Modeling social services performance: a four-stage DEA approach to evaluate fundraising efficiency, capacity building, service quality, and effectiveness in the nonprofit sector

Managers in nonprofit human and social service organizations are increasingly tasked with the design of performance measurement systems in an attempt to monitor aspects of their day-to-day operations. Monitoring key performance areas is said to improve the chances of sustainability and to provide early warnings of managerial and operational problems in tough fundraising environments. The data envelopment analysis (DEA) modeling framework described by this research was created for social service organizations that operate a network of field offices and are spatially distributed but provide similar services under the same managerial format. We define and assess multiple performance dimensions and more specifically, fundraising efficiency, capacity building, service quality and effectiveness (outcome achievement). The performance with respect to each of the four dimensions is represented as a separate stage where a DEA formulation is provided at each stage. Central to each formulation is the need to account for the influence of key environmental socio-economic factors and for the incorporation of the customer’s voice that is obtained through service quality and effectiveness questionnaires. Results from the implementation of the proposed framework in hundreds of field offices of one of the largest nonprofit organizations in the United States, suggest that social service nonprofits have a harder time being efficient in the fundraising area than in any of the other three areas of activity but that efficient fundraising is not a guarantee for efficient and high quality service delivery, nor it is guarantee of client outcome achievement (effectiveness). Copyright Springer Science+Business Media, LLC 2014