BSC for NGOs


When it was first launched at the beginning of the 1990s, the Balanced Scorecard was promoted as a concept that addresses the performance measurement and management needs of the private organizations (Kaplan and Norton, 1996). Few years later, in 1996, the migration of the BSC concept to the nonprofit organizations was still in the incipient stages (Kaplan and Norton, 2001). 


In the last decade, the increased competition encountered from other agencies and organizations, all competing for scarce donor and governmental funding has elevated the need of the nonprofit organizations for measuring and managing organizational performance (Kaplan, 2001)


Balanced Scorecard framework for nonprofit organizations

Many nonprofit organizations had difficulties with the original architecture of the Balanced Scorecard which places the financial perspectives at the top, followed by the Customer, Internal Process and Innovation & Learning dimensions (Kaplan and Norton, 2001)


This is due to the fact that achieving financial success is not the primary objective for these organizations. Instead, nonprofit organizations should be primarily concerned with how efficiently and effectively they meet the needs of their constituencies (Kaplan and Norton, 2001).


 This being the case, the scorecard perspectives can be adapted, in a structure that best fits the strategic interests of a nonprofit organization. A better framework, adapted for the nonprofit organization purpose, switches positions between the Financial and Customer perspective.


As the financial dimension is becoming for the nonprofit organizations an enabler for attaining its final purpose, many organizations who adopt the BSC place it at its very base (Kaplan and Norton, 2001). Additionally, Kaplan and Norton (2001), proposes the identification of several primary strategic themes that drives the organizations actions which can be placed at the very fore front of the scorecard.


One of the particularities of the nonprofit organizations Balanced Scorecard is the Customer dimension (Kaplan, 2001). If in the private sector, customers both pay and receive the service; in the case of a nonprofit organization two separate types of customers can be identified. On the one hand are the donors, who provide the organization with the necessary financial or other material resources to accomplish its mission, and on the other hand are the constituencies, who are receiving the services (Kaplan, 2001). As it might become hard for some organizations two distinguish between the two categories, both vital for a nonprofit organization, they can be placed in parallel at the top of the BSC (Kaplan, 2001).


Benefits of using the Balanced Scorecard in nonprofit organizations

Some of the benefits of implementing the Balanced Scorecard by nonprofit organizations as identified by Kaplan (2001) are:

  • BSC enables the nonprofit organization to bridge the gap between strategy and day to day operational actions
  • It provides the nonprofit organization with a strategic focus, aligning resources, initiatives and financial support to the organizational objectives
  • The measurement system shifts the organization’s focus from programs and initiatives to the outcomes they are suppose to accomplish
  • It provides with alignment between different initiatives, departments and individuals


Balanced Scorecard successful implementations in the nonprofit organizations

Among the first nonprofit organizations who adopted a Balanced Scorecard was The United Way of Southeastern New England (Kaplan and Norton, 2001).  During the BSS design stages, though, debates were sparked, round the subject whether additional perspective should be added to reflect the importance of the volunteers or the agencies contribution, the final BSC kept the traditional perspectives.  The success of the BSC implementation as outlined by Kaplan (2001) came from the positive reactions of the majority of employees who considered that it gave more clarity and outlined everyone’s contribution to the organization’s final mission.


Another successful story of a Balanced Scorecard implementation in the nonprofit organizations is offered by the May Institute. The nonprofit organization, based in Massachusetts, is among the US largest providers of behavioral health care, education and rehabilitation programs for children and adults. Its Balanced Scorecard, built around the four traditional perspectives: Financial, Customer, Internal Processes and Learning & Growth offers a unique framework. The organization placed at the top of its BSC the customer perspectives for which five critical categories were identified: Patient and families, Funders, Academic community, Media and Legislators.


The second next in line, beneath the customer perspective was identified as being the Learning and Growth perspective (Kaplan and Norton, 2001). This was due to the fact that the organization’s leaders felt that the staff had the greatest impact on helping the nonprofit to achieve its customer objectives. The internal processes and the financial perspective promoting the viability of the organization came next. Overall, as acknowledged by Kaplan and Norton (2001), the BSC helped personnel to understand the importance of the business aspects especially in terms of budgets and marketing initiatives.



  • Kaplan, R., Norton, D. (1996), The Balanced Scorecard: translating strategy into action, Harvard Business School Press, Boston, MA.
  • Kaplan, R., Norton, D. (2001), The strategy focused organization. How Balanced Scorecard companies thrive in the new business environment, Harvard Business School Press, Boston, MA.
  • Kaplan, R. (2001), Strategic Performance Measurement and Management in Nonprofit Organizations, Nonprofit Management and Leadership, Vol. 11, No. 3, pp. 353-370.

BSC in practice : By industry


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