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Scale should not be the only measure of success or impact. Nonprofits and donors must realise that scaling for the sake of scaling is pointless, especially if doing so is at odds with the organisation’s DNA and mission.

Over the years I have participated in many discussions on growing businesses. And the main thrust of these discussions has been that organisations have to be large in order to matter. I have a contrarian view, mainly because I have always preferred to work with small teams.

Before looking at the nonprofit space, I would like to start with the for-profit space, where I spent many years. In 1994 we started HDFC Bank, where our objective was, above all else, to build an institution that would make us proud. I left the bank six years later, when I thought it had become big.

Similarly, I exited IDFC Private Equity eight years after setting up India’s first infrastructure fund, by when it had become the largest Indian alternative investment platform. Even then, the best performing of our three funds was our first, and also our smallest.

These examples highlight my belief that size shouldn’t really matter: while it did for HDFC Bank, in the case of IDFC Private Equity it did not. In both cases, I left when we had become larger. I prefer smaller teams and organisations as I find them to be more flexible, less burdened with bureaucracy and processes, more entrepreneurial and a lot more fun.

So when I was asked to write on why I believe small is beautiful in the nonprofit world, I thought about why I don’t get excited by scale. My conclusion is that the size of an organisation is closely linked to its mission and the DNA of the founder and the senior team.

Size just for the sake of size–or because donor money is available–is pointless.

There is no point chasing size if the leadership is not interested in or capable of managing scale. Size just for the sake of size–or because donor money is available–is pointless. Today, I am involved with a dozen nonprofit organisations of different sizes. And the small ones invariably face pressure from the outside to grow.

Let us look at the two factors I mentioned: mission and DNA.

Mission

Some organisations are set up with the objective of serving local communities. They do an excellent job by staying closely connected to their beneficiaries or customers; their service is very personalised. If they were to grow too big, this personalised service may get impacted.

Take CORO, an organisation that works with marginalised communities. We were under pressure from a donor to scale up our fellowship programme by expanding to other geographies. But after expanding from Maharashtra to Rajasthan and Delhi, we decided to put a halt on our expansion and focus on the three existing states.

According to Sujata Khandekar, co-founder of CORO, “Scaling is not only about outreach. Our impact model is a satellite model. It is not about the centre getting bigger, but rather that all satellites draw from each other. We work with other like-minded organisations to create networks of networks and, thereby, build capacities mutually. If we can influence policy through this process, the impact can be huge.”

This approach is reflected in CORO’s grassroots leadership development programme, through which 180 fellows (who belong to various other organisations) are trained for 18 months. These fellows, in turn, impact 2,000 people in their communities on an average, resulting in an amplified impact on 360,000 people.

Vanessa DeSouza, CEO of SNEHA (Society for Nutrition, Education and Health Action), believes that “you need to grow what works. SNEHA’s strength is in the creation of evidence-based models. We want to scale models/components of models that work. We don’t necessarily want to scale ourselves, instead we want to partner with nonprofits and government health systems to share our technical expertise. This way, our knowledge can be leveraged to scale impact in a cost-effective manner.”

SNEHA has built an excellent reputation in the areas of child and maternal care and prevention of violence against women by focusing on its mission and what it does well. It has resisted the temptation of scaling up just for the sake of scaling up.

Scale image of rulers/scales
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DNA

Looking at the DNA of the leadership team is also important. I have been in some organisations where the founder is not capable of scaling up significantly. But at the same time, the organisation functions well in its niche.

Parth Shah, founder and president of the Centre for Civil Society (CCS), has this to say about his experience with scaling his organisation: “After many attempts to have standard processes, we realised that this is not who we are and our personalities prefer us to remain small and agile. At the same time, how can we create impact in our large country and change the hearts and minds of Indians? We believe scale can be achieved by helping other CCS-like organisations grow and by working together in some form of cooperation to create impact.” CCS, though small, continues to be a top-ranked think tank in India as per the rankings of the University of Pennsylvania.

After many discussions regarding growth at another organisation I work with, we concluded that the management bandwidth and funding required to go national would impact the soul of the organisation. We decided to achieve scale through partnerships, instead.

However, most donors want scale.

The management bandwidth and funding required to go national would impact the soul of the organisation.

They want to fund larger nonprofits either because they have too much money (and, therefore, need to make larger commitments to be able to manage their portfolio more efficiently) or because they believe that impact can happen only if the organisation has scale. There are some donors though who prefer to work with smaller, efficient organisations.

Regardless of the model of scale a nonprofit chooses, it is important to invest in training and processes to ensure that the organisation remains effective when it scales up. Though it can be difficult to get donors to fund these activities, scaling without first strengthening the organisation’s backbone could prove suicidal.

Ultimately, scale should not be the only measure of success or impact. The ability to work with networks and partners can be a more cost-effective way to create impact; smaller nonprofits, in fact, can often be more efficient and driven than larger ones.

Size should not really matter.

Luis Miranda

Luis Miranda

Luis is Chairman of CORO and Centre for Civil Society. He is also actively involved with other non-profits including SNEHA, CARE India, Educate Girls, and Take Charge. He spends his time these days connecting the dots for amazing social entrepreneurs, using his network to help the organisations he is connected with. Luis is also Senior Advisor to Morgan Stanley Infrastructure and Advisor to the Nadathur Group. Prior to this, he was involved with setting up two highly successful companies – HDFC Bank and IDFC Private Equity. He is on Chicago Booth’s Global Advisory Board and Social Enterprise Initiative’s Advisory Board and writes a blog for Forbes India. Luis received an MBA from the Booth School of Business, University of Chicago and is a member of the Institute of Chartered Accountants of India.

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