A Discussion Between Paul Shoemaker and Mario Morino... It's a pleasure to be able to respond to Mario Morino's excellent points. I hope others will chime in and leave comments and reactions to this interesting exchange. I have a few reactions to the ideas Mario raised:

RE: A Misguided Focus on Scaling?
I think Mario is correct on this, but it's also one of those nuances in our work that I think gets misunderstood at-large and even amongst ourselves. I've never assumed that scaling up is the right thing for every (probably not for most) nonprofits just like I don't assume that every nonprofit needs what SVP brings. Maybe it's partly just a communication issue for all of us. SVP works with local organizations that both do and don't want to scale. To be honest, it is one (but one of many) factors for us, but not overriding. I think it might behoove all of us to just make note of that when we do talk about some organizations scaling.

RE: A Social Capital Market and Nonprofit Funding
Certainly Bridgespan's piece on scaling addresses part of Mario's comments, but I would add that I don't feel perhaps as pessimistic as others may feel about this. We will never, of course, get the diversity, rationality and scale of capital flows that exist in the private sector, primarily because there is not that one outcomes measure, a la EPS. But I think the social capital market is a complex system and today it is, remarkably, still at a pretty Neanderthal stage of evolution, primarily because of how Foundation Boards and public funding entities operate. Read the recent Center for Effective Philanthropy report about operating support for more information.

I think systemic progress (slow and hard, I presume) is possible on a number of parts of the nonprofit capital system. Having money to scale up is significant, but it is also just one of many pressure points in the whole financing system between funders and nonprofits. We can also address other issues that can create friction and hinder the potential effectiveness of nonprofits, such as promoting and advocating for more unrestricted funding, longer-term grants, simpler due diligence processes, streamlined reporting, etc. The amount of money is a key issue, of course, but just as significant may be how the money gets distributed, how funders work together to create scaling-up ladders for certain nonprofits, how the funding is designated, etc.

RE: Talent Shortage
There is no doubt that a talent shortage exists, as Tom Tierney articulated well a few months ago. But again, I feel a little more optimistic perhaps. The degree of emphasis on the social sector at major MBA programs is night and day versus 25 years ago when I was there. I also have the advantage (or bias?) of working with our SVP Partners every day. They are current and former CEOs, CFOs, COOs, VPs, etc. One by one, more of them are transitioning over to the non-profit sector, and a few of them are now running for school board, city council, etc. I am not at all disagreeing with Mario's assessment of the human capital deficit and I know we need to deal with this faster than one at a time, but I think there is a new wave or segment of professionals who are headed down this route who would not have done so in previous generations.

RE: Absence of Market Pressures and the Social Entrepreneur Movement
There is no way to ever change this situation 100%, but I've come to a somewhat ironic conclusion on this point. The most significant market pressure, as we know, comes from the funders and I think we, as funders, have almost no choice but to apply that pressure. We must do it in the right way, with humility, with lots of explanation and dialogue, and it will not be easy. I don't think we are going to see true, significant systemic changes in the nonprofit economy unless the funders, the philanthropists, the people with the "power and the bucks" lead the change. Nonprofits can't do it, the community-at-large doesn't understand it well enough, and the end clients certainly don't have the power in our world.

This isn't meant to suggest that funders or the people with power are the "rightful" people to lead. To the contrary, there is a lot wrong with that idea. Rather, this is based on the "world as it is," and given today's circumstances funders will probably have to lead and/or co-lead on a lot of these issues because other constituencies don't have enough power to do so in today's nonprofit economy.

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Note: the preceding was drawn from a private exchange between Paul Shoemaker and Mario Morino. Although not originally intended for a public audience, the idea of posting this exchange was suggested by an interested party who was "listening in."