Application of BSC to Local Not for Profit Organisations

Financial Perspective

Not only profit oriented oragnisations but also non-profit organisations must have a solid understanding of their financial situation. However this perspective is kept below the other perspectives by NPO due to the priority of non-financial objectives and it will raise the question how will the organisationbe affordedfor what they came together to do.Funds for the operations will be generated both by trading income and non-trading income. For an example in a religious organisation trading income would be money collected from selling Dammabooks and non-trading income would be the donations. Distribution of gains to targeted community and promoting sustainability of the organisation are two aspects to be balanced by NPO out of surpluses. Distributions (which indicate the quality of programmes) are required to attract donors e.g.:distribution of stationery goods to school students in a rural area. Funding sources, cost of services and overheads etc. could beincorporatedinto NPO’s strategic plans and operating income, return on capital and economic value addition could be measured. Through these measures it focuses on improving value to stakeholders while controlling the cost since lack of funds. Finally financial reports could improve the confidence of donors and other fund grantors ensuring the financial sustainability.

2.2.2.      Member Perspective

There is a question of naming people who are involved with the NPO, as ‘customers’ due to the variation and nature of dealings in compared to PO. Ali B. Somers (2016) has widened the customer perspective as stakeholder perspective recognizing them as employees, volunteers, suppliers, beneficiaries, donors and consumers.This perspective focuseson improving stakeholder value and questions that how will the organisation ensure that they are delivering what they had decided to deliver from the start. The attitudes, satisfaction and retention of stakeholders could be measured by setting objectives.

 Internal Business Perspective

This perspective will question on how the organisation will ensure that they are doing it in the most efficient way. It concerns about the efficiency of programmes or services offered and the ability to fulfil needs of the community.  It measures the cost and quality of services provided.

2.2.4    Learning and Growth Perspective

This view raises the question how will the organisation move forward to ensure that they continue in the future or achieve succession. This aspect looks at the human capital of the organisation and measures the necessary skills, community connection and retention etc. In this scenario skills, knowledge and attitudes of leaders and employees are essential for the success of marketing, branding and donor development.

Mission Perspective

This perspective supersedes all the other perspectives and highlights the importance of prioritising and achieving the social objective. For an example religious organisations have focused on spreadingDamma as much possible. All the other spiritual activities have been arranged around this perspective. The effectiveness could be measured by setting objectives for milestones and feedback programmes.

 In addition an environmental perspective could be seen in Health-Care organisations in order to understand the behavior pattern of stakeholders. They would use aging indexes and dependency indexes to understand the population.

 Process of Adoption of BSC

In order to apply BSC in to the strategic planof the organisation, vision and mission of the organisationshould be clearly stated andvision should be converted in to operational goals.Next it is required to identify objectives and measures which is called a strategy map and adjust strategy based on feedback. The responsibilities of volunteers/ members can be assigned as per the map andwork can be reconciled after the completion.Outcome can be used as an external communication methodologyto promote next and on-going activitieswhich will enhance the credibility towards investors. Few examples for objectives and measures related to a religious organisationhave been presented under appendix 01.

  Issues in Implementation of BSC

Since original BSC was developed to cater PO (as per the literature reviews) amendments might be required (adding mission perspective) to reflect the achievement of mission of NPO. Occasionally implementation is difficult in NPO than PO due to unavailability of properorganisational structure,absence of indicators which has linked to goals,lack of management commitment, political issues, lack of resources and misrepresentation of information. Most of these disputes have been arisen due to barriers in implementing strategy i.e. BSC is applied to the organisational strategy and failure in strategy execution leads to the failure in BSC.  Mainly members do not understand the strategy and superiors do not consume enough time to discuss on strategy. Further budgets have not been linked to strategy and performance of superiors has not been connected to strategy.Thus well-articulated mission and strategy, staff involvement and training, identification of correct key performance indicators and measures and communication are the critical success factors in BSC implementation.

 Conclusion

Successful implementation of BSCmay enhance cross-functional collaboration, co-operation, communication and the visibility across the organisations. Application of BSC to Sri Lankan organisations would bring similar benefits Amendments may be required to the original BSC especially in applying it to non-profit organisations.Implementation should be well planned avoiding main barriers.