Board Monitoring and the Balanced Scorecard in Nonprofi ts: Challenges in Realising Potential

Directors of nonprofi ts in most countries have legal responsibility for monitoring organisational performance (Brody, 2010), although there is typically little guidance on how this should occur. The balanced scorecard (BSC) (Kaplan & Norton, 1996, 2001) potentially provides boards with a monitoring tool (Kaplan & Norton, 2006; Lorsch, 2002). The BSC is intended to help integrate performance measurement, performance management and strategy implementation (Kaplan, 2009). The scorecard is balanced in that it should incorporate both fi nancial and non-fi nancial measures, external and internal perspectives, short and long-term objectives and both lagging and leading indicators. It is a relatively simple tool, but with potentially profound implications for directing board attention and subsequent action (Ocasio, 1997; Salterio, 2012).