Giving Compass' Take:

• Arun Maira argues that while there is much emphasis on scaling up organizations to achieve impact, there are many advantages to small organizations. 

• Are you funding nonprofits that are the right size for the work they are undertaking? 

• Learn how to decide if your organization is ready to scale up. 

Large nonprofits have as much inertia as large corporations and government organisations, and sometimes maybe even more. And with reason. They take public and donor money, and they need to have more controls, more accounting, which in turn makes them more bureaucratic.

The more energetic part of the sector resides in the smaller organisations, the ones that are immersed in their communities and working on areas that they care about. But they are too small. Does it, and should it, matter that they are so small? If impact is about changing lives, can the size of an organisation be the right metric to evaluate scale?

I have worked as chairperson at a few large international nonprofits and I’ve seen progress measured by budgets, revenues, and expenditures. The discussion and accountability is focused internally on the organisation’s growth, which is easier to measure, rather than on the effect it has had on the people they serve. Instead, if the nonprofit’s attention and energies are directed towards outcomes, its size becomes secondary, and not really worth worrying too much about either.

I often use the example of the automobile industry in the US. In the late 1980s, the country was dominated by General Motors, Chrysler, and Ford. Honda, which was a tiny company among the global giants, was the first foreign company to set up a plant in the US, and they were the first ones to build cars that were energy compliant with California state laws. General Motors had the money and the research, but they couldn’t do it.

The general belief in the industry as well as with my management consulting colleagues, at that time, was that to thrive in the auto industry one needed huge resources–for research, for building new models, and to stave off competition that was only getting fiercer by the year. But some of us believed that there was another way to win–one which didn’t involve large amounts of resources. Something that entailed passion, energy, and using the little that you had more effectively. Thirty years later, the Big Three were replaced by their smarter, smaller peers.

Today, we see this around us–smaller organisations that are nimble and creative. The problems arise when they start getting bigger. The mindset slowly changes to one that believes that you need more resources to win; it shifts away from the other energies that you’ve used to get to this point. But you have to watch out and not play that game; you have to play your game because the big guys can never play your game.

And this is true everywhere–whether in corporates on in nonprofits. As enterprises grow and reach a certain point, they don’t know how to manage and coordinate all the things that they have. So, they go and hire a manager. The managers come in with their theory of how to organise and manage things on scale, and they dampen all innovation thereafter. We must be careful not to adopt this approach and this thinking in our sector.

Read the full article about scaling up by Arun Maira at India Development Review.