Stochastic frontier is non-profit associations performance assessment (the case of homeowners associations)
The paper demonstrates the potential of the stochastic frontier-based methods of performance assessment of non-profit associations. They are commonly used for productivity analysis and could serve as an adequate tool for such assessment, especially when dealing with numerous non-profits pursuing identical and clearly identified objectives. A case in point are homeowners associations (HOA), which are formed within apartment buildings to manage common property. Data was collected by a survey of 82 HOAs in Russias national capital Moscow and a large industrial city of Perm. Different techniques and robust checks are applied, exogenous parameters that influence HOA efficiency are revealed. Among those, physical conditions of the housing stock and ability of tenants to resolve the collective action problem in operating housing infrastructure were shown to be of primary importance. Overall, HOA, despite of their appeal and successful performance in developed nations, are not necessarily a superior option in countries and societies where civic capacity is in short supply, and housing stock suffers from wear and tear.