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Value for Money:

presenting the business case for your charity’s approach to furlough

Estimated reading time: 1 minute, 17 seconds

If you find that you need to analyse options or make the business case for furlough, redundancy, or changing project priorities it can be helpful to draw on value for money principles.

The UK National Audit Office (NAO) defines value for money as, ‘the optimal use of resources to achieve the intended outcomes’ and identifies economy, efficiency and effectiveness (the three E’s) as the core ways of achieving this:

  • Economy refers to the costs of inputs and resources of an intervention (unit costs are typically used as a measure of economy).
  • Efficiency refers to how much you get out in relation to what you put in. It’s about maximising an output for a given input, or minimising input for an output.
  • Effectiveness refers to how far a programme achieves its intended outcomes, using qualitative and quantitative assessments of change.

Good value for money is therefore about weighing up the costs and benefits of different choices and options and selecting the one that achieves the best balance across the three E’s.

In the current crisis, it may be tempting to only consider the short-term economy benefits of furloughing staff.

However, we make a more accurate analysis when we include considerations such as a) the efficiency of a CEO or other senior staff taking on additional admin, instead of focussing on decisions about the future and b) the overall effectiveness of the organisation in six months if a cadre of staff are exhausted.

Although these maybe harder to accurately quantify, this wider perspective will form a stronger business case for our decisions.

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