How the Bigger-Is-Better Mentality Plagues the Charity Sector

In the non profit world, there’s an underlying logic that bigger is better. This is a notion that is rarely challenged.

Non-profits, including those whose very design prevents them from being effective at scale, love to boast about size. “We have headquarters in 25 countries! We have 1,000 staff in Malawi! We raised $108 million last year, up from $78 million the year before!”

Charities will often talk about scale, as if scale alone implies that their work is effective. But none of these boasts say anything about the effectiveness of a charity’s work. They tell us about the capacity (country offices and staff size) and the inputs (donation size) but nothing about the outputs (effect on people’s lives).

Out of all the metrics, the most meaningless is one often quoted by charities — the amount of money raised. It speaks to the inputs in a project but says nothing about the outputs produced.

It would be like a marathon runner talking about how many carbohydrates were consumed before a race, rather than the time or distance achieved.

Scale does not necessarily equal success.

However, for the survival of the non-profit, bigger clearly is better, particularly when it results in stamping out competition. Bigger non-profits can attract greater “market share” — the very definition of private sector logic — by out-competing other non-profits for funding. More resources to begin with mean greater resources to lobby and advocate for more funding.

In Australia, half of the revenue in the charity sector goes to the largest 0.4% of charities. Another way of thinking of this is that of the roughly 48,000 charities registered with the national body — the Australian Charities and Not-for-profits Commission (ACNC) — 192 charities consume half of the available income.

With large fundraising teams and greater institutional trust, it becomes increasingly common for large charities to push smaller charities out of the way.

A cause that already has more resources can out-compete other causes, further funnelling resources in its direction.

To be clear, a non-profit that grows is not, in and of itself, problematic. Logically, scale allows non-profits to reach more people and do more good. However, when a non-profit focuses on growth, often at the expense of effectiveness, the mission can easily deviate towards self-perpetuation.

This is often the start of what I call “the hamster wheel of charity work”.

The hamster wheel is all about asking for funding, spending it and justifying why you should get more. All of a sudden, the charity’s focus is no longer on the impact that they have, or even on doing a job and finishing it, but on perpetuating this cycle.

The bigger-is-better mentality propagates the hamster wheel, and encourages more charities to focus on scale. But the charity sector is potentially one of very few sectors that should be encouraged to shrink, not grow. After all, shrinking indicates the problem that charities are addressing is no longer a problem.

This involves a complete rethink of what a successful charity looks like. It’s a significant mindset shift from the traditional model of charity, which defines success narrowly, and often defines success through simply getting bigger.

By comparison, a redundant charity thinks completely differently. A redundant charity defines success through no longer being needed.

So how do redundant charities break the cycle of dependency?

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