(2 rânduri libere, 11p)
Studies and Scientific Researches. Economics Edition, No 20, 2014 http://sceco.ub.ro
THE PERFORMANCE OF NON-GOVERNMENTAL
ORGANIZATIONS
Nicoleta Ciucescu
"Vasile Alecsandri" University of Bacau
ciucnico@yahoo.com
Andreea Feraru
"Vasile Alecsandri" University of Bacau
andreea_feraru26@yahoo.com
Abstract
Operation of NGOs is dependent on the correct identification of the needs in the community
and their ability to attract the necessary funds to cover them. Non-profit organizations interest
to performance measuring and fulfilling the objectives has increased lately, this it become an
essential element for the survival of the organization. The main reasons that underlie the
increasing interest are: increasing the number of new organizations; increasing the budgetary
reductions; the decrease in the number of donors; increasing the challenges arising from the
multiplicity of social cases. In addition, the majority of the stakeholders associated with the
NGOs want to know if the programs or services they claim have a prominent and positive
impact on the community. Such organizations felt the need to demonstrate the effectiveness of
the programs they provide and the correctness of using the funds are made available. The
article intends to present the issues related to the concept of performance for NGOs, to clarify
the content of each performance categories, namely economic performance, managerial
performance and social performance.
Keywords
funds; performance; objectives; efficiency; the beneficiaries
JEL Classification
M41
1. The economic performance
The main purpose of non-profit organizations, according to the recent researches,
consists still in increasing revenue (donations, grants, contracts) and in balancing the
expenses so that the organization can support the programs. The financial power of
nonprofit organizations is determined by their ability to attract consistently donors, to
benefit from sponsorship, support and grants to be used in the services of customers’
groups.
This is called the base of variable revenue and changes according to the general level
of prosperity of the society in which live donors. The revenues are affected and by
changes in the perception of customers’ groups, either positively or negatively. A
positive or an improved perception leads to the increasing of the revenues or vice
versa.
The capacity to generate revenues is, also, affected by the occurrence of urgent
concerns. The specific problem of this type of organization is to be strong and stable
by the covering of fixed costs, without resorting to shareholders' funds or public
finances.
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THE PERFORMANCE OF NON-GUVERNMENTAL ORGANIZATIONS
The measurement of the performance in the non-profit sector is made according to:
- the size of donors’ groups, the location of donors’ groups, the donation rates and
the average donations;
- the source for all donations, the proportion of each donation;
- the actual nature of donations (money, time, effort) and the intended nature of
the donations;
- the share of spending on customers’ groups, the desired levels of spending on
customers’ groups, the possible levels of spending on customers’ groups;
- the access to customers’ groups, the access of categories of customers within the
organization.
2. The management performance
There have been identified three dimensions of performance (Medina-Borja &
Triantis, 2007):
- the effectiveness or results;
- the quality of services;
- the efficiency.
The nonprofit organizations measure their performance most often traditionally by
assessing the managerial activity.
The measurement system based on assessing of the performance in a managerial
perspective involves the collecting of data on the planning and the use of financial
resources, the productivity, the service quality and the customer satisfaction. Another
approach is to assess the program, namely of the impact of the program, that it had or
of the results obtained in the course thereof.
The two measuring systems are intertwined, the common point being the
measurement of the quality of the offered service. Both the overlapping area and the
data related to each system are shown in the figure 1.
Figure 1 Overlapping area of the two approaches of measuring the performance
Source: Medina-Borja, A., Triantis, K. (2007), A conceptual framework to evaluate performance of
nonprofit social service organizations, International Journal of Technology Management, vol. 37, no. 1-2
In order to assess how best possible at the managerial level, the non - profit
organizations must develop a system of continuous internal assessment covering also
the efficiency and effectiveness of the programs implemented and the decision-
makers.
necessities
outputs
processes
financial issues
Servicies
quality
Impact
results
Managerial
performance
measuring
system
The assessment
of the program
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Ciucescu, Feraru
Indices that can shape a clearer picture on managerial performance are:
- the interdependence;
- the teamwork;
- the way to resolve the problems at the level of the task;
- the productivity;
- the safety of members;
- the degree of mutual support.
The most important thing in assessing the performance is the continuity in
appreciation, measurement and evaluation of it, drawing the conclusions on a regular
mood, to maintain a constant vision, so as to detect early the problems.
Ideally, this is punctuated by regular organizational and team meetings in order to
make reports on performances. Given that no activity takes place in complete
isolation, the performance reporting should consider the effectiveness of working
relationships and the coordination of activities and, also, of the legitimate interests
both of those inside the organization and of those outside it.
The managers should also analyze, regularly, the measures and the indicators
currently used, and how they are used to ensure that they are still valid, reliable and
able to demonstrate performance. This extends at the level of the accumulated
knowledge, to the generalization and the self-perception, both inside and outside the
organization.
The organization and its managers will be analyzed and assessed in terms of the
performance by different categories of people, in different ways. All categories of
persons who come into contact with the organization will evaluate it in one way or
another. These categories are:
- the staff: everyone who works for, and in the organization, and therefore, are
dependent on it, in terms of revenues and funds raised;
- the beneficiaries: for the continuity of satisfaction;
- the communities: where the staff and the customers live and work, and where the
organization operates;
- the supporters: people who make donations constantly.
- competitors: the other non-profit organizations.
The managerial responsibilities:
- to develop (and to be developed) the capacity and the assessment which is
necessary to the organization, imposed by professional management in which is
developing and which involves the required services;
- to take personal commitments to the organizational success and, also, to the
department, to the division or to the function for which he is responsible. A high level
of personal commitment is required in all occupations, in all spheres of activity and
evaluation, this is also applicable to the management and to the managers;
- to develop a full range of managerial skills and qualities required by the
profession of manager. This includes the ability:
o to solve problems;
o to manage people;
o to establish performance standards;
o to use the resources efficiently and effectively;
o to establish and evaluate the budgets;
o to recognize the constraints;
o to identify the operations to be performed;
o to manage a positive, open and harmonious culture and attitude.
The general managerial performances (Verboncu, 2006):
a. The methodological and general managerial performances - refers to the degree of
scientific content of the organization management.
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THE PERFORMANCE OF NON-GUVERNMENTAL ORGANIZATIONS
This is expressed quantitatively on the base of the number of systems, methods and
management techniques used at one time to exercise the management processes and
the involved functions. Qualitatively is achieved by making them operational. The
measure of the performance is given by the degree of involvement and of
participation of the managerial tools in the exercise of managerial processes, given by
the number and the proportion of systems, methods and managerial techniques that
managers call for exercising of each function. In the same time, it is necessary to add
the managerial skills that are given, mainly, by the knowledge in the field of
knowledge that managers have managers from the organizational echelons of the
organization.
b. The general decision-making performance - refers to the degree of solving decision
problems in the organization.
This type of performance is determined as the ratio between the number of decisions
taken at the level of the organization and the number of problems it has faced at one
time. The application rate of the decisions is another performance which is
determined by the initial actions in the field led to the implementation of decisions.
This is determined both on the whole management and on the organizational
echelons.
c. The overall information – managerial management
The degree of satisfaction of information needs of managers for the three levels (top,
middle and bottom) is determined as the ratio between the amount of information
provided and the amount of information required for each level. Following the same
algorithm it is determined the degree of satisfaction of the informational needs of
performers.
d. The general organizational performances
The degree of achievement of the objectives to be achieved in a while highlights the
extent in which the sizing of work processes meet the needs imposed by the five
categories of objectives. The degree of structural / organizational coverage of work
processes involved in achieving the objectives - any procedural component must have
a properly delimited organizational-structural support in order to be exercised. If these
correspondences are not considered, inevitable will arrive to not reach the objectives.
The researches conducted in the field of performance of management committees
(Brown, 2005):
- Bradshaw (1992) focused on the relationship between the structures and the
processes of management committees and their performances, but also between the
performance of management and organizational effectiveness;
- Chait (1991) attempted to identify the competences of management committees or
the behaviors that were associated with their effectiveness – it were discovered six
competences, then a self-assessment questionnaire was developed to assess them;
- Jackson and Holland (1998) examined the reliability, the sensitivity and the validity
of the instrument and the relation between this and organizational effectiveness;
- Green and Griesinger (1996) conducted a study focused only on the analysis of the
relationship between performance of management committee and organizational
effectiveness;
- Herman and Renz (1999) examined the relationship between various factors,
including the effectiveness of the management committee and the prestige in one
hand and organizational performance in other hand.
3. The social performance
Social performance is represented by the contribution of the work undertaken by
NGOs in community development through: encouraging public institutions in making
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decisions; greater awareness of the legal framework; expressing the point of view of
public opinion; aid granted for the preparation of local development strategies;
provide opportunities for the participation of citizens, in the largest possible number,
to the public's decision.
An NGO can play a vital role in society by identifying some strands, overlooked by
the public authorities. They can tackle niches identified through the use of
organizational capacities and human resources can provide assistance or the
authorities.
It has been shown that associations which are more involved in socially (through
organizing charitable events through the actions of environmental or community
development) can benefit from a higher capital in comparison with those that do not
are equally involved.
Social performance can be defined as the ability of NGOs to meet the expectation of a
diverse group of stakeholders, which will lead to financial performance. The
relationship is valid and vice versa. They operate in complex environments with many
stakeholders including: the Board of Directors, volunteers, donors, agencies,
government officials, recommending clients or participants.
One of the main concerns for these organizations is represented by way of monitoring
and management of relations with these stakeholders. They are a source of uncertainty
for NGOs. From their perspective, the relationship established with NGOs is based on
the manner in which their expectation are met and how they are treated by members
of the organization (Ciucescu, 2006).
During the past 20 years, the methodology and tools of social performance evaluation
have enjoyed a continuous development. Different approaches for measuring the
social return on investment (SROI) as well as internal rates of return are the most
popular methods of analyzing the impact of the investment.
Social Return of Investment (SROI) is a framework of understanding, management
and measurement of results of activity of the organization. SROI encompasses a wide
range of outcomes: social, economic, environmental. This analysis is based on the
involvement of stakeholders in the determination of those results that are more
relevant. SROI evolved from social accounting and cost benefit analysis and has
much in common with other methods of analysis of the results. However SROI
differentiates from other methods, because it assigns a monetary value of results, so
that they can be collected, and the values obtained are compared with the investments
made. SROI values depicting the story of the investment made, including both
quantitative findings and qualitative ones. The information provided by these values
helps organizations maximize profits.
Internal rate of return (IRR) is a tool used by NGOs for the assessment of cash flows.
Hazen (2003) States that when used properly, can be a valuable tool for acceptance
and selection of investment projects.
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