Most of the time, drag-and-drop features work fine in OS X 10.11.2. However, there appears to be a bug which can unpredictably start occurring whilst using OS X, which stops all drag-and-drop operations from working, throwing the error message shown.

According to krypted.com’s comprehensive list of error codes, -4960 is “coreFoundationUnknownErr”, in other words an unknown error occurred in the Core Foundation functions in OS X. Seen in Console’s log, it is reported as:
03/01/2016 11:28:13.390 Safari[68285]: Can't allocate a new block for a pasteboard. Creation of a new Pasteboard will fail.
– in that case for Safari, but repeated for any app in which you try to use a command which requires a pasteboard.

Once this starts, all subsequent attempts to use drag and drop will fail with the same error report. The only cure appears to be log off and back on again: you should not have to perform a full restart. Hopefully it will be fixed in the next update.