Cost-Effectiveness in the Nonprofit Sector: Methods and Examples from Leading Organizations

Cost-Effectiveness in the Nonprofit Sector: Methods and Examples from Leading Organizations

Cost-Effectiveness in the Nonprofit Sector: Methods and Examples from Leading Organizations

Cost-Effectiveness in the Nonprofit Sector: Methods and Examples from Leading Organizations


Schmaedick makes the case that responsible nonprofit managers must utilize cost-effectiveness analysis and draws examples of how it can be done from prestigious nonprofit organizations. Referencing TechnoServe's search for a practical methodology to measure the cost-effectiveness of its own work, editor Schmaedick provides a unique synthesis of the principles of cost-effectiveness analysis. These guidelines are widely applicable and make cost-effective management an attainable goal for all nonprofits. Schmaedick provides some hard-nosed practical directions for nonprofit managers. Anyone seriously interested in management for cost-effectiveness will find this a challenging, but not intimidating prescription. The chapters that follow illustrate how leading nonprofit organizations in the Arts, Education, Environment, Health, Human Services, and International Development grapple with and resolve the challenge of cost-effective management.


The content of this book is drawn principally from papers presented at the National Workshop on Cost-Effectiveness in the Nonprofit Sector. This workshop took place at Stanford University, June 27 and 28, 1991. It was organized by TechnoServe and the Public Management Program of Stanford University. All the chapters, except Chapter 4, reproduce the material presented by the authors at the workshop. Chapter 4 has been added because of its exceptionally clear and articulate statement on the need for cost-effectiveness analysis. The authors of this chapter also provide an unusually persuasive explanation of how to accomplish cost-effectiveness analysis in spite of all the often cited obstacles and limitations. Its application goes far beyond the health sector for which it was originally written.

The origins of the book, however, go beyond the workshop. In the mid- 1980s TechnoServe began searching for a way to evaluate the cost-effectiveness of its assistance to groups of subsistence farmers in developing countries. This search led to the development of a methodology which TechnoServe published in 1989 as part of its Findings series. It was titled Measuring Our Impact: Determining Cost-Effectiveness of Non-Governmental Organization Development Projects. The appearance of Measuring Our Impact gave rise to much discussion within the nonprofit community, especially among those involved in international development.

Encouraged by the widespread interest in the subject, TechnoServe decided to organize a workshop on cost-effectiveness in the nonprofit sector. The focus was to be a practical one. We wanted to provide workshop participants with concrete tools--tools tailored to their own fields, from assisting the homeless to running a museum--with which to evaluate the cost-effectiveness of their activities. To this end, many organizations submitted their methodologies. Again, we were encouraged by the degree of activity and interest this indicated. We decided to include cases from both domestic and internationally oriented nonprofit organizations. The cases presented in this book are those that were presented at the Workshop.

Let me say a word about the TechnoServe case, Chapter 7. The content of . . .

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