Page 345 - PM Integrated Workbook 2018-19

Performance measurement in not-for-profit organisation

The problem of non-quantifiable

objectives

The not-for-profit sector incorporates a diverse range of operations
including national government, local government, charities, executive
agencies, trusts and so on. The critical thing about such operations is
that they are not motivated by a desire to maximise profit.

 Many, if not all, of the benefits arising from expenditure by these bodies are
non-quantifiable (certainly not in monetary terms, e.g. social welfare). The same
can be true of costs.

 Therefore any cost/benefit analysis is necessarily quite judgemental, i.e. social
benefits versus social costs as well as financial benefits versus financial costs.

 The danger is that if benefits cannot be quantified, then they might be ignored.

 Another problem is that these organisations often do not generate revenue but
simply have a fixed budget for spending within which they have to keep (i.e. a
capital rationing problem – covered later).

 Value for money (VFM) is often quoted as a performance measure here but it
does not get round the initial problem of what value is.

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