ACCA Applied Skills · Performance Management · Specific performance analysis issues in not-for-profit organisations and the public sector
Which of the following is the main reason why performance measurement in a not-for-profit organisation is generally harder than in a profit-seeking company?
Not-for-profit organisations usually have multiple, qualitative objectives and no single bottom-line measure like profit. Outcomes such as welfare or education quality are hard to quantify, so assessing success is more difficult than for a profit-seeking company.
- ANot-for-profit organisations do not have any budgets
- BObjectives are often multiple, qualitative and not expressed in a single financial measure such as profitCorrect
- CNot-for-profit organisations are not subject to any external scrutiny
- DInputs cannot be measured in monetary terms
Explanation
Profit-making firms can use profit and return measures as an overall indicator. Not-for-profit bodies pursue multiple, often conflicting and hard-to-quantify objectives such as welfare or education quality, so no single measure exists. The other options are false: they use budgets, face scrutiny from funders, and inputs are measurable in money.
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