Financial performance of the United Kingdom's national non-profit sport federations: a binary logistic regression approach

Abstract

Purpose

The aim of this study was to predict the financial performance of the United Kingdom's (UK) national non-profit sport federations (NNSFs) using financial effectiveness indicators and financial efficiency ratios, as framed by the resource dependency theory and stakeholder theory.

Design/methodology/approach

The dependent variable was financial performance quantified as net income. The independent variables were financial effectiveness (measured as total assets and revenues) and financial efficiency (indicated as return on assets, sponsorship efficiency and donation efficiency). With the help of panel data, the study utilised binary logistic regression and Kendall’ tau correlations.

Findings

Binary regression results reported a Nagelkerke R² of 87.5%, with ROA and donation efficiency being the best predictors of financial performance. Results from Kendall’ tau correlations indicated a positive and statistical association between financial performance and financial effectiveness and financial efficiency.

Research limitations/implications

The study was delimited to UK non-profit sports organisations that had free, useable and publicly available financial data. For top management, donors and policy advocates, the study highlighted the superiority of financial efficiency over financial effectiveness.

Originality/value

The study adds to research, theory and practitioners' perspectives by offering a new way of evaluating financial performance with the combination of financial effectiveness and efficiency and not opinions, a factor uncommon in previous studies.

Citation

Omondi-Ochieng, P. (2021), "Financial performance of the United Kingdom's national non-profit sport federations: a binary logistic regression approach", Managerial Finance, Vol. 47 No. 6, pp. 868-886. https://doi.org/10.1108/MF-03-2020-0126