CAPITAL BUDGETING PRACTICES FOR CHURCHES IN KUMASI, GHANA

Abstract

Capital budgeting plays a vital role in investment decision making. These decisions are crucial to the long term financial investment for not-for-profit organization. It involves huge amount of money committed for long periods of time and once the funds have been committed and the project has begun, it is difficult or impossible to reverse. Therefore churches with good capital budgeting decisions may benefit but those with poor capital budgeting decisions may suffer for many years. The study is to enquire whether or not, Not-for-profit organization especially churches in Ghana practice capital budgeting in their investment decisions. From the study, none of the respondents, representing 100%, have never used the capital budgeting techniques such as Payback Period, Accounting rate of return (ARR), Discounted cash flow including Net present value(NPV), and Internal rate of return (IRR)], and seems not to have any knowledge on what they mean or used for.