You are newly appointed Finance Manager of an Educational Institution that is mainly government funded, having moved from a similar post in a service entity in the private sector. The objective, or mission statement, of this Institution is shown in its publicity material as: To achieve recognized standards of excellence in the provision of teaching and research. The only financial performance measure evaluated by the government is that the Institution has to remain within cash limits. The cash allocation each year is determined by a range of non-financial performance measure such as the number of research publications the Institutions staff have achieved and financial ratings for teaching. However, almost 20% of total cash generated by the Institution is now from the provision of courses and seminars to private sector entities, using either its own or its customers facilities. These customers are largely unconcerned about research ratings and teaching quality as they relate more to academic awards such as degrees. The Head of the Institution aims to increase the percentage of income from the private sector to 50% over the next 5 years. She has asked you to advise on how the management team can evaluate progress towards achieving this aim as well as meeting the objective set by the government for the activities it funds.

Required (a) Assess the main issues that an institution such as this must consider when setting objectives. Propose makes this kind of organisation different from those organisations in the profit-making setting?

(b) Advise on whether a financial objective, or objectives, could or should be determined and whether such objective(s) should be made public.