A new framework to help NGOs balance the
conflicting objectives of cost control and improving welfare has
been launched by the Chartered Institute of Management Accountants
(CIMA).
The framework, laid out in the CIMA funded
report, Social capital: the role of management control systems
in NGOs, found the increasing demands on NGOs require them to
have a more businesslike approach to project planning and
governance.
However, the report stresses there are real
dangers to the identity and potential survival of NGOs if the
balance between the mode of control and the commitment to shared
values is lost.
CIMA said the framework, jointly constructed
by Monash University in Australia and the London School of
Economics, is intended to help NGOs adopt the right balance between
formal and informal management controls and relate these to social
capital.
“On the one hand, NGOs play an increasingly
significant role in dealing with humanitarian crises. On the other
hand, they face increasingly strong cost pressures and the need to
demonstrate efficiencies to donors and other stakeholders. This
creates a tension over delivering welfare services while
maintaining good cost control,” CIMA research manager Naomi Smith
explained.
“Managers must aim to avoid a clash in control
cultures that can arise from the premature imposition of formal
financial management within the customary informal controls that
have operated in most NGOs.”
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By GlobalDataThe research was carried out over a 12-month
period at an Australian-based NGO.
