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Towards Predicting Financial Failure in Non-Profit Organisations

Towards Predicting Financial Failure in Non-Profit Organisations
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Author(s): Sharon Cheuk (Universiti Malaysia Sarawak, Malaysia)
Copyright: 2016
Pages: 18
Source title: Handbook of Research on Financial and Banking Crisis Prediction through Early Warning Systems
Source Author(s)/Editor(s): Qaiser Munir (Universiti Malaysia Sabah, Malaysia)
DOI: 10.4018/978-1-4666-9484-2.ch019

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Abstract

Non-profit organisation financial failure has been a prevalent problem in developed and developing economies. Such incidences bring adverse effects to the reputation of the non-profit organisation in question and the third sector as a whole, especially if the organisation in question is significantly large in size, leading to possible knock-on effects such as disruption to society, litigation, loss of investor confidence in the economic environment, and a worsening of a country's ranking under the Corruption Perceptions Index. This chapter examines past financial failures amongst non-profits and reviews past literature on attempts to predict non-profit failures before they occur. Finally, it proposes an additional governance-related factor to be taken into consideration when considering potential financial distress amongst non-profit organisations. Suggestions for further research are made accordingly.

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