The Gap Between Big and Small nfp's

A glance through any directory off not for profit organisations will quickly illustrate a single statistic. That is the gap between the large not-for-profit organisations and the small not-for-profit organisations. This gap is measured is gross operating revenue - much in the same way as we would measure those organisations in the for profit sector!

In Australia it is estimated there are around 700,000 nfp organisations, which around 30,000 employ staff, the remainder are operated mainly by corps of volunteers. In New Zealand it is estimated there are around 30,000 nfp organisations. The vast majority of not for profit organisations are small, have only a handful of paid staff, if any, and survive (just) on meagre resources. For the majority their revenue comes from small time sources such membership fees, fundraising activities and donations.

At the 'big end' of town, again to borrow terminology from our colleagues in the for-profit sector, we have those non-Government, not-for-profits primarily funded by Government to deliver services on behalf of the Government. In total, these nfp's number few yet they have access to the vast majority of funding and resources. Let us not forget also, the nfp's at the big end of town are also significant employers of staff.

This dichotomy clearly disadvantages the majority of not-for-profit organisations, yet it is a natural process. Tirrana Surhood labelled this larger group Small Non-Government Organisations (SNGO's) in a paper she presented to the Partnerships and Activism conference at the University of Western Sydney in 2000 when she called for SNGO's to create a 'voice' for themselves - so that they may be heard. Tirrana's call may have been ahead of its time, or maybe no one was listening back then. I believe the rationale that Tirrana applied then remains relevant today - maybe even more so.

The emerging environment of the nfp sector favours those larger, better resourced, more coordinated organisations, in particular those able to distribute services into multiple communities. I stated earlier that the division of organisations based upon size is a natural process - to a degree - yet i do not believe it needs to be an inevitable process. I also believe it is unhealthy for any market, whether it be in the commercial sector or the nfp sector, to be dominated by a small number of suppliers. The ultimate losers will be those the organisation is supposed to help.

Divisions in the corporate sector occur as a result of competition. Some organisations are better at doing the job than others therefore they garner a greater share of the market. The not for profit sector is not a competitive sector, at least not in the sense that the sector 'sells' its services. The pricing mechanism within the not for profit sector is not used as a competitive tool. Divisions in the not-for-profit sector are created by funding bodies being selective in their distribution of funds. In their desire to make life easy for themselves funding bodies prefer to deal with one larger provider than several smaller organisations. While this is understandable it is debatable as to whether such selective practices actually create efficiencies in service delivery.

The reality is this. The division between large and small already exists and it will continue to exist into the future. Those SNGO's can elect to sit on their bums and await the inevitable grim reaper or they can elect to become proactive in controlling their own destiny. Tirranna Surhood was right, the smaller nfp's need a voice, a coordinated peak body that will speak and act for them, that will advocate and attempt to influence funding decisions. Tirranna even suggested in her paper that the 'voice' may not need to be a national one; that a combining of resources at a community level may be even more effective. But even more is needed. the larger nfp's should recognise the inherent benefits of a diverse group of providers. They have the resources, courtesy of inequitable funding distributions, and they are in the business of helping others - it is time to extend some of that help to the smaller not for profit organisations that work along side them. There are many ways in which this could be achieved, from seconding key staff to sharing resources to providing back office support in the form of human resources and many, many others.

In turn the SNGO's need to become more proactive, they in turn need to explore how they might latch onto the resources and expertise that exist within larger organisations. Near to where I live a large nfp aged care provider prepares the payroll for a much smaller nfp aged care provider. They compete for customers yet they collaborate and they cooperate and both survive in a market that is much richer for the diversity and choice that is then available to the customer.