Not for Profit objectives

NotesQuiz

Primary goal is NOT shareholder wealth

  • A not-for-profit organisation’s primary goal is to provide some socially desirable need on an ongoing basis.

  • A not-for-profit generally lacks the financial flexibility of a commercial enterprise because it depends on resource providers who often gain no tangible benefit themselves.

Charities

Charities, unlike companies, do not have shareholders.

  • Charities could not operate without the work of employees and volunteers, or without donations from their donors, so these are both important stakeholder groups.

  • The objective of a charity is to provide help or support for its beneficiaries, so beneficiaries are also an important stakeholder group.

Objectives hard to quantify

  • The non financial objectives are often more important in not for profit organisations. 

    However, they are harder to quantify 

    eg Quality of care

Value for money as an NFP objective

  • Economy – Buy goods at minimum cost (still paying attention to quality)
    Efficiency – Use these goods to maximise output
    Effectiveness – Use these goods to achieves objectives

  • Another way of looking at these is:

    Economy - ‘doing things at a low price’
    Efficiency - ‘doing things the right way’
    Effectiveness - ‘doing the right things’

  • A final way of looking at these is as input - process - output

    Inputs - Economy - get as cheap as possible given quality
    Process - Efficiency - perform the process as efficiently as possible
    Outputs - Effectiveness - These match the objectives set

    Input driven - Try to get as much out given limited inputs e.g. library

    Output driven - Maintaining standards even when output changes eg Prison service

NotesQuiz