Improving Social Capital and Stakeholder Support in Nonprofit Organizations with Formal Performance Management and Control Systems

A commonly used form of social capital is bonding. Bonding is the development of close interpersonal relationships between the organization and stakeholder in order to gain the stakeholder’s support. The acquisition of these close interpersonal relationships is greatly influenced by the stakeholder’s perception of the organization’s values and competence. To ensure that the stakeholder has the correct view of the organization, both formal performance management and management control should be implemented.

The article “Performance management and management control in non-profit organizations” by CGMA, the Chartered Global Management Accountant, analyzed two nonprofit organizations’ use of formal performance management and management control systems. The article found that the two nonprofit organizations’ use of the systems clarified and drew attention to the nonprofits’ values and perspectives as well as the knowledge and experience of the nonprofits’ staff.

Formal performance management and management control systems are set activities that monitor the effectiveness and efficiency of the completion of all goals relating to an organization. To implement the most successful formal performance management and management control systems it is best to involve the staff in the creation of the systems. This allows the organization to discuss and reaffirm its core values as well as the importance of formal control in operational concerns. 


AVF Consulting is a leading Serenic partner and Microsoft Silver ERP partner providing financial, donor, and grant management software to nonprofit organizations and NGOs across the United States. Visit our events page and register for a complimentary webinar to see if Serenic Navigator is right for your nonprofit accounting and fundraising needs.

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ERP professionals providing insight and advice for not for profit organizations.