THE RELATIONSHIP BETWEEN THE ESTABLISHMENTS AND THE FINANCIAL PERFORMANCE OF MALAYSIAN NON-PROFIT ORGANIZATIONS

Abstract

This research proposal was commissioned to study the relationship between the establishment of the Malaysian Non-Profit Organizations (NPOs) and its financial performance. The establishment is measured by year of establishment, board size and board efficiency; while the financial performance measured by overhead ratio and contribution diversification, which measured by Hirschman – Herfindahl Index (HHI). By adopting a quantitative research methodology, the researcher decided to use secondary data to obtain the annual reports of Malaysian NPOs for the financial year 2015 to 2018. By using convenience sampling, the researcher found 40 NPOs’ annual report which is 160 annual reports in total. IBM SPSS software will be used to conduct the analysis between the variables. This research conclude that the establishments significantly affect the financial performance of NPOs, especially in term of financial stability. From the findings, the researcher developed some recommendations. These include: 1) Government Law Enforcement; 2) Appointment of Independent Members as Board; and 3) Public focus more on Young NPOs.