Question

Why is cost effectiveness important in the nonprofit sector and yet so difficult to measure compared to the private sector?

Answer 1

In the private sector, the cost effectiveness is something that can enable the business perspective and business norms quite easily they'll actually drive their focus in such a way that there are maximum amounts of profits through increasing cost effectiveness. Therefore special teams and surveys and CEA methods are used in the private sector to measure the cost effectiveness which makes it quite easy to measure the cost effective. In the non profit sector, though the requirement of cost effectiveness is high as the main motto is customer satisfaction, CEA might not pop out to be a better one because as it could result in wrong results as the customers might always judge the value to be high because of the low price.