1. Management Control Systems
Chapter 17: Management Control in Not-for-Profit Organizations
Merchant and Van der Stede: Management Control Systems © Pearson Education Limited 2003

2. Not-for-profit organizations ...
Lack of goal clarity
Goal: provide some kind of public service
Governmental, scientific, educational, charitable, religious, etc.
Various constituencies enforce sometimes conflicting goals.
Difficult to design MCSs and assess their effectiveness.

3. Not-for-profit organizations ...
Difficulty in measuring performance
The degree of achievement of the overall goal (provision of quality service to constituencies) usually cannot be measured accurately in financial terms.
Difficult to use results controls, install responsibility centers, and compare the performances of subunits with dissimilar activities.

4. Not-for-profit organizations ...
External scrutiny
Many overseers (donors, government entities, alumni, etc.) often constituting its governing body.
Extra demands on the MCS (detailed project proposals, action reports, lengthy and time- consuming planning and budgeting processes, etc).

5. Not-for-profit organizations ...
Legal constraints
Compliance with legal constraints calls for tight action controls and increases control costs;
The provision of incentives may be impossible.

6. Not-for-profit organizations ...
Employee characteristics
Compensation is not always competitive
Impact on employee quality (cf., personal limitations)
Employees are often highly committed.
Control can be achieved through personnel and cultural controls.