Measuring Financial Efficiency of Nonprofit Organisation: A Literature Review

Abstract

In an era of globalisation, nonprofit organisations operating environment has become more competitive, and their goals and priorities are constantly being adjusted to reflect changing trends. The prevailing view on essential financial measurement surprises researchers and practitioners working with nonprofit organisations partially due to a general lack of empirical tests of existing measures. Past literature on nonprofit organisations employs a variety of methods for calculating financial efficiency. Among the techniques are the use of financial ratios. Hence, there is a need to reveal how efficient nonprofit organisations are regarding their financial performance. Therefore, the purpose of this paper anticipates providing a literature review on financial efficiency focusing on financial ratios measurement on nonprofit organisations.