The Influence of Budgeting and Financial Reporting on Financial Accountability in Religious Organisations: Evidence from Selected Churches in Tanzania

Abstract

Budgeting processes and financial reporting are widely recognised mechanisms for enhancing financial accountability, yet empirical evidence on how these mechanisms influence financial accountability within faith-based non-profit organisations remains limited. Guided by Stewardship Theory and Stakeholder Theory, this study examines the influence of budgeting processes and financial reporting on financial accountability in religious organisations. Using a deductive approach, empirical data were collected from 173 Catholic and Lutheran parishes in Dar es Salaam, Tanzania, yielding a total of 471 valid responses aggregated at the parish level for analysis using Partial Least Square Equation Modeling (PLS-SEM). The findings reveal that both budgeting processes and financial reporting positively and significantly influence financial accountability, with financial reporting demonstrating a stronger effect. These results support the applicability of Stewardship and Stakeholder theories in faith-based settings, underscoring that formal financial management practices are essential for promoting transparency, trust and responsible stewardship. The study highlights the importance of institutionalising transparent reporting practices and performance-oriented budgeting systems to enhance accountability and mission effectiveness. By providing evidence from a developing-country context, the study contributes to the limited literature on financial governance and accountability in religious organisations and offers insights relevant to faith-based institutions in similar emerging economies.