Section B - Case 3: ClearFlow Initiative
ClearFlow is a Not-For-Profit (NFP) NGO dedicated to providing clean drinking water in rural communities. They measure their performance using the 'Value for Money' (VFM) framework, often referred to as the 3 Es.
During the year, ClearFlow negotiated a bulk discount with a supplier, reducing the cost of purchasing water filtration pumps from $500 per unit to $450 per unit.
Which of the 3 Es does this achievement directly demonstrate?
ACCA · Question 30 · Performance measurement and control
Section B - Case 3: ClearFlow Initiative
ClearFlow is a Not-For-Profit (NFP) NGO dedicated to providing clean drinking water in rural communities. They measure their performance using the 'Value for Money' (VFM) framework, often referred to as the 3 Es.
ClearFlow's donors have asked them to participate in a 'League Table' published by an independent charity watchdog, which ranks water NGOs based on the percentage of donations spent directly on charitable activities versus administrative costs.
What is a significant behavioral risk of ClearFlow being evaluated via this League Table?
Answer options:
ClearFlow will be forced to increase their administrative costs to match competitors.
ClearFlow may underinvest in necessary administrative functions like IT and staff training to artificially improve their ranking.
ClearFlow will automatically achieve better Value for Money across all 3 Es.
The League Table will prevent ClearFlow from raising any further funds.
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