Accounting Information and Performance Measurement in a Nonprofit Organization

Abstract

Purpose – Accountability and performance measurement have become an important and urgent subject for nonprofit organizations (NPOs) as they encounter increasing competition from others agencies, all competing for governmental funding. This case study investigates how multiple stakeholder interests are incorporated into information systems to provide stakeholders with useful information, which contribute and make easier the assessment of the organization performance.

Methodology/approach – The paper draws on a combination of in-depth interviews with NPO managers, extensive documentary analysis, and participant observation in order to understand and explain how managers use accounting information. The study was conducted as a qualitative single case study of a large Portuguese NPO. Managers were inquired about their information uses and needs to evaluate the NPO performance and make decisions. The result of these interviews was complemented with the analysis of several documents of the NPO.

Findings – The subject of performance measurement for nonprofit organizations is extensive but generally inconclusive, because NPO lack the simple elegance of a financial measure, such as profitability, used by for-profit organizations to assess their performance. In such a context, this research provides empirical insights, and allows us to propose a framework that complements financial indicators with nonfinancial indicators.

Research limitations/implications – Because of the chosen research approach, our results may not be generalized and therefore researchers are encouraged to test the proposed framework.

Citation

Francisco, L. and Alves, M.-C. (2012), "Accounting Information and Performance Measurement in a Nonprofit Organization", Davila, A., Epstein, M.J. and Manzoni, J.-F. (Ed.) Performance Measurement and Management Control: Global Issues (Studies in Managerial and Financial Accounting, Vol. 25), Emerald Group Publishing Limited, Leeds, pp. 465-487. https://doi.org/10.1108/S1479-3512(2012)0000025020