Big v. Small in the non-profit world

I'm doing a project for my non-profit class where I research an "ethical" issue in the non-profit field. It's turning out to be pretty interesting. I was curious about whether "economies of scale" exist in the non-profit world. That is, if one or several large organizations can achieve greater sector-wide efficiency than lots of small organizations. Would there be less overall administrative cost with a larger organization, for instance, or would there be better coordination in a disaster situation? If so, maybe small non-profits have an ethical obligation to make a sound evaluation of their potential effectiveness before they birth themselves.

This question brought up a lot of issues around non-profit organizations that I had not thought much about but that are pretty interesting. Particularly, this issue points out important ways that non-profits differ from for-profit organizations. Take the issue of poor performance. If a business sucks at what it does, it will go out of business fairly quickly. In the non-profit world, there is no necessary connection between the quality of its services and the amount of money it can raise. In other words, there isn't a very strong "destructive" power to ensure that only effective organizations survive.

The converse of the argument that small non-profits are inefficient is the argument that small non-profits are more flexible and have better knowledge of the needs of local communities. In essence, this argument is identicle to conservative arguments for decentralization of government. Perhaps a wide ranging, diverse set of non-profits can better fill the gaps of government and industry that an oligopoly of bulky, bureaucratic organzations. Indeed, this rationale is partially responsible for the proliferation of non-profit services, as conservative forces have pushed for the "outsourcing" of social services to private charities.

On the other hand, this proliferation creates intense competition for funding. Advocates of competition would point to the positive incentive for innovation that competition provides. Critics would point out that non-profits are duplicating services and undermining their stated missions by failing to cooperate with other organizations.

Anyway, some interesting thoughts about non-profits.

Bigfoot exists.