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A performance evaluation model of

CRM on non-profit organisations
a b
Shwu-Ing Wu & Jr-Ming Hung
a
Department of Business Administration , National Chin-Yi
University of Technology , Taichung, Taiwan, Republic of China
b
Institute of Distribution and Technology Management, National
Chin-Yi Institute of Technology , Taiwan, Republic of China
Published online: 01 Apr 2008.

To cite this article: Shwu-Ing Wu & Jr-Ming Hung (2008) A performance evaluation model of CRM
on non-profit organisations, Total Quality Management & Business Excellence, 19:4, 321-342, DOI:
10.1080/14783360701591978

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 Total Quality Management
Vol. 19, No. 4, April 2008, 321– 342

A performance evaluation model of CRM

on non-profit organisations

Shwu-Ing Wua and Jr-Ming Hungb

a
Department of Business Administration, National Chin-Yi University of Technology, Taichung, Taiwan,
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Republic of China; bInstitute of Distribution and Technology Management, National Chin-Yi Institute of Technology,
Taiwan, Republic of China

Recently, CRM (Cause-Related Marketing) has gradually been adopted by non-profit organisations.
However, for the evaluation of CRM’s effect, a non-profit organisation still refers to traditional
financial data, which could not understand the influence and effect of CRM on a non-profit
organisation completely. This research introduces the concept of the Balanced Scorecard as the
framework for the evaluation of CRM, and utilises the Balanced Scorecard’s five dimensions in a
non-profit organisation to design a questionnaire. The questionnaire is used to collect the
performance data of a non-profit organisation after the execution of CRM, and uses Structural
Equation Modelling (SEM) to verify the relations and interaction between each performance
dimension. The primary purposes of this research are (1) to analyse the influence and effect on a
non-profit organisation of its participation of CRM; (2) to design a reliable measurement index to
evaluate the effect of CRM; (3) to establish the relationship structure model of the influence
factors of the CRM’s effect. This research shows that the measurement index developed by this
research could measure the fact that the non-profit organisation has effects in five dimensions
after the execution of CRM – namely, organisational mission, financial, customer, internal
process, learning and growth – and these five dimensions influence each other.

Keywords: non-profit organisation; Cause-Related Marketing (CRM); Balanced Scorecard;

Structural Equation Modelling (SEM)

Introduction
CRM (Cause-Related Marketing) is defined as the public association of a profit company with a
non-profit organisation, with the intention of increasing the interests of both parties. The American
Express Company first used CRM in 1981 to raise funds for art groups in San Francisco. Owing to
the great success of this regional campaign, the concept of CRM became popular among profit
and non-profit organisations. In recent years, CRM has been highly valued and praised by
many industries. In the United States, the money spent on CRM campaigns has increased many
times (Porter & Kramer, 2002).


Corresponding author. Email: wusi@ncut.edu.tw
1478-3363 print/1478-3371 online
# 2008 Taylor & Francis
DOI: 10.1080/14783360701591978
http://www.informaworld.com
 322 S.-I. Wu and Jr-M. Hung

CRM in Taiwan has been enforced for about 10 years. According to statistics of the
Department of Social Affairs, Ministry of Interior of Taiwan, the funds raised from CRM
campaigns by non-profit organisations are almost NT$1.9 billion in 2004. These figures indicate
that CRM has been accepted gradually by non-profit organisations in Taiwan. ‘30 Hours
Famine’, ‘Lotus Card’, ‘Six Minutes Protect A Life’, and ‘Campus Credit Card’ are successful
campaigns that still are regularly held. However, to evaluate CRM’s effect, a non-profit
organisation still refers to traditional financial data, which does not understand the influence
and effect of CRM on a non-profit organisation completely. This research therefore focuses
on the performance evaluation of CRM in the Taiwan area to establish an effective measurement
index and relation structure model.
Academic research on CRM can be categorised into three types.

(1) Study consumers’ attitudes and responses toward CRM from the consumer’s perspective
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(Dean, 2004).
(2) Discuss the objective and performance of CRM from a company’s perspective (Lichtenstein
et al., 2004).
(3) Observe the effect and influence of CRM from non-profit an organisation’s point of view
(Gwin, 2000).

So far, not much literature has studied CRM from a non-profit organisation’s perspective and
what studies exist are inadequate in quantity evidence-based research. Thus, this research intro-
duces the concept of the Balanced Scorecard as the framework for CRM evaluation and utilises
it to design a questionnaire on five perspectives of the non-profit organisation in order to collect
performance information of CRM on a non-profit organisation as well as to verify the cause-and-
effect relationship and interaction between each performance dimension by using Structural
Equation Modelling.
Based on the research motives above, the objectives of this research are as follows.

(1) Analyse the influence and effect on a non-profit organisation after its participation in CRM.
(2) Design the reliable measurement index to evaluate the effect of CRM.
(3) Establish the relation structure model of the influence factors of the CRM’s effect.

Literature review
Non-profit organisation and CRM
The non-profit organisation, defined by Hansmann (1980), is a ‘non-distribution constraint
organisation’ that is barred from distributing net earnings. A non-distribution constraint organ-
isation means that a non-profit organisation is prohibited from distributing its profit to individ-
uals, group members, directors, officers, or board members. In words, net earnings, after payroll,
should be devoted entirely to finance further production of the services that the organisation was
formed to provide.
A non-profit organisation is categorised by Kolter and Andreasen (1975) according to its
ownership and operation purpose: (1) a privately-owned non-profit organisation, such as
private college or museum; (2) a government-owned non-profit organisation, such as a public
hospital and public school. In Taiwan, it is categorised in three ways by law: (a) a professional
organisation – such as a labour union, industrial and commercial organisation; (b) social
 Total Quality Management 323

groups – including an individual or group that is founded for promoting culture, academic work,
medical care, hygiene, religion, sports, union, social service or other charity purpose; (c) politi-
cal organisation – a political party for example. The definition of non-profit organisation in this
research, however, is ‘privately-owned non-profit social group’.
In recent years, the fierce economic competition has prompted the private corporations to
shift the sponsorship model from pure charity to a CRM campaign with non-profit organis-
ations because CRM can improve corporate performance, strengthen the corporate and
brand image, and expand the target market (Varadarajan & Menon, 1988). When the
company is sponsoring a charity, it will demand its operational objective and the needs of
receivers be satisfied simultaneously. The partnership between company and non-profit organ-
isation can be categorised into four types: (1) CRM – including transaction-based pro-
motional, joint issue promotion, licensing (Varadarajan, 1986), such as a community
activity held by real-estate broker; (2) company’s direct sponsorship – a company provides
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funds and manpower to sponsor a specific event (Ponsford & Agrawal, 1999), such as the
National Gymnastic Invitational Tournament held by an automobile company; (3) gift –
donate a company’s products or services to a non-profit organisation (Thomas, 2005), for
example, a bookstore donates books donated to the library; (4) volunteer – a company organ-
ises its employees to provide services to the communities nearby (Dunn, 2004), such as HP’s
voluntary group.
From the company’s point of view, CRM is a marketing strategy that combines
company charity, social responsibility, and fundraising for the non-profit organisation.
CRM, first proposed by Varadarajan (1986), is a joint-transaction model, which is an align-
ment of product and donation through the partnership between company and non-profit
organisation, and ultimately gains interests for both parties. Varadarajan and Menon
(1988) deemed that CRM helps to achieve many substantial benefits, such as improving
performance, strengthening corporate and brand image, and expanding the target market.
The scholars after that gradually broaden the definition of CRM. Andreasen (1996)
started to extend the concept of CRM, using the condition that increasing product sales
for the corporation coexists with fundraising for the non-profit organisation. Any marketing
activity promoted by the corporate and the non-profit organisation can be considered as
CRM as long as it has a direct or indirect impact on sales growth. Kolter & Andreasen
(2002), on the other hand, thought that when a company promotes a certain issue or
idea by itself, it should also be considered as CRM. Therefore, the scope of CRM
covers all kinds of social issues.
Andreasen (1996) categorised CRM into three types based on the cooperation between the
company and the non-profit organisation: (1) transaction-based promotion: a corporation
donates a specific amount of cash, food, or equipment in direct proportion to sales revenue –
often up to some limit – to one or more non-profit organisations; (2) joint issue promotion: a
corporation and one or more non profit organisations agree to tackle a social problem through
tactics such as distributing products and promotional materials, and advertising. Money may
or may not pass between the corporation and the non-profit organisation; (3) licensing: the licen-
sing of the names and logos of non-profit organisations to corporations in return for a fee or
percentage of revenues. A company, on the other hand, targets supporters of the non-profit
organisation.
To sum up, the definition of CRM in this research is a cooperation model combining a
company’s product and charity donation, and so as to achieve a win-win situation for both
the company and the non-profit organisation. A CRM campaign in this research includes all
 324 S.-I. Wu and Jr-M. Hung

the types stated above. In other words it is a general term for all CRM activities instead of just a
specific kind.
Although company and non-profit organisations have accepted CRM gradually, CRM can
cause some controversy. According to academic studies, the risks CRM might have for a
non-profit organisation are as follows.

(1) Loss of organisational flexibility – both Caesar (1986) and Gurin (1987) deemed that a
non-profit organisation might change its goal to cater to the company needs in order to
gain financial support. Andreasen (1996), however, found that a corporation that enters
into an alliance with a non-profit organisation may impose restrictions on the non-profit
organisation. For example, a non-profit organisation might be prohibited from cooperating
with a company’s competitor.
(2) Tainted partners – Levine (1989) found that CRM would jeopardise an organisational image
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for its commercialised charity activities. Andreasen (1996) proposed that many corporations
enter into relationships with non-profit organisations because they want to bask in the glow
of their esteemed partners.
(3) Wasted resources – building a CRM alliance requires a lot of time and effort. If the venture
fails, a corporation can chalk it up to the cost of doing business; however, a non-profit
organisation probably has few staff and limited resources, and it may find that it has seriously
compromised other activities, such as fundraising, educating people about issues, and
building alliances with other corporations and non-profit organisations (Andreasen, 1996).
(4) Reduced donation – a non-profit organisation might weaken its marketing capability for an
over-dependence on a company. Once the partnership terminates, the non-profit organis-
ation would lose capital support. On the other hand, if cooperating with a company turns
out to be a great success, the risk of poor capital management might occur when the
fundraising amount is too large for the non-profit organisation to manage (Andreasen, 1996).

Because CRM might generate all kinds of negative influences for a non-profit organisation, it
is very important for a non-profit organisation to understand the performance of the CRM
execution.

Performance measurement dimension and relation with Balanced Scorecard

In order to understand the performance of the CRM execution, this study uses the concept of a
Balanced Scorecard as the framework for the evaluation of CRM. The concept of a Balanced
Scorecard, first proposed by Kaplan and Norton (1992) in 1991, allows an organisation to
carry out more comprehensive management and control. A Balanced Scorecard includes four
dimensions: Financial perspective, Customer perspective, Internal process perspective, and
Learning and growth perspective. In addition, it combines both financial and non-financial
scales and measures the performance based on a company’s vision and strategies.

(1) Financial perspective – to succeed financially, how should an organisation appear to its
shareholders?
(2) Customer perspective – to achieve an organisation’s vision, how should the organisation
appear to its customers?
(3) Internal process perspective – to satisfy an organisation’s shareholders and customers, what
business processes must the organisation excel at?
 Total Quality Management 325

(4) Learning and growth perspective – to achieve an organisation’s vision, how will the
organisation sustain its ability to change and improve?

Martin (1997) pointed out that the benefit of a Balanced Scorecard is to provide the relevant
measurement index to the company, allowing the company to focus on customers’ behaviour,
ability to gain profit, quality, innovation, and product selectivity. MacStravic (1999) found
that the purpose and benefit of a Balanced Scorecard is to increase insight, readjust the focus
of internal operation and motivate shareholders within the company, and expand the target
market, retain customers, increase customer loyalty, as well as extend the company value exter-
nally. Frigo & Krumwiede (2000), on the other hand, proposed that the focus of a Balanced
Scorecard should be ‘strategy management’ and considered it as a daily management tool.
A Balance Scorecard has been used extensively in manufacturing industries, service industries
and non-profit organisations (Kaplan & Norton, 2001). Yet, unfortunately, the dimensions of a
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Balanced Scorecard are so far mostly used in management and control mechanism design rather
than as a performance index. This research takes the lead in using a Balanced Scorecard as the
tool to measure the performance of CRM on a non-profit organisation. For non-profit organis-
ations, the financial perspective is a restraint rather than an objective. Because these organis-
ations have to control their expenditures under budget, the performance of these organisations
should be evaluated by whether they have satisfied fund supporter’s demand or achieved a
vision or mission, instead of focusing on budget control. That comprehensive evaluation is
the spirit of the Balanced Scorecard.
To meet a non-profit organisation’s requirements, Kaplan and Norton (2001) again proposed a
peculiar theory (Figure 1) in 2001 based on the characteristics of a non-profit organisation.
Figure 1 indicates that when a non-profit organisation introduces a Balanced Scorecard strategy
framework, its ultimate goal is to achieve its mission instead of pursuing financial profit. There-
fore, the Mission perspective, Financial perspective, Customer perspective, Internal process
perspective, and Learning and growth perspective become the five important dimensions for
evaluating the performance of a non-profit organisation. The basic ideas of these five dimensions
are: (1) Mission perspective – strive to achieve the mission; (2) Financial perspective – evaluate
the outcome from a financial supporter’s point of view; (3) Customer perspective – evaluate the
mission achieved from a grantee’s perspective; (4) Internal process perspective – improve the
operational procedure by satisfying both a grantee’s and grantor’s expectation; (5) Learning and
growth perspective – achieve the mission by discussing how to improve learning, communi-
cation and teamwork. Furthermore, these five dimensions have a cause-and-effect relationship.
That is, the performance of the Learning and growth perspective will guide the performance of
the Internal process perspective and achieve the mission through the Financial perspective and
Customer perspective. This research accordingly uses this framework as the fundamental
concept to explore the performance measurement dimensions and the relationship of CRM on
non-profit organisations.

Research methodology
This research adopts qualitative and quantity research methodologies.

(1) First, use an expert-opinion survey to have an in-depth understanding on the effect and
influence on a non-profit organisation after its participation in CRM, in order to study
and formulate the performance measurement dimensions and so produce a questionnaire.
 326 S.-I. Wu and Jr-M. Hung
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Figure 1. The Balanced Scorecard in non-profit organisations.

Source: Kaplan and Norton (2001).

(2) Next, use a quantity statistic – for example, sending out the questionnaire by mail or e-mail
– to understand what the marketing staff of non-profit organisations which have participated
in CRM, think of CRM, so as to verify the framework and hypothesis of this research.

Research framework and hypothesis

This research adopts the strategy map of Balanced Scorecard proposed by Kaplan and Norton
(2001) as the framework foundation, and the proposed Relation Structure Model of Performance
Factors of CRM on Non-Profit Organisation (Figure 2) after consulting with other academics.
Figure 2 shows that: (1) the performance of the Learning and growth perspective has a positive
relationship on the Internal process perspective. The learning and growth perspective includes
Human capital, Information capital, and Organisation capital; (2) the Internal process perspec-
tive, including Operation management, Customer management, Innovation process, and Regu-
latory and social process, has a positive relationship on both the Financial perspective and
Customer perspective; (3) the Financial perspective, the performance on a fund supporter, has
a positive relationship with the organisation mission; (4) the Customer perspective, the perform-
ance on help receivers, has a positive relationship with the achievement of the organisational
mission; (5) the Mission perspective is the ultimate objective for a non-profit organisation.
Based on the structures described above, this research proposes the following hypotheses:

H 1: The performance of the Learning and growth perspective has a positive

influence on the Internal process perspective.
 Total Quality Management 327
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Figure 2. Research framework.

H 2: The performance of the Internal process perspective has a positive influ-

ence on the Financial perspective.
H 3: The performance of an Internal process perspective has a positive influence
on the Customer perspective.
H 4: The performance of the Customer perspective has a positive influence on
achieving the Mission perspective.
H 5: The performance of the Financial perspective has positive influence on
achieving the Mission perspective.

Questionnaire design
In the first phrase, this research adopts an expert-opinion survey, which uses judgement
sampling to choose the sampling objects for large a non-profit organisation in Taiwan. We
also asked selected non-profit organisations about their objectives and missions for executing
CRM and each kind of performance index. Before the in-depth interview, we referred to
related literature reviews to list all possible measurement indexes for the draft of the interview.
We then chose two to three directors and PR staff as interviewees from three privately-owned
non-profit organisations. Each interview was to last about 30 minutes. The direction and ques-
tions inside the questionnaire would then be formulated based on the items that all interviewees
consider important. We used a Likert scale to rate each question.
 328 S.-I. Wu and Jr-M. Hung

Definition of variables and measurement methodology

Referring to the dimension measurement index of a Balanced Scorecard proposed by Kaplan and
Norton (1992, 2001, 2004a) and an expert’s in-depth interview, this research confirms the fol-
lowing questions and variables (shown in Table 1).

(1) Mission
Mission means ‘the performance of the mission achieved by non-profit organisation after its
participation in CRM’. Gurin (1987) pointed out that CRM will eventually influence the
independence of charity behaviour, for it is not an unconditional donation. Varadarajan
and Menon (1988), however, considered that the mission of CRM is to help the charity
events that are worth helping. Schiller (1988) thought that CRM helps a non-profit organis-
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ation to gain awareness. The theme of this research is to discuss the performance of CRM;
thus, the organisational mission should emphasise the influence and effect on a non-profit
organisation after its participation in CRM. The questions in this section include: Vision
achieved (Q1), Public confidence in organisation (Q2), Positive image (Q3), Independence
(Q4), and Objectives that comply with social demand (Q5).
(2) Financial perspective
The performance of financial perspective refers to ‘the influence on fund supporters of a
non-profit organisation after its participation in CRM’. Levine (1989) deemed that CRM
might damage a donor’s image, as CRM commercialises charity campaigns. Barnes
(1991) and Webb (1999), however, found that CRM provides consumers with a
channel to purchase the products originally provided by company and use the donation
service provided by non-profit organisation at the same time. Shargorodski (1992)
pointed out that CRM is a passive charity donation for consumers. The questions in
this section include: Organisational image (Q6), Consistency between purpose and func-
tion (Q7), Provide proper services (Q8), Desire to join activity (Q9), and Donor’s image
and awareness (Q10).
(3) Customer perspective
The performance of the customer perspective means ‘the influence on help receivers of a
non-profit organisation after its participation in CRM’. The ‘Customer Value’ in a Balanced
Scorecard includes items such as characteristics of product/service, customer relationship,
image, etc. The aim of this section is to explore the influence on help receivers. Therefore,
the variables include: Understand the services provided by an organisation (Q11), Good
customer relationship (Q12), and Positive perception on organisation (Q13).
(4) Internal process perspective
The performance of the internal process perspective means ‘the influence on internal process
of non-profit organisation after its participation in CRM’. The ‘internal management
process’ in a Balanced Scorecard includes the following categories: Operation management,
Customer management, Innovation, and Regulatory and social. The descriptions for these
categories are stated below:
(a) Operations management process
The performance of an operations management process refers to ‘the influence on
operations management of a non-profit organisation after its participation in CRM.’
The questions in this section include: Teamwork (Q14), Simplify internal procedure
(Q15), Expand service target (Q16), and Operation risk (Q17).
 Table 1. Reliability and validity analysis of questionnaire pretest.

Item correlation Factor Explained

Perspective Measurement variable with total item loadings Eigenvalue variance (%) Cronbach’s a

Mission perspective Vision achieved Q1 0.843 0.711 3.375 67.49 0.8764

(0.77) (2.95) (73.90) (0.8682)
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Public confidence on organisation Q2 0.844 0.712

(0.82)
Positive image Q3 0.864 0.746
(0.76)
Independence Q4 0.757 0.572
Objectives that comply with social 0.796 0.634
demand Q5 (0.60)
Financial perspective Organisational image Q6 0.857 0.735 3.266 65.31 0.8554
(0.69) (2.78) (69.58) (0.8638)
Consistency between purpose 0.837 0.701
and function Q7 (0.68)
Provide proper services Q8 0.846 0.716
(0.79)
Desire to join activity Q9 0.798 0.636
(0.61)
Donor’s image and awareness Q10 0.691 0.478
Customer perspective Understand services provided by 0.873 0.763 2.341 78.03 0.8483
organisation Q11
Good customer relationship Q12 0.855 0.731

Total Quality Management

Positive perception on organisation Q13 0.920 0.847
Internal process perspective
Operation management Teamwork Q14 0.722 0.521 2.079 51.975 0.6822
(0.71) (1.95) (65.12) (0.7200)
Simplify internal process Q15 0.743 0.552
(0.62)
Expand service target Q16 0.825 0.680
(0.61)
Operation risk Q17 0.571 0.320
Customer management Attract customers who need help Q18 0.883 0.779 2.232 74.410 0.8215

329
(Table continued)
 330
Table 1. Continued.
Item correlation Factor Explained

S.-I. Wu and Jr-M. Hung

Perspective Measurement variable with total item loadings Eigenvalue variance (%) Cronbach’s a

Customer retention Q19 0.850 0.722

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Understand service scope Q20 0.855 0.731

Innovation process Confirm customer needs Q21 0.973 0.946 1.892 94.58 0.9403
Proper service Q22 0.973 0.946
Regulatory and social Overall working environment Q23 0.880 0.774 2.904 72.60 0.8720
process
Occupational health and safety Q24 0.903 0.816
Talent recruit Q25 0.834 0.695
Relationship with communities 0.786 0.618
nearby Q26
Learning and growth
perspective
Human capital Employee capabilities Q27 0.944 0.890 1.780 89.024 0.8754
Employee’s learning desire Q28 0.944 0.890
Information capital Information collection channel Q29 0.891 0.793 2.218 73.929 0.8082
(0.90) (1.80) (90.28) (0.8724)
Utilisation of market information Q30 0.929 0.863
(0.90)
Application of information 0.749 0.562
technology Q31
Organisation capital Organisational culture Q32 0.826 0.683 4.665 77.70 0.9418
Creativity and innovation of 0.792 0.628
employee Q33
Employee devotion Q34 0.924 0.854
Team proficiency Q35 0.923 0.852
Comprehension on organisational 0.871 0.758
mission Q36
Policy correctness Q37 0.943 0.890

Note: to deleted item( ): value after deleting item.
 Total Quality Management 331

(b) Customer management process

The performance of customer management process refers to ‘the influence on custo-
mer relationship management of a non-profit organisation after its participation in
CRM.’ The questions in this section include: Attract customers who need help
(Q18), Customer retention (Q19), and Understand service scope (Q20).
(c) Innovation process
The performance of an innovation process refers to ‘the influence on an innovation
process of a non-profit organisation after its participation in CRM.’ The questions
in this section include: Confirm customer needs (Q21) and Proper service (Q22).
(d) Regulatory and social process
The performance of regulatory and social process refers to ‘the influence on regulatory
and social management of a non-profit organisation after its participation in CRM.’
The questions in this section include: Overall working environment (Q23), Occu-
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pational health and safety (Q24), Talent recruits (Q25), and Relationship with commu-
nities nearby (Q26).
(5) Learning and growth perspective
The performance of the learning and growth process refers to ‘the influence on employee’s
learning and growth of a non-profit organisation after its participation in CRM.’ The learn-
ing and growth perspective in a Balanced Scorecard includes Human capital, Information
capital, and Organisation capital, as stated below.
(a) Human capital
The performance of human capital refers to ‘the influence on human capital manage-
ment of a non-profit organisation after its participation in CRM.’ The questions in this
section focus on: Employee capability (Q27) and Employee’s learning desire (Q28).
(b) Information capital
The performance of information capital means ‘the influence on information capital
utilisation of a non-profit organisation after its participation in CRM.’ The questions
in this section focus on: Information collection channel (Q29), Utilization of market
information (Q30), and Application of information technology (Q31).
(c) Organisation capital
The performance of organisation capital means ‘the influence on employment of
organisation capital of a non-profit organisation after its participation in CRM.’ The
questions in this section focus on: Organisation culture (Q32), Creativity and
Innovation of employee (Q33), Employee devotion (Q34), Team proficiency (Q35),
Comprehension on organisational mission (Q36), and Policy correctness (Q37).

Pretest
The outline of the questionnaire was drafted based on interviews with experts during the first
phrase. In order to strengthen the reliability and validity level, a pretest on employees of
three non-profit organisations was held before conducting the official survey. The total
number of questionnaires returned was 54. We then evaluated the scale of reliability and validity
using Cronbach’s a, factor analysis, and correlation analysis. According to Nunnally (1978), the
guideline to judge the reliability of the questionnaire depends on Cronbach’s a. If Cronbach’s a
is greater than 0.7, it is considered high reliability. On the contrary, if Cronbach’s a is lower than
0.35, then that variable should be deleted. The result is shown as Table 1. The reliability of other
dimensions are all above 0.7 except for the operations management process in the Internal
 332 S.-I. Wu and Jr-M. Hung

process perspective, whose Cronbach a is near 0.7. The result shows that the questionnaire has
certain reliability.
In addition, the result of factor analysis reveals that factor loading of Independence (Q4) under
Mission perspective is below 0.6. However, after deleting this item, the factor loading of all
other items will become above 0.6. In the Financial perspective, the factor loading of all
other items becomes greater than 0.6 after deleting item Q10 – Donor’s image and awareness.
In Operational management under the Internal process perspective, the factor loading of all other
items becomes greater than 0.6 after deleting item Q17 – Operation risk. In Information capital
under the Learning and growth perspective, factor loading of all other items becomes greater
than 0.6 after deleting item Q31 – Application of information technology. In addition, every
item correlation with the total item is greater than 0.5, which means the examination of all per-
spectives has met the validity standard. Thus, the revised questionnaire should have a certain
convergent validity. Four questions are deleted based on the result of the pretest. The other
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33 questions will be included in the formal survey.

Sample
The subject of this research is the formal employees who served in organisations listed in ‘An
Overview of Taiwan’s 300 Major Foundations’ published by the Himalaya Foundation in 2004.
The samples were chosen as they can access the Internet or they have an email address. After
ruling out the profit-companies-owned foundations, the total sampling size was 152. The ques-
tionnaire was administered by two methods, internet and email. The questionnaire was mailed to
152 email addresses first. However, because the returned rate was rather low (only ten returned),
the questionnaire was then administered by phone and post mail. A total of 135 valid question-
naires were received out of 400.

Research findings
Reliability and validity analysis on sample data
In order to get a valid performance measurement index, this research re-analyses the reliability
and validity of measurement perspectives and ratings based on returned questionnaires. The
reliability and validity of measurement perspectives are confirmed by Cronbach’s a, the explora-
tory factor model, and correlation of the item with total items. The result reveals that the factor
loadings of questions 13, 23, and 33 in the Customer perspective, Internal process perspective,
and Learning and growth perspective fail to meet the standard (,0.6). Thus, we analyse again
after deleting those questions. The result, shown in Table 2, indicates that the factor loadings of
all variables are greater than 0.6, the corrections of an item with total items are greater than 0.5,
and Cronbach’s a of all perspectives meets the requirement. Thus, in total 30 measurement
indexes remain after a second deletion (shown in Table 2).

CRM performance analysis

This research examines the performance of CRM on a non-profit organisation by the mean of
each performance index. It is shown from Table 2 that the mean of each index is greater than
4.3, meaning that CRM has a positive effect on a non-profit organisation. Among all perspec-
tives, the Mission perspective performs the best (mean 5.74), and the Financial perspectives
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Table 2. Analysis of validity, reliability of measurement variables and effect of CRM (n ¼ 135).

Item correlation Factor Explained

Perspective (Mean) Item name (symbol) Mean with total item loadings variance % Cronbach’s a

Mission perspective (5.74) Vision achieved Q1 5.70 0.88 0.77 73.90 0.87
Public confidence on organisation Q2 5.83 0.90 0.82
Positive image Q3 6.05 0.87 0.76
Objectives that comply with social 5.39 0.77 0.60
demand Q5
Financial perspective (5.50) Organisational image Q6 5.69 0.83 0.69 69.58 0.85
Consistency between purpose and 5.34 0.82 0.68
function Q7
Provide proper services Q8 5.47 0.89 0.79
Desire to join activity Q9 5.52 0.78 0.61
Customer perspective (5.47)

Total Quality Management

Customer perspective (5.47) Understand services provided by 5.58 0.87 0.77 57.98 0.78
organisation Q11
Good customer relationship Q12 5.37 0.88 0.78
Internal process perspective (5.10)
Operation management (4.92) Teamwork Q14 5.21 0.84 0.71 65.12 0.72
Simplify internal process Q15 4.31 0.79 0.62
Expand service target Q16 5.24 0.78 0.61
Customer management (5.32) Attract customers who need help Q18 5.50 0.85 0.72 70.58 0.78
Customer retention Q19 5.19 0.85 0.73
Understand service scope Q20 5.29 0.81 0.66
Innovation process (5.00) Confirm customer needs Q21 4.94 0.94 0.89 89.04 0.87

333
(Table continued)
 334
S.-I. Wu and Jr-M. Hung
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Table 2. Continued.
Item correlation Factor Explained
Perspective (Mean) Item name (symbol) Mean with total item loadings variance % Cronbach’s a

Proper service Q22 5.07 0.94 0.89

Regulatory and social process (5.17) Occupational health and safety Q24 4.87 0.83 0.68 57.09 0.50
Talent recruit Q25 5.15 0.86 0.74
Relationship with communities 5.50 0.84 0.71
nearby Q26
Learning and growth perspective (5.18)
Human capital (4.95) Employee capabilities Q27 4.95 0.93 0.88 88.10 0.86
Employee’s learning desire Q28 4.95 0.93 0.88
Information capital (5.49) Information collection channel Q29 5.49 0.95 0.90 90.28 0.89
Utilisation of market information Q30 5.50 0.95 0.90
Organisation capital (5.11) Organisational culture Q32 5.22 0.81 0.67 70.94 0.91
Employee devotion Q34 5.10 0.90 0.81
Team proficiency Q35 4.97 0.83 0.70
Comprehension on organisational 5.30 0.86 0.75
mission Q36
Policy correctness Q37 4.99 0.88 0.78
 Total Quality Management 335

second (mean 5.50). The means for the measurement items in the Mission perspective are all
greater than 5.39, indicating that CRM has a significant effect on achieving the mission,
especially on promoting a positive image. The means of the measurement items in the Financial
perspective are all greater than 5.34, indicating that CRM also has a great positive influence on
donors, especially on promoting an organisational image. For a Customer perspective, the means
of the measurement items are all greater than 5.37; among them, the performance of ‘Understand
the service provided’ comes top with a value of 5.58. For four categories of the Internal process
perspective, the means of the measurement items in the operations management process are
greater than 4.31, meaning CRM is effective in operations management. The means of measure-
ment items in the customer management process are all greater than 5.19, which mean CRM has
a certain effect on customer management, especially on attracting customers who need help. The
mean of measurement items in the Innovation process tells us that Proper service is more effec-
tive while Talent recruits and Relationship with communities nearby perform the best in Regu-
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latory and social processes. For three categories of the Learning and growth perspective, the
means of measurement items in Human capital are all greater than 4.95, indicating CRM is effec-
tive on manpower management; the means of measurement items in Information capital are all
greater than 5.49, meaning CRM is more effective on information capital; the means of measure-
ment items in Organisation capital are all greater than 4.97, indicating CRM is effective in pro-
moting the performance of organisation capital. To summarise, executing CRM does have a
comprehensive effect and performance on a non-profit organisation.

Measurement model analysis

Before conducting causal modelling verification, this research uses AMOS (Analysis of Moment
Structure) to conduct a confirmatory factor analysis on the measurement model of five dimen-
sions – Mission, Financial, Customer, Internal process, and Learning and growth, in order to get
standardised factor loadings between latent variables and measurement variables. Standardised
factor loadings are the validity index, which represent the correction coefficient between the
latent variables and the underlying measurement variables. Then we improve the goodness-
of-fit of measurement model by using three steps of observing modification indices, proposed
by Sethi and King (1994). The steps are: (1) delete the variable with factor loadings lower
than 0.6; (2) when the goodness-of-fit index fails to meet the standard, delete the variables
with high error correlation between items but low factor loadings; (3) when goodness-of-fit is
insufficient, delete variables with higher errors. Furthermore, judge the goodness-of-fit of the
measurement model based on the following principles: the fit assessment of GFI, AGFI, NFI,
and CFI indexes should be greater than 0.9; RMR and RMSEA should be lower than 0.05
(Bentler, 1990; Danes, 1984; Gefen et al., 2000; Gefen, 2002; Chau, 1997; Joreskog &
Sorbom, 1982); and x2/df is below 3 (Carmines & Mclver, 1981). From the methods stated
above, the measurement model of five perspectives is amended as follows.

(1) The first-order factor analysis of the measurement model of the Mission perspective, shown
as Figure 3, has goodness-of-fit and factor loadings that are all above 0.6.
(2) The first-order factor analysis of the measurement model of the Financial perspective,
shown as Figure 4, has goodness-of-fit and factor loadings that are all above 0.6.
(3) Exploratory factor analysis is applied because only two question items are put in the
measurement model of the Customer perspective. All factor loadings turn out to be above
0.6. The measurement model is shown as Figure 5.
 336 S.-I. Wu and Jr-M. Hung

Figure 3. The first-order confirmatory factors analysis of Mission perspective.

(4) After following the revised steps previously stated, to delete the 15th, 20th and 26th ques-
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tions by using first-order confirmatory factor analysis, use a second-order confirmatory

factor analysis to acquire the indictor that is appropriate for evaluating the Internal
process perspective, shown as Figure 6. This model has great goodness-of-fit and factor
loadings that are all above 0.6.
(5) After following the revised steps previously stated to delete the 32nd questions by using
first-order confirmatory factor analysis, use second-order confirmatory factor analysis to
acquire the indictor that is appropriate for evaluating the Learning and growth perspective,
shown as Figure 7. This model has great goodness-of-fit and factor loadings that are all
above 0.6.

As shown in Figures 3 to 7, each measurement model is a proficient performance evaluation

tool whose model goodness-of-fit meets the excellent standard. The standardised factor loadings
between latent variables and measurement variables in all models are all greater than 0.6, indi-
cating that each measurement model can measure the performance of CRM effectively. After
this simplified procedure, the number of measurement variables remaining totals 26 at the end.

Relation structure model analysis

After the scrupulous screening process previously mentioned, use the remaining 26 measure-
ment indexes to explore the causal relation on five main perspectives as well as building a
relation structure model that would influence the performance of CRM. Using a maximum like-
lihood estimation as the estimation method for causal model, the result shows that, in the good-
ness-of-fit index, the values of GFI (0.879) and AFGI (0.825) are near 0.9, NFI (0.917) and CFI
(0.995) are above 0.9, RMSEA (0.02) is below 0.05, x2 is 257.18, P-value is 0.269, x2/df (1.05)

Figure 4. The first-order confirmatory factors analysis of Financial perspective.

 Total Quality Management 337

Figure 5. The first-order exploratory factor analysis of Customer perspective.

is below 2, and RMR (0.07) is slightly larger than 0.05, which is barely acceptable. This proves
that the hypothesis model of this research is good.
In addition to evaluating the overall goodness-of-fit of the model, this research collects and
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edits the estimation value of hypothesis model standardisation in Figure 8. All of the parameters
in Figure 8 meet significance ( p , 0.05), indicating that the structure model of this research is
reasonable.
Focusing on the first hypothesis in this research, Figure 8 shows the path coefficient between
the Learning and growth perspective and the Internal process perspective is 0.80
(P-value , 0.01), which means that the Learning and growth perspective has a significant
positive influence on the Internal process perspective. Therefore, hypothesis H1 is supported.
Focusing on the second hypothesis of this research, the path coefficient between the Internal
process perspective and Financial perspective is 0.73 (P-value , 0.01), which means that the
Internal process perspective has a significant positive influence on the Financial perspective.
Therefore, hypothesis H2 is supported.
Focusing on the third hypothesis of this research, the path coefficient between the Internal
process perspective and the Customer perspective is 0.93 (P-value , 0.01), which means that
the Internal process perspective has a significant positive influence on the Customer perspective.
Therefore, hypothesis H3 is supported.

Figure 6. The second-order confirmatory factor analysis of Internal process perspective.

 338 S.-I. Wu and Jr-M. Hung
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Figure 7. The second-order confirmatory factor analysis of Learning and growth perspective.

Focusing on the fourth hypothesis of this research, the path coefficient between the Customer
perspective and Mission perspective is 0.33 (P-value , 0.01), which means that the Customer
perspective has a significant positive influence on the Mission perspective. Therefore, hypoth-
esis H4 is supported.
Focusing on the fifth hypothesis of this research, the path coefficient between the Financial
perspective and the Mission perspective is 0.50 (P-value , 0.01), which means that the Finan-
cial perspective has a significant positive influence on the Mission perspective. Therefore,
hypothesis H5 is supported.
The results of the aforementioned hypotheses show that a non-profit organisation can improve
the performance of the Internal process through the positive effect from Learning and growth
after executing CRM, while the efficient Internal process has a positive influence on fund
supporters and receivers and achieves the organisational mission eventually. Therefore, the
cause-and-effect relationship between the five perspectives is positive and interconnected.
The performance of one perspective can affect the next one in a positive way. For organisation
executives, focusing on performance evaluation comprehensively to upgrade the overall effect is
the essence of the Balanced Scorecard, as is the basic philosophy of Total Quality Management.

Conclusion and discussion

In recent years, the cooperation and interaction between non-profit organisations and companies
on CRM campaigns have been increasing. Yet the effect remains questionable because the CRM
performance is still evaluated by financial data only. However, from the non-profit organis-
ation’s standpoint, the performance of CRM campaigns should be explored from different
aspects instead of financial outcomes. This research explores the performance of executing a
CRM on a non-profit organisation as well as building a reliable measurement index and explor-
ing a related structure between each perspective from a non-profit organisation’s standpoint. The
research findings and applications can be summarised as follows.
 Total Quality Management 339
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Figure 8. The relation structure model.

First, the result of CRM performance analysis indicates that the five measurement perspec-
tives all have positive efficiency, especially the Mission perspective. In the Mission perspective,
the best performance is promoting a positive image, meaning the non-profit organisation can use
CRM to increase awareness. Namely, CRM aids in various kinds of tasks in achieving the
mission. In the Financial perspective, CRM allows the donors to generate positive perceptions
on a specific organisation and then provides long-term financial support to the specific non-profit
organisation. In the Customer perspective, CRM allows the public to have a greater understand-
ing of the services provided by the organisation or its founding purpose, and urges those persons
who are in need of assistance to come to the non-profit organisation voluntarily, and it even
builds good interaction. In the Internal process perspective, this research finds that CRM can
attract more citizens who need help. Furthermore, it has a significant effect on improving the
relationship with communities, which means the non-profit organisation can change its
 340 S.-I. Wu and Jr-M. Hung

relationship with nearby communities through CRM. In the Learning and growth perspective,
this research discovers that CRM can exploit information capital effectively to understand the
supporters’ behavior and responses. CRM also allows employees to understand the mission of
the organisation, strengthens the organisational culture and then accumulates abundant
resources.
To summarise the above-mentioned analytical results, CRM is a positive cyclic process that
has effects on promoting awareness, increasing public confidence, elevating image, urging help
receivers to have a greater understanding of the organisation, and benefiting more civilians. In
addition, it has outstanding effects on aspects, such as employee capability, teamwork, etc.
Second, after deleting question items and revising the process several times, this research has
constructed five performance measurement models and reaches a reliable performance index. (1)
The measurement index of the Mission perspective includes four items: Vision achieved, Public
confidence on organisation, Positive image, and Objectives that comply with social demand. (2)
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The measurement index of the Financial perspective includes four items: Organisational image,
Consistency between purpose and function, Provide proper services, and Desire to join activity.
(3) The measurement index of the Customer perspective includes two items: Understand ser-
vices provided by the organisation, and Good customer relationship. (4) The measurement
index of the Internal process perspective includes eight items: Teamwork, Expand service
target, Attract customers who need help, Customer retention, Confirm customer needs, Proper
service, Occupational health and safety, and Talent recruit. (5) The measurement index of the
Learning and growth perspective also includes eight items: Employee capabilities, Employee’s
learning desire, Information collection channel, Utilisation of market information, Employee
devotion, Team proficiency, Comprehension on organisational mission, and Policy correctness.
The five measurement models consist of 26 measurement indexes with good reliability and
validity. These measurement models and performance indexes can effectively evaluate the
performance of CRM on a non-profit organisation.
Third, the hypothetical related structural model of CRM is good and acceptable. Thus, the
relation structure model in this research is supposed to have a certain practical value. The
analytical results of structural model show that the five hypotheses have been verified;
meaning (1) the performance of the Learning and growth perspective has a positive influence
on the Internal process perspective; (2) the performance of the Internal process perspective
has a positive effect on fund supporters in the Financial perspective as well as receivers in
the Customer perspective; (3) the performance of the Financial perspective has a positive
effect on achieving Mission; (4) the performance of the Customer perspective has a positive
influence on achieving the organisational mission; (5) the achievement of the mission is the ulti-
mate objective for a non-profit organisation, which is directly affected by the performances of
the Financial perspective and Customer perspective, and indirectly influenced by the perform-
ances of the Internal process perspective and the Learning and growth perspective.
From the causal model, we find that a non-profit organisation can improve the Internal process
performance by learning and growth after executing CRM. The efficiency of the Internal
process, however, can also affect the perception and interaction of donors and receivers, and
then achieve the organisation’s mission. Thus, these five perspectives are closely interconnected.
Improving the performance of the Factor perspective can boost the performance in the Result
perspective. This result matches the spirit and concept of Total Quality Management. If the
organisation managers can use the Balanced Scorecard concept to conduct the overall perform-
ance evaluation, then it is possible to realise and improve the overall organisational performance
in order to reach the objective of Total Quality Management.
 Total Quality Management 341

In the academic field on studying CRM and performance evaluation, this research is thought
to be the first that introduces the Balanced Scorecard concept to explore the performance factors
of CRM and its cause-and-effect relationship. Although this is the initial exploration, it is poss-
ible to educe a preliminary research direction and outcome that allows scholars to have more in-
depth exploration in the future.

Research limitations and research suggestions

This research takes the lead in implementing the Balanced Scorecard on evaluating the perform-
ance of CRM on a non-profit organisation. Although there are some preliminary outcomes, some
restraints remain to be improved.

(1) Regarding the questionnaire draft design, because this is the first research that uses the
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Balanced Scorecard method to analyse the performance of CRM, the variables in the ques-
tionnaire might be incomplete or insufficient. This research only conducts in-depth inter-
views with the executives and key personnel who have participated in CRM from three
non-profit organisations. It is impossible to get complete information. Therefore, future
researches should use a larger sample size in order to collect more diversified and in-
depth opinions for future amendments and to make the questionnaire rating more efficient.
(2) Regarding data collection, the number of returned questionnaires was not many due to time
and manpower constraints. The small sample size might cause a deviation in research
assumptions; therefore, it cannot represent the whole. Consequently, we suggest that
researchers conduct more comprehensive investigations in the future in order to obtain
more accurate results.
(3) This research defines CRM in a broad sense, namely the total of all CRM campaigns. Future
researches can focus on one specific CRM to conduct an in-depth analysis in order to realise
the performance more concretely.
(4) The relation structure model of the performance factor might not be the sole structure
relation. It is possible that a more or better structure model is there to be explored.

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