Purpose – The purpose of this paper is to compare performance measurement in the humanitarian relief chain with performance measurement in the commercial supply chain, develop performance metrics for the humanitarian relief chain, and present a framework that can be used as a basis for a performance measurement system in the relief sector.Design/methodology/approach – The performance measurement analysis is developed through extensions on an existing performance measurement framework. Details regarding relief chain system were obtained through off‐site and on‐site interviews with relief professionals from World Vision International.Findings – The paper finds that this work yielded: a comparison of performance measurement in the humanitarian relief chain with performance measurement in the commercial supply chain, new performance metrics for the humanitarian relief chain, and a performance measurement framework for the relief chain.Research limitations/implications – The paper shows that future work includ...

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Performance measurement in humanitarian relief chains

The article analyzes the way academic scholarly works measure organizational outcomes, commonly reported as either organizational effectiveness or organizational performance (OEP). From the analysis of 149 scholarly publications published in the past decade, focusing on business organizations (100), on nonprofit organizations (21), and a mix of both (28), a set of criteria emerged. Overlapping common ground issues found for all the sectors include (a) efficiency and/or productivity, (b) growth and/ormarket share, (c) customer orientation, and (d) quality. Further measures (e.g., public image and/or reputation, social performance) fit specific sectors. A multivariate analysis showed three and two configurations of criteria for business and not-for-profit research, respectively. Results suggest a set of accepted, multidimensional, and universal criteria for measuring OEP. In choosing criteria for future studies, we recommend adopting such common ground, backed up by specific criteria when a certain sector i...

Communalities and distinctions in the measurement of organizational performance and effectiveness across for-profit and nonprofit sectors

We investigate how unique features of charities affect the manner in which they compensate their executives. We find that changes in compensation are significantly positively associated with changes in spending on programs that advance organization objectives, whether changes in program spending are attributable to changes in revenue raised or to changes in the relative costs of administering the charity. The results suggest that accounting performance measures can play a role in nonprofit organizations whose objectives are typically subjective and nonfinancial, and thus, whose progress toward objectives is difficult to quantify.

Compensation to Managers of Charitable Organizations: An Empirical Study of the Role of Accounting Measures of Program Activities

An experimental investigation of accounting information’s influence on the individual giving process

Nonprofit organizations are under great pressure to use evaluations to show that their programs “work” and that they are “effective.” However, empirical evidence indicates that nonprofits struggle to perform useful evaluations, especially when conducted under accountability pressures. An increasing body of evidence highlights the crucial role of a participatory negotiation process between nonprofits and stakeholders on the purpose and design of evaluations in achieving evaluation utility. However, conceptual confusion about the evaluation objectives, unclear evaluation purposes, a lack of appropriate evaluation questions, and normative ideas about superior evaluation designs and methods, complicate the process. In response, we provide practical conceptualizations of the central objectives of evaluations and propose a framework that can guide negotiation processes. It presents the relationships between the evaluation purpose, evaluation question, and the different levels of effects that should be measured....

Why Aren't Evaluations Working and What to Do About It: A Framework for Negotiating Meaningful Evaluation in Nonprofits

EXECUTIVE SUMMARY * SINCE MOST KEY BUSINESS PERFORMANCE MEASURES don't work for not-for-profit organizations, these groups need to develop specialized measures to help them achieve their goal-driven strategic plans. One approach NPOs use is to measure the amount of resources they spend on providing program services vs. management and general expenses. * THE CHRISTIAN CHILDREN'S FUND DEVELOPED its annual impact monitoring and evaluation system (AIMES) to assess whether its programs were making a positive, measurable difference in the lives of children and their communities around the world. The system allows CCF to be more accountable to its sponsors and give communities a tool to continually assess the organization's impact. * IN DECIDING WHAT TO MEASURE, CCF IDENTIFIED CORE indicators it felt were critical to the success of all projects. It determined the measures should focus on program impact, not activities, gauge the program's effect on children, determine results in terms of broadly defined health and education outcomes and assess only what CCF was able and prepared to track. * CCF's INITIAL RESPONSE TO AIMES HAS BEEN VERY positive. The system is now in place for more than 1,000 projects in 20 countries. As a result, project managers are more focused and better able to concentrate resource allocations on areas that can make a measurable difference in the lives of parents and children. * BY FOLLOWING FOUR BASIC STEPS, OTHER NPOs should be able to develop a performance measurement system similar to the one CCF uses. The result should be better linkage between resource decisions and the outcomes the organization wants to achieve. Many key business performance measures don't work for most not-for-profit organizations. For example, the "bottom line" measurement of profit or loss indicates how effective a business is at achieving its goal of generating profits for the owners. However, generating profits is not a goal for NPOs. These organizations have no owners, often provide goods and services to constituents free of charge and typically seek resources from people and organizations that do not expect economic benefits in return. Thus, the bottom line doesn't work for NPOs. How should NPOs measure their work and its results? This article reports on one organization's experience in developing better performance measures. The Christian Children's Fund (CCF) (see sidebar on page 64) put together what it calls its annual impact monitoring and evaluation system (AIMES). For organizations of this type, accountability is extremely important. CPAs can use outcome measures to help similar organizations achieve their goal-driven strategic plans. HOW DO YOU SPELL SUCCESS? One approach CPAs might use to judge an NPO's performance is to measure the amount of resources the organization spends on providing program services (to carry out its purpose) vs. what it spends on management and general expenses and fundraising. For most organizations, a higher percentage of resources spent on program services than on management and fundraising is considered a positive performance indicator. Tax-exempt organizations are required to file IRS Form 990, Return of Organization Exempt From Income Tax, annually. It includes the amount of resources the organization received and how it spent them. Several watchdog organizations use these data to track and rate NPO performance. Although this type of measure is useful, it doesn't indicate how effectively an organization uses its resources to meet its objectives. For example, an NPO may spend 80% of its resources providing a particular program service, but may be ineffective in reaching the program's goals. Just spending money on a service is not an effective performance measure. FASB recognizes the limitations of traditional financial statements in assessing NPO performance. In Concepts Statement no. …

Performance Measures for NPOs: How One Organization Developed a Way to Collect Meaningful Information

Outside the District of Columbia, changes don't come much bigger than this' New financial reporting requirements from the Governmental Accounting Standards Board (GASB) mean state and local governments must revamp both the form and substance of their financial reports The new model requires government-wide statements containing information--not previously collected--that will make it easier for financial statement users to measure operational accountability by accounting for activities as business enterprises do In the statement of activities, for example, governments will have to capitalize--not expense--the purchase of fixed assets In addition, the financial statements' format will reflect the net cost of government services, such as providing for public safety and education For the tens of thousands of governments that have to comply with GASB Statement no 34, Basic Financial Statements--and Management's Discussion and Analysis--for State and Local Governments--and for the auditors helping them interpret and implement it--this is a major undertaking (Statement no 34 was issued in June 1999 See JofA, Official Releases, Oct 99, page 112) When they have implemented the statement, however, these governments' financial reports will provide more data than ever before, much of it in new government-wide formats The required implementation date for larger governments is for fiscal years beginning after June 15, 2001 (see "GASB 34 Implementation Schedule" page 72) The city of Alexandria, Virginia, however, decided to implement two years early Its financial statements are presented in exhibit 1, "Statement of Net Assets," page 77, and exhibit 2, "Statement of Activities," page 78 This article offers suggestions and advice on how to implement the new statement It recounts Alexandria's experience and discusses possible concerns from the viewpoint of the state of Alaska--which expects to implement the standard in 2002--and of an Oklahoma City CPA firm that audits the financial statements of state and local governments and is assisting a number of them in preparing their financial reports under Statement no 34 To help governments implement Statement no 34, GASB issued Statement no 37, Basic Financial Statements--and Management's Discussion and Analysis--for State and Local Governments: Omnibus, and Statement no 38, Certain Financial Statement Note Disclosures in June 2001 (see Official Releases, page 127) Governments should review the following related statements as well: * Statement no 36, Recipient Reporting for Certain Shared Nonexchange Revenues (April 2000) * Statement no 35, Basic Financial Statements--and Management's Discussion and Analysis--for Public Colleges and Universities (November 1999) * Statement no 33, Accounting and Financial Reporting for Nonexchange Transactions (December 1998) GET A GOOD START Governments need to quickly identify issues that could hinder a smooth implementation of the requirements One determination they should make early is whether they have enough skilled staff or will need outside assistance in preparing their financial statements, says Frank Crawford, CPA, a partner in the Oklahoma City auditing firm of Crawford & Associates Those beginning to plan for implementation will be glad to hear the statement's provisions won't have much impact on accounting software systems "The effect is minimal," Crawford says "Governments still will maintain their fund accounting and do adjustments at yearend to convert to the external financial reporting requirements of Statement no 34" But there are other areas to be concerned about Kim Garnero, CPA, director of the division of finance in Alaska's department of administration, says her top concern is staffing "We don't have people to dedicate to this," she says, "and staff turnover is a constant worry So, we've been training with a consultant who reviewed our previous financial statements and designed an implementation plan that focused on those statement provisions that pertain to us …

How to Implement GASB Statement No. 34: Prepare for the Largest Innovation Ever in State and Local Government Financial Reporting

Many small firms go out of business after experiencing a major disaster, but there are preventive measures that can help a practice survive. Bruce Chase, CPA, PhD, Radford University, Radford, Virginia, William J. Withrow, CPA, owner, and Gwen L. Withrow, office manager, William J. Withrow, CPA, PC, recount what one sole practitioner learned when his greatest fears were realized--at the peak of tax season. As April 15 looms closer on the calendar and last-minute returns and extensions fill the in box, most CPAs have little time to think about anything but taxes. However, for William J. Withrow, a sole practitioner in Covington, Virginia, the approach of April 15 always will serve as a reminder of his worst nightmare--an office fire that destroyed client records and tax returns. In the sidebar on page 85, Withrow recounts what happened that night and the steps he took to put the business back together. This article offers some practical advice to assist any sole practitioner in preparing for a disaster. WHAT A SOLE PRACTITIONER CAN DO Withrow's success in reconstructing his business was due partly to luck. Many businesses are not so lucky. There are several steps a sole practitioner can take to increase the chances of surviving a disaster. They include: * Maintain adequate insurance coverage. Most CPAs carry some form of property damage insurance, which covers furniture, computers, software, publications and virtually anything movable. Most policies offer replacement value with a set dollar coverage limit. CPAs must ensure the dollar amount is adequate to cover the potential loss in case of a complete disaster and should reevaluate coverage after any major purchase. Two additional types of insurance are business interruption coverage and additional expense coverage. These coverages are relatively inexpensive and provide important protection. Business interruption insurance will cover lost business after a disaster and the additional expenses insurance will cover added costs of operating during recovery. In another vein, practitioners should consider liability insurance that protects them from the building owners' and other building tenants' claims if a fire resulted from a firm member's negligence. In any insurance decision, the cost of insurance must be weighed against the potential loss. However, the cost normally is minimal compared with the coverage. CPAs need a good insurance agent who will come to the office and review the alternatives. * Maintain adequate computer file backups. Old disk backup systems for personal computers are slow and cumbersome. Practitioners must invest in an efficient tape backup system (such systems start at less than $500) and make sure the tapes are stored off-site. Backing up files at the end of the day and taking the tapes home should be part of every sole practitioner's routine. For added protection, there should be two sets of tapes--yesterday's backup always should remain at home and the tapes from the day before should be brought to the office to be used as the current day's backup. If the entire hard disk isn't copied, a copy of the system software and programs should be stored off-site. * Develop a computer hardware backup plan. Backup files are of little value if there is no computer to replace the one that was destroyed. Developing a plan to replace the equipment can be more involved than it might seem. CPAs first must determine how long the business can survive without hardware and then choose the best way to obtain replacement equipment. One approach is to seek an agreement with a local vendor that enables the CPA to borrow equipment immediately while an order is being processed. Another idea is to establish an emergency backup agreement with a local company that has compatible computer equipment that can be used after a disaster. Having timely access to computer hardware may be one of the most critical elements in disaster recovery, and a CPA must know where to turn for this support. …

A Sole Practitioner's Tough Lesson in Disaster Planning

As the effective date for FASB Statements nos. 116 and 117 approaches, not-for-profit organizations must prepare for significant financial reporting changes. Not-for-profit organizations (NPOs) face implementing new accounting standards that will require major changes in financial reporting. Financial Accounting Standards Board Statement no. 117, Financial Statements of Not-for-Profit Organizations, addresses financial reporting by all NPOs. A companion statement, Statement no. 116, Accounting for Contributions Received and Contributions Made, includes accounting and reporting requirements of donor-imposed time and purpose restrictions. These statements are part of an ongoing FASB project addressing inconsistency in financial reporting among NPOs. Accounting standards evolved to meet NPOs' external and internal needs, resulting in different accounting and reporting practices for the various not-for-profit industry groups. Comparability of statements among NPOs from different industry groups is therefore difficult at best, requiring external financial statement users to learn different accounting conventions. Because of these varying accounting practices, the new FASB standards will not have the same effect on all NPOs. Colleges and universities likely will feel the largest impact, followed by voluntary health and welfare organizations. Hospitals and health care service providers will have the fewest changes to deal with. The effective date for the new accounting guidelines is years beginning after December 31, 1994 (December 15, 1995, for NPOs with less than $5 million in total assets and less than $1 million in annual expenses). Although early implementation is encouraged, most organizations are taking a "wait and see" attitude. Statement no. 117 establishes certain minimum requirements for financial statements but allow considerable flexibility and encourage experimentation. In the first quarter of 1995 the American Institute of CPAs accounting standards executive committee expects to issue an exposure draft of the audit and accounting guide Audits of Not-for-Profit Organizations. The guide will address Statements nos. 116 and 117 and provide additional guidance. In the meantime, there are several steps CPAs can take to help clients prepare for the changes required by the two standards. The purpose of this article is to describe ways auditors can help not-for-profit clients prepare for the significant changes that lie ahead. THE NEW REQUIREMENTS Statement no. 117, which is directed at reporting aggregate financial information for an entire entity, requires three basic financial statements: * A statement of financial position. * A statement of activities. * A statement of cash flows. A statement of cash flows is new for many organizations and the other two statements will be significantly different from the ones used currently. Traditional reporting by fund groups in the financial statements is replaced by three classes of net assets: permanently restricted, temporarily restricted and unrestricted. The first two classifications are based on the existence of certain donor-imposed contribution restrictions. The standard requires that entities report total assets, total liabilities and total net assets (both in total and by the three classes of net assets) in the statement of financial position. Changes in net assets (again in total and by the three classes) also must be reported in the statement of activities. Currently, most organizations report totals only by fund. The statement of cash flows will be similar to one currently required by FASB Statement no. 95, Statement of Cash Flows, but the classifications of cash flows are expanded to reflect certain long-term donor-restricted activity. The standard allows considerable flexibility in formatting financial statements; the FASB encourages organizations to experiment with financial statement formats. …

Get Ready, Here They Come: As the Effective Date for FASB Statements Nos. 116 and 117 Approaches, Not-for-Profit Organizations Must Prepare for Significant Financial Reporting Changes

Bruce W. Chase

Papers

Performance Measures for NPOs: How One Organization Developed a Way to Collect Meaningful Information

How to Implement GASB Statement No. 34: Prepare for the Largest Innovation Ever in State and Local Government Financial Reporting

A Sole Practitioner's Tough Lesson in Disaster Planning

Get Ready, Here They Come: As the Effective Date for FASB Statements Nos. 116 and 117 Approaches, Not-for-Profit Organizations Must Prepare for Significant Financial Reporting Changes