The Impact of Scalability on Advisory and Service Delivery Efforts of Nonprofits

Motivated by several nonprofit organizations (NPOs) that support and serve distressed individuals, we study the impact of scalability on the service design of resource-constrained NPOs who need to balance advisory and service delivery efforts to maximize their social impact. We model the NPO’s service-design problem that captures this essential trade-off: while increasing advisory efforts increases the likelihood of clients receiving the appropriate services (reduces mismatches), it limits the resources available for different service delivery efforts. We derive optimal advisory and service delivery efforts as a function of the state of the NPO (resources and services) and clients’ characteristics (mix and diversity of needs). We show that an NPO should invest more in its advisory effort as compared to service delivery efforts when service offerings are not scalable or when the NPO is not severely resource-constrained. We present an illustration of our analysis in a practical context, and suggest ways that NPOs can implement our findings in designing their services.