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

Abstract

PurposeThe 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/approachThe 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.FindingsBinary 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/implicationsThe 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/valueThe 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.