Final answer:
Nonprofit organizations struggle with measuring effectiveness because they lack a conventional profit metric, are consumed by funding efforts, and balance organizational bureaucracy.
Step-by-step explanation:
Managers in nonprofit organizations often struggle with the question of what constitutes results and effectiveness because nonprofits do not have a conventional profit metric to measure success. Nonprofits are in a constant cycle of seeking funding, which diverts their focus from program objectives to attracting grantmakers. This impacts how they measure their outcomes, as they may need to adjust their objectives to secure grants. Furthermore, the administrative tasks that come with managing an NGO can overshadow program execution and community needs due to the necessary focus on organization and reporting.
Today's organizational structures are becoming less hierarchical, which further complicates this issue. Directors may seek feedback from all levels within the organization, leading to a more collegiate atmosphere. This shift can blur the lines of what is viewed as effective due to the emphasis on teamwork over traditional top-down management metrics.
Economic decision-making models do not always reflect the messy realities of how people and organizations operate, as they can require more information and rationality than is typically available or acted upon. This underlines the challenge in measuring effectiveness for nonprofits, as economic approaches might not neatly apply to their operations.