Essay on Effectiveness and Efficiency

1. Unit 4. Effectiveness and Efficiency. Some organizations strive to be effective and others efficient.  How would you define the concepts cost effective and cost efficient for your organization?  Is cost effectiveness or cost efficiency more important for your organization? Justify your response.

Answer.

In general, the difference between cost effectiveness and cost efficiency is the following: cost efficiency means reaching the best ratio of benefits gained by the organization divided to the cost of reaching these benefits, and is largely a quantitative measure. Cost effectiveness means choosing the optimal course of actions which yields the best results for both intended and unintended consequences; the concept of cost effectiveness takes into account both quantitative and qualitative results.

The organization selected for this analysis is a nonprofit called ACF International (actionagainsthunger.com), the mission of which is to fight hunger across the world. This organization operates worldwide, and provides help to communities suffering from hunger, natural disasters, etc. ACF International was rated as top nonprofit in 2011, according to the Philantropedia expert rating of international nonprofits. For this nonprofit, cost efficiency would be the provision of maximal benefits to the target communities using minimal number of resources (e.g. reaching out to cost-efficient suppliers of products and goods, arranging bulk contracts with suppliers of seeds and fertilizers, using cheap local workforce to implement the initiatives, etc.). Cost effectiveness for ACF International can be determined as the course of actions allowing to use resources in a optimal way in order to solve short-term issues and to maximize long-term effect on communities through improving local agriculture, water and food supply, establishing educational organizations and helping the communities become more sustainable.

For ACF International, the concepts of cost-effectiveness and cost-efficiency are somewhat contradictory, because short-term organizational goals are quite measurable, while long-term perspectives like creating sustainable communities and reducing the threat of hunger are very difficult to measure. Therefore, cost efficiency might mean that the investments into long-term perspectives were not sufficient. Since the mission of ACF International is “to save the lives of malnourished children while providing communities with access to safe water and sustainable solutions to hunger” (actionagainsthunger.com), most attention should be paid to the long-term perspectives, and cost-effectiveness is the most important characteristics to ACF International.