Do Better-Performing Nongovernmental Organizations Report More Accurately? Evidence from Financial Accounts in Uganda

Canh Dang, Ronelle Burger and Trudy Owens

Economic Development and Cultural Change, 2021, vol. 69, issue 2, 789 - 828

Abstract: We use Benford’s Law to investigate inaccurate financial reports of a representative sample of Ugandan nongovernmental organizations (NGOs). We find that 25% of the sample provided information that did not conform to the Benford distribution, suggesting potential misreporting. NGOs with better ratings from their beneficiaries are more likely to submit credible information. This contradicts the belief that upward accountability demands crowd out serving the client community. The decision to withhold requested information is unrelated to the decision to report inaccurately, with the latter attributed to limited capacity and skills. Policies should provide larger roles for beneficiary-based assessments and increased support for bookkeeping activities.

Date: 2021
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