Success and Failure of Nonprofit Organizations: Theoretical Foundations, Empirical Evidence, and Future Research

Performance Measurement and Accountability ofWAQFInstitutions in Malaysia

“…Managerial effectiveness can be measured by financial ratios, human resource statistics, and balance scorecard; program effectiveness can be measured by program output and impact; network effectiveness can be measured by mobilizing actors through networks or control resources and the achievement of strategic objectives through participating in networks; legitimacy can be measured by the ability of an organization to raise fund, access to policy process, and gain support from partners and donors. A similar study has been conducted by Helmig et al (2014) and found that the categories that can depict an organization success are goal achievement, financial performance, social performance, service quality, resource acquisition, survival, efficiency, stakeholder satisfaction, and organization transformation.…”

“…The results can be reflected by success or failure of the organizations in accomplishing their objectives (Helmig, Ingerfurth, & Pinz, 2014). According to Kaplan (2001), the success of an NPO should be measured based on the effectiveness and efficiency of the organization's activities in fulfilling the needs and expectation of the stakeholders.…”

“…Hence, efficiency is related to the conversion of inputs into outputs and how inputs are transformed into output successfully, while effectiveness reflects the relationship between output and objectives (Sulaiman & Zakari, 2015). Helmig et al (2014) and Lecy, Schmitz, and Swedlund (2012) have pointed that efficiency can be considered as a part and a subset of effectiveness. This view is supported by Mouzas (2006) who highlights that effectiveness has broader scope in which it consider quality, creation of value added, employee satisfaction, output interaction with the social and economic environment.…”

“…Zheng, Yang, and McLean (2010) in their study on assessing organizational effectiveness have adopted the measurement that relates to members' perception of the overall success, profitability, growth rate, and innovativeness. However, since the main objective of NPO is not achieving financial success and profit maximization (Kaplan, 2001), the measurement of management effectiveness for the organization is more complex (Helmig et al, 2014). The measurement should not only be based on monetary factors but also on the extent of NPO reaction to moral values that inspire contributors and beneficiaries (Herman and Renz (1999).…”

“…The effectiveness of an organization depends on the financial condition, vulnerabilities (Keating, Fischer, Gordon, & Greenlee, 2005), and sustainability (Helmig et al, 2014) of the organization. The organizations can enhance their effectiveness if they have sufficient fund and strong financial support from the funders.…”