Not-for-profit organisations such as NHS and Oxfam operate for purposes other than profit. The primary aim is to benefit a particular group of people and a typical goal may be Surplus Maximisation or Budget maximisation. It can be difficult to measure the performance of NFP’s however they tend to have a number of objectives to help analyse success.
NFP organisations aim to provide value for money this refers to the benefits serving society’s interest exceeding the cost of providing the benefit. The three E’s describe value for money:
- Economy – Cheapest way of doing things
- Efficiency – Minimising time spent on activities
- Effectiveness – Doing things right