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ACCA Strategic Professional · Advanced Performance Management · Performance optimisation in specific contexts

Greenfield Trust, an environmental charity, adopts a balanced scorecard. Its donors fund the charity but the beneficiaries are the communities it serves, and the board is debating the top-level perspective. Which adaptation is most consistent with good practice for a not-for-profit scorecard?

The mission or stakeholder-value perspective should sit at the top of the scorecard, with the financial perspective acting as an enabler and constraint. Charities exist to deliver their mission to beneficiaries, not to make profit, but they still need financial sustainability and accountability to donors.

  1. AKeep the financial perspective at the top because profit remains the primary objective
  2. BRemove the financial perspective since charities do not need to control costs
  3. CPlace the mission or stakeholder-value perspective at the top, with the financial perspective as an enabler that supports itCorrect
  4. DReplace all perspectives with a single measure of donations received

Explanation

For not-for-profits the mission drives the strategy, so the stakeholder or mission perspective sits at the top and finance becomes a constraint and enabler. Removing finance ignores the need for sustainability and accountability to donors. Profit is not the primary objective, and one donation measure would abandon the balance the scorecard exists to provide.

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