are both variable
Actual output / actual input
compared with
Standard output / standard input
Actual performance needs to be compared as follows:
a) With standards, if there are any.
b) With similar external activities.
c) With similar internal activities.
d) With targets.
e) With indices.
f) Over time, as trends.
2.6.4 NON-FINANCIAL PERFORMANCE METRICS AND THEIR
MISSION
During the past 15 years, corporations have increasingly recognized the importance of
appropriate non-financial performance metrics, in addition to the more traditional financial
metrics (as in a balanced scorecard or dashboard), in evaluating organisational success. Most
46. 36
nonprofit organisations desperately need performance measures to achieve their overall long-
term goals and mission rather than only the short-term goals of fundraising and budget
achievement.
Today, many nonprofit organisations have developed new performance measures to track their
non-financial performance. One example of a social-impact-focused organisation that has made
progress here is KaBOOM!, a nonprofit whose mission is to build playgrounds and create safe
places for children all over America to play. A related goal is to inspire local residents to work
together and become more proactive in revitalizing and maintaining their communities. The
organisation has created an overall performance measurement system that includes these
financial performance measures:
Building cost efficiency (actual vs. planned),
Program efficiency (program expenses as percentage of total expenses),
Fundraising efficiency (the amount spent to generate one naira in revenue),
Total cash available at the end of the period, and
Annual revenue growth.
Along with these efficiency performance measures, the KaBOOM’s board uses other
performance indicators to assess past impacts and steer the organisation toward success. Some of
these performance measures include:
Total number of volunteers per year,
Number of media mentions per year,
Number of children served within walking distance (actual vs. planned),
Number of playgrounds started and completed, and
Number of individuals who have taken a step beyond volunteering on a build.
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Few nonprofits have developed nonfinancial performance metrics and used them regularly to
monitor achievement of their mission. Yet the process of identifying and using these
performance measures typically provides an opportunity to discuss goals and the actions to
achieve them.
2.6.5 PROBLEMS WITH PERFORMANCE MEASUREMENT IN
COMMUNITY DEVELOPMENT ASSOCIATIONS
a. Multiple Objectives
Many community development associations tend to have multiple objectives; so that even
they can all be clearly identified but it is impossible to say what the overriding objective is.
b. Measuring Outputs
Outputs can seldom be measured in a way that is generally agreed to be meaningful and
data collection can be problematic.
c. Lack of profit measure
If an organisation is not expected to make profit, or if it has no sales, indicators such as
ROI and RI are meaningless.
d. Nature of service provided
Many not-for-profit organisations provide services for which it is difficult to define a cost
unit. This problem does exist for commercial service providers but problems of
performance measurement are made simple because profit can be used.
e. Financial constraints
Although every organisation operates under financial constraints, these are more
pronounced in not-profit organisations. For instance, a commercial organisation’s
borrowing power is effectively limited by managerial prudence and the willingness of
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lenders to lend, but a local authority’s ability to raise finance (whether by borrowing or via
local taxes) is subject to strict control by central government.
f. Political, social and legal considerations
i. Unlike commercial organisations, community development associations are subject to
strong political influences. Local authorities, for example, have to carry out central
government’s policies as well as their own (possibly conflicting) policies.
ii. The public may have higher expectations of community development associations and
other public sector organisations than commercial organisations. A decision to close a
local hospital in an effort to save costs, for example, is likely to be less acceptable to
the public than the closure of a factory for the same reason.
iii. The performance indicators of community development associations are subject to far
more onerous legal requirements than those of private sector organisations.
iv. Whereas profit-seeking organisations are unlikely in the long term to continue services
making a negative contribution, not-for-profit organisations may be required to offer a
range of services, even if some are uneconomic.
2.6.6 POSSIBLE SOLUTIONS TO THE PROBLEMS OF
PERFORMANCE MEASUREMENT
1. Inputs: Performance can be judged in terms of inputs. This is very common in
everyday life.
2. Judgements: A second possibility is to accept that performance measurement must to
some extent be subjective. Judgments can be made by experts in that particular not-for-
profit activity or by the persons who fund the activity.
3. Comparisons: Although most not-for-profit organisations do not face competition, this
does not mean that all are unique. Bodies like local governments, health services and so
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on can judge their performance against each other and against the historical results of
their predecessors. Since they are not competing with each other, there is less of a
problem with confidentiality and so bench marking is easier.
In practice, benchmarking usually encompasses:
Regularly comparing aspects of performance (functions or processes) with best
practitioners.
Identifying gaps in performance.
Seeking fresh approaches to bring about improvements in performance.
Following through with implementing improvements.
Following up by monitoring progress and reviewing the benefits.
2.7 METHODOLOGICAL LITERATURE REVIEW
For the purpose of this research work, the methodological framework solely relies on ZERO-
BASED BUDGETING SYSTEM (ZBB) as this is the obtainable budgeting system of our case
study- Magodo Residents’ Association (MRA). The methodological framework also depends on
thedata analysis technique that is used for this research work, that is – the use of regression
analysis, out of which the linear regression analysis type was applied.
ZERO BASED BUDGETING
According to Chika (2010), zero-based budgeting is a budgetary method that is mainly used in
non-profit organisations and seeks to overcome the deficiencies of incremental budgeting. ZBB
works from the premise that projected expenditure for existing programmes should start from
base zero, with each year’s budget being compiled as if the programme were being launched for
the first time. The budgetees should present their requirements for appropriations in such a
fashion that all of cost benefits or some similar kind of evaluative analysis. The cost benefit
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approach is an attempt to ensure “value for money”. It questions long-standing assumptions and
service as a tool for systematically examining and perhaps abandoning any unproductive
projects. ZBB involves the following three stages:
A description of each organisational activity in a decision package
The evaluation and ranking of decision packages in order of priority
Allocation of resources based on order of priority up to the spending cut-off level
Some of the benefits of ZBB can be capture by using “priority-based incremental budgets”.
Priority incremental budgets requires managers to specify what incremental activities or changes
would occur if their budgets were increased or decreased by a specified percentage (say 20%).
Budget allocating are made by comparing the change in cost with the change in benefits, priority
incremental budgets thus represents an economical compromise between ZBB and incremental
budgeting.
ADVANTAGES OF ZERO BASED BUDGETING
1. ZBB focuses attention on outputs in relation to value for money.
2. It requires a close and realistic re-evaluation of an organisation’s programmes.
3. It tends to prevent errors which might have characterized the basing of the preparation of
budget on the past figures.
4. The ZBB requires a thorough examination and analysis of cost, other alternative courses
of action, measures of performance and other benefits that may occur to the users of the
system.
5. It helps in the communication of present activities to the board for effective appraisal of
performance as it also allows managers to set priorities over the activities of the
organisation.
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DISADVANTAGES OF ZERO BASED BUDGETING
1. It diverts manager’s attentions from their primary areas of responsibility.
2. It is a time consuming exercise.
3. It could lose the benefits of long term companions of trends in efficiency control.
4. It requires the board to apply higher skills in planning.
REGRESSION ANALYSIS
Regression analysis is a statistical technique used for estimating the relationships among
variables. It includes many techniques for modeling and analyzing several variables, when the
focus is on the relationship between a dependent variable and one or more independent variables.
More specifically, regression analysis helps one understand how the typical value of the
dependent variable changes when any one of the independent variables is varied, while the other
independent variables are held fixed. Most commonly, regression analysis estimates the
conditional expectation of the dependent variable given the independent variables – that is, the
average value of the dependent variable when the independent variables are fixed Less
commonly, the focus is on a quartile, or other location parameter of the conditional distribution
of the dependent variable given the independent variables. In all cases, the estimation target is a
function of the independent variables called the regression function. In regression analysis, it is
also of interest to characterize the variation of the dependent variable around the regression
function, which can be described by a probability distribution.
Regression analysis is widely used for prediction and forecasting, where its use has substantial
overlap with the field of machine learning. Regression analysis is also used to understand which
among the independent variables are related to the dependent variable, and to explore the forms
of these relationships. In restricted circumstances, regression analysis can be used to infer causal
52. 42
relationships between the independent and dependent variables. However this can lead to
illusions or false relationships, so caution is advisable; for example, correlation does not imply
causation.
A large body of techniques for carrying out regression analysis has been developed. Familiar
methods such as linear regression and ordinary least squares regression are parametric, in that the
regression function is defined in terms of a finite number of unknown parameters that are
estimated from the data. Nonparametric regression refers to techniques that allow the regression
function to lie in a specified set of functions, which may be infinite-dimensional.
The performance of regression analysis methods in practice depends on the form of the data
generating process, and how it relates to the regression approach being used. Since the true form
of the data-generating process is generally not known, regression analysis often depends to some
extent on making assumptions about this process. These assumptions are sometimes testable if
many data are available. Regression models for prediction are often useful even when the
assumptions are moderately violated, although they may not perform optimally. However, in
many applications, especially with small effects or questions of causality based on observational
data, regression methods can give misleading results.
BRIEF HISTORY ON THE DEVELOPMENT OF REGRESSION ANALYSIS
TECHNIQUE
The earliest form of regression was the method of least squares, which was published by
Legendre in 1805 and by Gauss in 1809. Legendre and Gauss both applied the method to the
problem of determining, from astronomical observations, the orbits of bodies about the Sun
(mostly comets, but also later the then newly discovered minor planets). Gauss published a
53. 43
further development of the theory of least squares in 1821, including a version of the Gauss–
Markov theorem.
The term "regression" was coined by Francis Galton (1885) to describe a biological
phenomenon. The phenomenon was that the heights of descendants of tall ancestors tend to
regress down towards a normal average (a phenomenon also known as regression toward the
mean). For Galton, regression had only this biological meaning, but his work was later extended
by Udny Yule (1897) and Karl Pearson (1903) to a more general statistical context. In the work
of Yule and Pearson, the joint distribution of the response and explanatory variables is assumed
to be Gaussian. This assumption was weakened by R.A. Fisher in his works of 1922 and 1925.
Fisher assumed that the conditional distribution of the response variable is Gaussian, but the joint
distribution need not be. In this respect, Fisher's assumption is closer to Gauss's formulation of
1821.
In the 1950s and 1960s, economists used electromechanical desk calculators to calculate
regressions. Before 1970, it sometimes took up to 24 hours to receive the result from one
regression. Regression methods continue to be an area of active research. In recent decades, new
methods have been developed for robust regression, regression involving correlated responses
such as time series and growth curves, regression in which the predictor or response variables are
curves, images, graphs, or other complex data objects, regression methods accommodating
various types of missing data, nonparametric regression, Bayesian methods for regression,
regression in which the predictor variables are measured with error, regression with more
predictor variables than observations, and causal inference with regression.
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2.8 EMPIRICAL LITERATURE REVIEW
There is a consensus among authors that, in order to avert failure in any organisation whatsoever,
such entity must have a vision of where it wants to be in the near feature and must accordingly
draw up a strategic future plan.
These long term plan are further broken down into detailed step by step procedures by which to
attain the organisation’s objectives. The end result of planning is profit maximization (for profit-
making firms) or the provision of social goods that would better the larger society (non-profit
firms), which is also a yardstick for judging the organisations performance especially in the short
term, it is generally agreed, is carved out by the use of budget.
A.W Willsmore (1939) is rather of the view that budgeting is a service functions and that
budgets do not replace management. Willsmore also observes that planning goes from top down
whereas budget formulation flows from bottom to up. Isaac Reynolds (1989) agree with
Willsmore but noted that “budget planning is the key to survival in today highly technical and
competitive environment and that failure to plan results, for many firms in a business failure that
might have been avoided by profit planning this is said in relation to non-profit organisation like
that of community development associations.
J.F Weston (1978) and E.F Brigham (1985) are in agreement with Reynolds. They see a budget
as a guideand not as a means of limiting expenditure. Rather, it is a method to improve
operations, a tool for obtaining the most productive and profitable use of the organisation’s
resources through careful planning and controlling.
Hingren and Foster (1988) agreed that the budget not a penny-pinching device. They also
concurs and agree with the views expressed by other authors that budget is an aid to co-
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ordination and implantation. They went further, to say that well managed organisation usually
have the following budget cycle:
1. Planning the performance of the organisation as a whole as well as its units. The entire
management term agrees as to what is expected.
2. Providing a frame of reference a set of specific expectation against which actual result
can be compared.
3. Investigating variance form plans, corrective action follows investigation.
4. Planning again, considering feedback and charged conditions.
All authors examined agreed that budgeting have some benefit and as follows:
1. Budget induces managers to plan ahead. In addition, they believe that the budgeting
process also provides for the co-ordination of the activities and departments of the
organisation so that each fact of the operation contributes towards the overall plan.
2. Budget set a control framework, which helps expenditure to be kept within the agreed
limits and points out deviation so that corrective action can be taken.
3. Budget clarifies the responsibilities of each manager who has a budget and thus enables
management by objectives.
4. Budget enables communication between top and middle officials regarding the
organisations’ objectives and the practical problems of implementing these objectives.
5. Budget especially participate budgeting have been proved to motivate middle and lower
management by the establishment of clear targets against which performance can be
judged.
Terry Lucy (1985) on the other-hand, while disputing the earlier submissions, has listed some of
the typical problems of budgeting:
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1. Variance is just often due to changing circumstance and poor forecasting as due to
changing circumstance and poor forecasting as due to managerial performance.
2. Budget tends to hide inefficiencies by basing estimate on past performance which may
not be appropriate for current conditions.
3. The existence of well documented plans may cause inertia and level of flexibility in
adopting a change hence over budgeting can be unduly cumbersome and expensive.
4. Badly handled budgeting system with undue sure or lack of regard to human factors may
cause antagonism and may lower morale.
5. Budgetary goals may come to supercede organisational goals.
Walter Scott (1948) asserts that budgetary control is the use of the budget as an instrument for
the guidance of an organisations operations or activities. In that case, budgets serve as a
yardstick for executive control of operation, to determine the extent to which planned goals and
objectives are being attained and to arrest off-line drifts on time. While agreeing that budgetary
control follows budget preparation, Lucy opined that budgets require not only top managerial
support but that control is assisted as well by “participation of budget holders into the
investigation of solution to the problems which arise”.
B.C. Osisioma (1989) concurs with the above views but stated that budgets fulfill two basic
requirements in the overall control process:
FEED FORWARD- To provide a basis for control at the point of action that is at the
decision point.
FEEDBACK-To provide a basis for measurement of the effectiveness of central after the
point of action.
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Control they say promotes efficiency and reduces waste. It can do according to S. Modetola
Odeleye (1991), “ensuring that corrective actions taken where necessary and possibly, to bridge
the gap between the budget and actual performance” and to review unrealistic budgets. There is
no opposing view to the assertion made by Brown and Howard (1975) that’s budgetary control
enables management by exception because management attention is concentrated only on those
areas of the operations that do not work according to plan. The above assertions are self-evident
truths and the author cannot help but agree with them all.
2.8.1 WHY MEASURE PERFORMANCE?
There are different reasons for measuring the performance of community development
associations as well as other similar non-profit concerns that exists today. Though measuring
performance is good, the problem is how do we know it is good? Even if it is quite true that
performance measurement is more emphasized and managed in the private sector, it still serves a
useful purpose in the non-profit sector. So what should non-profit entities like community
development associations measure? And what kind of performance should they measure, how
should they measure it, and what should they do with these measurements? A variety of
commentators offer a variety of purposes:
Joseph Wholey of the University of Southern California and Kathryn Newcomer of
George Washington University observe that "the current focus on performance
measurement at all levels of government and in nonprofit organisations reflects citizen
demands for evidence of program effectiveness that have been made around the world"
(1997, 92).
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In their case for performance monitoring, Wholey and the Urban Institute's Harry Hatry
note that "performance monitoring systems are beginning to be used in budget
formulation and resource allocation, employee motivation, performance contracting,
improving government services and improving communications between citizens and
government" (1992, 604), as well as for "external accountability purposes" (609).
"Performance measurement may be done annually to improve public accountability and
policy decision making," write Wholey and Newcomer, "or done more frequently to
improve management and program effectiveness" (1997, 98).
Performance measurement, write David Osbome and Peter Plastrik in “The Re-inventor's
Field-book”, enables officials to hold organisations accountable and to introduce
consequences for performance. It helps citizens and customers judge the value that
government creates for them. It also provides managers with the data they need to
improve performance" (2000, 247).
Robert Kravchuk of Indiana University and Ronald Schack of the Connecticut
Department of Labor do not offer a specific list of purposes for measuring performance.
Nevertheless, imbedded in their proposals for designing effective performance measures,
they suggest a number of different purposes: planning, evaluation, organisational
learning, driving improvement efforts, decision making, resource allocation, control,
facilitating the devolution of authority to lower levels of the hierarchy, and helping to
promote accountability (Kravchuck and Schack 1996, 348, 349, 350, 351).
Performance measures can be used for multiple purposes. Moreover, different people have
different purposes. Legislators have different purposes than journalists. Stakeholders have
different purposes than public managers.
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2.8.2 EIGHT PURPOSES FOR MEASURING PERFORMANCE
1. To evaluate how well the organisation is performing.
2. To control the activities of officials and staffs of the organisation especially in ensuring
that the staffs/subordinates are doing the right thing.
3. To budget on what programs, people, or projects the organisation would spend the
public's money on.
4. To motivate line staff, middle managers, nonprofit and for-profit collaborators,
stakeholders, citizens and so onto doing the things that are necessary for improving the
organisation’s performance.
5. To promote the organisation in terms of being able to convince political superiors,
legislators, stakeholders, journalists and citizens that the organisation is doing a good job.
6. To celebrate the organisations accomplishments that are worthy of mention.
7. To learn more about various issues, techniques, systems and tools that are working or not
working in the organisation.
8. To be able to suggest various ways of improving the organisations performance.
2.8.3 THE RELATIONSHIP BETWEEN ECONOMY, EFFICIENCY
AND EFFECTIVENESS
The economy, efficiency and effectiveness aspects of an organisation are closely interlinked,
sometimes, they trade-off with each other. For example, the economy of post office departments
can be increased manifold by delivering mail once a week but it would cut down the
effectiveness of the department to an unacceptable level. It is therefore important to note that the
assessor's role in arriving at the most desirable level of trade-off between three 'E's is rather
difficult. A general approach is that the assessor should focus on the organisations’ goals and try
to see whether economy or efficiency measures are helpful in achieving those goals. In other
60. 50
words, the quality of performance should not be compromised in seeking greater economy or
efficiency. On the other hand, if possible, effectiveness should increase by such measures.
In conclusion, as the key concepts in performance measurement have been highlighted. The
theory of performance measurement is fairly simple. But its practice presents difficult problems,
some of which may bring serious difference of opinion. The assessors are expected to remain
open to other point of view without sacrificing the objectivity, independence and rigour which
their profession demands.
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CHAPTER THREE
RESEARCH DESIGN AND METHODOLOGY
3.1 INTRODUCTION
The various steps and procedures used in this study and upon which claims for knowledge and
assumptions are evaluated in this chapter. This chapter describes the steps and procedures
involved in carrying out the study and those activities involved in drawing a logical conclusion
on the study, research design, measurement of variables, research instrument, sampling
techniques, and sample size, procedure of data collection, data analysis and tools of the study
will also be dealt with.
The methodology comprises model specification, estimation techniques and evaluation criteria,
definitions of variables, data identification and source. In contemporary Nigerian society, the
place of research in the scheme of things cannot be over emphasized. This has called for many to
ensure the suitable development of all sectors through research findings. The validity of research
findings is a function of the quality of data available and the tools of analyses employed in
analyzing the data.
According to Adebowale (2006), “research connotes a systematic and objective investigation of
a subject or problem in order to discover relevant investigation or principles”. It can be
considered to be primarily “fundamental” or primarily “applied” in nature. Research is also
referred to as the process of arriving at dependable solutions to problems through the planned
and systematic collection, analysis and interpretation of data.
Methodology is defined as a body of methods, procedures, working concepts, rules and
postulates employed by a science, art or discipline. “It is also the process, technique(s) or
approach employed in the solution of a problem or in doing something”- (Webster’s Dictionary).
62. 52
Methodology helps to describe how the research analysis is to be carried out, how to test for
hypothesis, and what assumptions are made and so on.
Research Methodology as a compound word is defined as a scientific inquiry in which the
procedure includes the observation of reliable facts relating to a particular problem following the
formula for experiment. And in an effort to present and enrich quantitative assessment of the
impact of budgets and budgetary control changes on the overall performance and performance
measurement systems output of a community development association (like that of our case
study- Magodo Residents Association- MRA), linear regression analysis technique will be used
for proper data analysis.
3.2 STUDY AREA/ESTABLISHMENT
3.2.1 OVERVIEW OF MAGODO RESIDENTS ASSOCIATION (MRA)
The case study, Magodo Residents Association (MRA) is a community development association
(CDA) that is made up of land and property owners, residents and occupants of Magodo GRA
estate, Kosofe local government, Lagos state, Nigeria. The estate is also made up of twenty-one
zones or sub-divisions. MRA is a type of non-profit entity that falls under the group of
neighbourhood assisters in any given society. As MRA falls under this category, it means that
they are the closest within ones vicinity and their objective is to do good for the estate occupants
through various welfare activities and programs like:
i. Magodo Sports Day (inclusive of a raffle draw/promo)- organized by Blueprint
magazine, MRA and other sponsors.
ii. Miss Magodo beauty pageant.
iii. Blueprint/MRA Magodo Awards.
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iv. The “PLANT A TREE” campaign launched and embarked on during the same time as the
Worlds Environmental Day/Week.
v. Estate end-of-the-year parties conducted at the central level/headquarters and in various
zones within the estate.
vi. Estate elections for potential candidates that would constitute the members of the
association’s board for every board for every four years both conducted at the central
level/headquarters and in various zones within the estate.
vii. Blueprint/MRA “WALK FOR HEALTH” campaign launched to raise awareness about
cervical cancer, diabetes, HIV/AIDS and other health issues conducted by Blueprint
magazine, MRA, schools, companies, individuals, other agencies and sponsors as well.
Included in this campaign are workshops, lectures and free medical tests and checkup for
individuals living within and outside the estate.
These and many events are the programs that help to boost the economic and social standards of
people living within the estate.
3.2.2 AIMS AND OBJECTIVES OF MAGODO RESIDENTS
ASSOCIATION (MRA)
The aims of this community development association are as follows:
i. To promote healthy communal relations and cooperation between residents and
governments at various levels.
ii. To foster harmony and social interactions among residents of the estate.
iii. To enhance mutual collaboration in the maintenance of security and environmental
sanitation in every part of the estate.
iv. To cooperate in any other ways that will lead to the well-being of all residents within the
estate.
