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Skip to 0 minutes and 3 seconds Financial success can be important as we have seen. However, not all organisations exist to make money. So how would a not-for-profit entity measure success? Well the university has two real purposes. One is student education and the other is research. So we’re interested in measuring the quality of our student education provision and the quality and outcomes of our research. Measuring success in the not-for-profit organisation can be quite controversial. We go by how efficient we’ve been in terms of implementing programmes, so we really look at one monitoring and evaluation as a way of assessing how successful we have been in implementing what we said we would implement with the funds that were given to us.

Skip to 0 minutes and 53 seconds So there’s a lot of impact assessment, really, in terms of trying to understand how successful we’ve been at helping our communities, which are effectively children and their families. Being not-for-profit doesn’t mean we don’t have to make money. The whole point about not-for-profit organisations is they are sustainable for the medium and long term. So you want to make a surplus in order to invest for the future. In universities that could mean investment in capital, it can mean investment in high-tech equipment, or it could mean investment in people and the development of the academic staff of the institution. So any notion that not-for-profit organisations are a soft touch is wrong.

Skip to 1 minute and 42 seconds They have to be pretty hard nosed and they have to generate the sort of surpluses they require to sustain the business into the future. In some cases, in the case of the health service and the case of charities, you are spending other people’s money and you have to be sure that you’re spending that money in an efficient and effective way for the purposes intended and it’s not being consumed, for example, in excessive overheads. So I do not think that there’s much difference between the not-for-profit sector and the private sector. Both require a high degree of professionalism and both require skilled financial and management accountants. Value for money and efficiency will often be the focus in not-for-profit organisations.

Skip to 2 minutes and 41 seconds Although the measures may differ from organisation to organisation, the principles of success measurement and goal setting are common to all organisations.

Measuring success: not-for-profit entities

How do organisations in the not-for-profit sector measure their success?

In all organisations, measuring success is about assessing the extent to which the organisation is meeting its goals. Some of the goals will be financial, some will be non-financial. Both elements are important to gain the full picture on whether an organisation is successful or not.

In this video we’ll look in detail at two organisations, a university and a charity. You will see that while factors such as value for money are more important than profit for these kinds of organisations, the measurement of success is not as different as you might think.

What’s next?

We’ve seen that while the measurement of success is important for all types of organisations, there can be a range of ways in which a business or not-for-profit can define success. In the next step we will consider one popular technique used by many organisations to analyse and measure their success from multiple angles.

Have your say

Can you give an example of a company or organisation that measures a non-financial aspect of success? Why do you think this measure is important to the company or organisation?

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This video is from the free online course:

The Importance of Money in Business

University of Leeds