1. Objective

The primary objectives of not-for-profit organization is not to make money but to benefit prescribed groups of people.

1.1. Planning influences

A number of factors influence the way in which management objectives are determined in this organization, which distinguish them from commercial businesses:

- Wide range of stakeholders
- High level of interest from stakeholder groups
- Significant degree of involvement from funding bodies and sponsors
- Little or not financial input from the ultimate recipients of the service
- Funding often provided as a series of advances rather than as lump sum
- Projects typically have a longer-term planning horizon
- May be subject to government influence.

1.2 Non-financial Objectives

As with any organization, NFP will use a mixture of financial and non-financial objectives. However, with NFPs the non-financial objectives are often more important and more complex because of the followings:

- Most key objectives are very difficult to quantify, especially in financial terms, e.g. quality of care given to patients in a hospital.
- Multiple and conflicting objectives are more common in NFPs, e.g. quality of patient care versus number of patients treated..

1.3 Financial Objectives

Because the services provided are limited primarily by the funds available,
key objectives for NFPs will be to:

- Raise as large a sum as possible.
- Spend funds as effectively as possible.

2. Value for money (VFM)

VFM can be defined as "achieving the desired level and quality of service at the most economical cost. The concept of VFM is of particular important in NFPs (particularly those in the public sector) because they:

- Often use public funds raised through taxation or donation
- Don not produce financial results such as profit figures.
- Have no clear priority of objectives
- Face an increasing demand for accountability.

3. Measuring Objectives in NFPs

3.1 Systems Analysis

A more detailed analysis of what is meant by VFM can be achieved by viewing the organization as a system set up to achieve its objectives by means of processing inputs into outputs.

3.2 The Three Es

Assessing whether the organization provides value for money involves looking at the functioning of all aspects of the system. Performance measures have developed to permit evaluation of each part separately.

The three Es consist of the following:

Economy: Minimizing the cost of input required to achieve a defined level of output.

Efficiency: Ratio of outputs to inputs - achieving a high level of output in relation to the resources put in (input driven) or providing a particular level of service at reasonable input cost (output-driven).

Effectiveness: Whether outputs are achieved that match the predetermined objectives.