i) Problems with performance measurement of not-for-profit organisations

• Multiple objectives: They tend to have multiple objectives, making it difficult to identify which is the overriding objective.
• Measuring outputs: Outputs can seldom be measured in a way that is generally agreed to be meaningful, making data collection problematic.
• Lack of profit measure: Without a profit expectation or sales, indicators such as ROI and RI are meaningless.
• Nature of service provided: Many not-for-profit organizations provide services for which it is difficult to define a cost unit.

ii) Components of ‘value for money criteria’

• Effectiveness: The relationship between an organization’s outputs and its objectives, ensuring that outputs have the desired impact.
• Efficiency: The relationship between inputs and outputs, aiming to maximize output for a given input or using the minimum input for a given output.
• Economy: Acquiring the appropriate quantity and quality of inputs at the lowest cost, ensuring resources are of suitable quality to provide the desired service standard.