Efficiency in non-profit organizations

Abstract

Background and problem discussion: The need for aid organizations is growing in pace with increase in natural disasters and poverty. At the same time the need for non-profit organization to be able to present results of some kind increases with the amount of money involved. The often quite long distance between people giving money to charity and the set where the actual aid projects take place makes it important to have some type of efficiency thinking formulated. The difficulty lies in understanding the efficiency of non-profit organizations and what results the contributions have. Therefore our focus in this study will be on describing how efficiency in the activities of aid organizations is estimated. Purpose: The purpose is to describe how three Swedish aid organizations estimate external and internal efficiency and what they do in order to achieve it and for what reasons. Delimitations: We have chosen three Swedish non-profit aid organizations and picked out one or two people from every organization and let them represent the entire organization. Method: We started our study by reading relevant literature and earlier research in order to get to know more of the selected subject. We are going to approach this subject by doing a case study, where we have selected three Swedish aid organizations to be the focus of our interest. We wanted the organizations to have activities that focused on similar kinds of target groups in order to make it easier to detect common denominators. We noticed that some of the largest ones had as their main goal to better the lives of children. We also wanted to have one smaller and two larger organizations to get variations and see if we noticed any differences in control and structure. To be able to collect the empirical data that we needed we decided that the most suitable tool for this would be to do interviews with the right people working in these organizations. Conclusions: In our study it has emerged that it seems to be a widespread tendency of taking for granted that the efficiency measuring of profit driven organizations can be replaced with something similar in the non-profit sector. This however is not the opinion of the interviewees of this study. The estimation of efficiency in the aid organizations is often an object of judgment and a question of having contributed to something rather than having created something alone. Therefore standardized measuring systems are badly suited for many kinds of non-profit activities. We have found out that the organizations 3 feel increased pressure from their surroundings when it comes to accounting for their use of resources. Our interpretation of the situation is that they take after the behaviour of profit driven companies in order to try and make it look as if they are satisfying the demands from the outside to a greater extent than they are really capable of and in order to gain legitimacy. This, however, does not mean they have found any reliable business ratios or other structured measuring instruments to make their activities more efficient. The organizations have their focus on the target group rather than the interest parties and prioritise quality in front of efficiency.