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Discuss the problems faced by not for profit organisations establishing meaningful performance measures for control purposes - Essay Example

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Not for profit organizations are one of those businesses that pertain to a different set of goals than from other organizations. This gives them a much…
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Discuss the problems faced by not for profit organisations establishing meaningful performance measures for control purposes
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Download file to see previous pages Such goals require they follow a particular legal scrutiny within their organizational structure and strong leadership that utilizes its resources to achieve that goal.
A not for profit organization begins its role generally for an altruistic purpose, and is centered on the motivations of their entrepreneurs1. Hence it can be deduced that most of the effort towards the organization’s goal is led by leadership of the entrepreneur. Not-for-profit organizations may be registered are corporations but they do not issue shares, so they are either headed by an entrepreneur, a board of governors, board of trustees or board of directors. Not for profit organizations also enjoy the benefit of tax exemption, a common liberty from most governments to encourage such organizations. Nevertheless these organization are also closely checked by the government through three modes of governance2:
The media in the general course of business does the effective work of a watchdog in terms of looking out for fraudulent activity in any sector. Their responsibility to bring publicity makes NFP a part of their agenda well.
NFPs have a Board of Directors or Donors who are part and parcel of the company serving as owners. As they all commit to a common interest, the Board also ensures they are meeting their target mission effectively and their money is being properly spent.
Besides these external forces of performance measures, there is are ways to measure performance internally like other organizations. For not for profit organizations they face much more difficulty while measuring their performance because their bottom-line is no longer in terms of money. Since their objective is generally to meet some socially desirable need of a community or its members, none of them can be quantified perfectly3. As important as performance measure is for the prosperity of any organization, each NFP organization develops its own criteria for developing performance.
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