That is why resource-allocation decisions present nonprofit executives with their best opportunity to focus resources on activities that will efficiently achieve their organizations' objectives. (Swords, n.d, online)
Considering the significance of these choices, it is worrying that the financial systems in many nonprofit organizations aren't designed to support either short-term or long-term strategic decision making. Particularly, most financial systems do not add to organizational knowledge about the true, total costs of providing services, running programs and otherwise running the organization. Working without this information, nonprofit executives frequently have to make vital resource-related decisions on the basis of instinct, the skills and knowledge of the program staff, or the priorities of the organization's funders. (Swords, 2002, pp 113-114) Consequently, they run the risk of weakening their organizations' missions by failing to assign resources to the programs and services that have the highest impact.
To make resource-related decisions in a way that enhances an organization's effectiveness and promotes its mission, nonprofit leaders need to have a clear picture of the full costs of operating their programs and services. ...
ata can provide valuable input to decisions about how to assign resources among programs, whether to expand into a new setting, and what level of funding is required to sustain the organization's operations (Lang, 2000, pp 57-58).
That Programs to Support
The most essential resource-allocation decisions concern dividing funds among numerous programs in a single department. For example, one of Bridgespan's clients provided a range of counseling, adult-education, youth, and economic development services to its clients to help them become more self-reliant. An investigation of this organization's costs revealed that within the economic-development department, the employment-services program and the resume-services program were incurring the same cost. To put it other way, it was costing the organization the same amount of money to put a client in a job as it was to help her prepare a resume. Because having a job provides a client with better economic self-reliance than simply having a resume on hand, the organization decided to center its resources on the employment-services program instead of mounting the resume-services program as it had initially planned.
Full and precise cost data can be uniformly enlightening when an organization's leaders are wrestling with the best way to divide resources among numerous sites. This was the situation facing a countrywide educational organization with seven regional affiliates. (Lang, 2000, pp 67-69) Because the organization's current accounting system stated that all its financial information on a line-item basis, area cost data had never been collected. When these data were collected and examined, the organization learned that the cost of training teachers differed significantly by locality. These findings encouraged a