Charmaine Jones explores the strengths of small organisations at a time when governments are showing a preference for dealing with the large organisations for service delivery.

When completing the end-of-financial year compliances and obligations with the Australian Charities and Not-for-profit Commission (ACNC), I was somewhat bemused to see, that despite only being an organisation with the equivalent of 4.5 full time employees, we had been scaled up from a small organisation to a medium one.*

There are many who would suggest that in the current environment this may not be a particularly bad thing. There is this prevailing sense that funders are not interested in funding small organisations anymore, that competing against the larger charities is nigh on impossible and, in the face of this, many organisations and agencies are scrambling to merge or set up collectives to avoid falling in to the ‘small’ status basket.

This nervousness is highlighted in the NSW Council of Social Services (NCOSS) paper Surviving the Squeeze: How small Non-Government Organisations (NGOs) can thrive in the current climate. The paper discusses the emergence or consolidation of large State-wide/national providers, the contraction of funding to favour these organisations coupled with high compliance costs, greater accountability and competition, and the effects of such trends on smaller organisations.

Yet, something occurred to me recently, when, totally unrelatedly, I was reading a list of the latest television shows and movies. The upcoming shows developed by the larger film and television studios are all rehashes of old stories; we will be seeing ‘Gotham’ a remake of the Batman comic, as well as a TV version of the Keanu Reeves movie Constantine. It appeared that only the smaller studios dared to create something new, exciting and which could, in all possibility, fail.

I was struck with how often our large charities emulate the larger movie and television studios in the way they adhere to the tried and true. How, as with most large bureaucracies, they sometimes lack the flexibility to be innovative and to take risk.

Smaller not-for-profits offer distinct benefits to all stakeholders; employees, service users, funders and other partners. They have the ability to help people connect more readily to the objectives and purpose of their organisation and to enable staff, volunteers and members to see the work they are doing is contributing to that purpose, in a meaningful way.

Due to this commitment to the work of the organisation from those associated with it, small NGOs, those with good governance and management structures at least, tend to have a constancy in staff and board members not replicated in larger organisations. This low turn-over results in a retention of corporate memory.

The combined knowledge and experience of employees and members, just like our own memories, assist in improved decision making and avoiding problems. It is not the sort of information that can be shared via a spreadsheet. It is an intuitive understanding of the environment within which the organisation sits.

Smaller organisations have the capacity to move very quickly as circumstances change. They do not have large tiered systems of bureaucracies through which the decision making processes must progress. Small NGOs can therefore keep abreast of changing needs and adapt their programs as required. They can be flexible and responsive in their service delivery and meet community need and concerns promptly.

One of the great advantages small organisations have over large ones is their communications links. Skip Reardon points out in his blog ‘Advantages of small business’ how the complexities of interaction increase exponentially with the number of staff an organisation has.

• in an organization with 3 people, there are only 3 possible different interactions.
• in an organization with 25 people (8x as many people), there are 300 possible different interactions = 100x increase in the complexity of communications
• in an organization with 100 people (33x as many people), there are 4,950 possible different interactions = 1,650x increase in the complexity of communications

The result of the higher number of possible interactions is slower and often lower-quality decisions. In smaller organisations, there are fewer decision-makers, and they are more than likely to be at the coalface, close to service users, employees, funders and daily operations; they can get a much more accurate sense of whether a decision is right or wrong (…and can get this sense much quicker.)

And it is this quicker communication and decision making process that allows smaller organisations to be less risk averse than larger ones, to veer away from the tried and true. And yes, while occasionally risk taking will lead to failure, often, it is only through failure that we can learn and then build upon those learnings.

Too often in this sector we bemoan how little has changed over the years in terms of disadvantage, but we are ourselves are partially to blame; for how little we have altered the manner in which we deliver and evaluate projects. The lingo may change, but the underlying practices remain the same.

Many times small organisations and projects do work which excites and inspires us, but due to the small scale of delivery or funding, is never picked up and developed in to broader programs.

Of course, there are disadvantages to being smaller. Funders prefer consistent service provision, which is unlikely when 50 organisations are delivering a service that could be delivered by one large organisation. It is also more work for funders in contractual red tape.

There are obviously higher costs –small organisations cannot exploit economies of scale which consequently means their average costs may be higher than their larger competitors, another aspect funders don’t like. Small organisations often do not have the resources to draw on when there is the loss of a funded program. It can mean the difference between survival and not.

But these very disadvantages are that which add to small organisations strengths. The latest buzz word ‘Collective’ is something smaller NGOs have been doing for aeons. Partnerships and collaborations with like-minded services, education bodies, local governments and other agencies have been driven through the need to share resources and skills sets, to build better practice models and to seek funding.

While overheads may be slightly increased, funders can be sure that with a smaller organisation the funding is being spent directly on its intended purpose. Expenditure within a smaller NGO is much more directed and more easily tracked. It is very unlikely, as is possible with larger organisations, that the funding is absorbed in to a greater pool and is used to subsidise other arms of the business.

For the NGO sector to remain innovative, progressive and user-friendly, we need organisations of all shapes and sizes. And at the very least, who would wish to contradict the Nobel Peace Prize winner and blessed missionary, Mother Theresa who is quoted as saying ‘Be faithful in small things because it is in them that your strength lies.’

Charmaine Jones is the Executive Officer of ISRC

SKIP REARDON’s Advantages of small business – http://myventurepad.com/skipreardon2/36358/top-5-competitive-advantages-small-businesses

* Australian Charities and Not-for-profit Commission thresholds

•   Small charity – Income $0-$250,000
•   Medium charity – Income $250,001-$1,000,000
•   Large charity – Income – $1,000,000 upwards