Attending the SVA Quarterly breakfast debate in Melbourne, what most struck me was Tim Costello, World Vision Australia’s CEO, warning against large scale consolidation in the for purpose sector.

Up against Jan Owen, CEO of Foundation for Young Australians, who put the case for rationalisation in the not for profit world, Costello said, “This sector is an energy zone. We shouldn’t do anything to dampen or kill it.”

The strength, and mystery, of this sector, Costello said, lies in its citizens — not governments — freely meeting their deep felt desires for a better society.

This, he said, creates enormous diversity which brings with it innovation and flexibility. He warned against any heavy handedness whether it be through regulation or mass consolidation which could stymy this.

The breakfast debate series, hosted by SVA and Macquarie Group Foundation, provides a regular opportunity for NFP CEOs and directors to explore key sector issues together. Each debate picks up on a recent theme from the SVA Quarterly.

In the name of justifying rationalisation, the 2010 Productivity Commission’s estimate of 600,000 NFPs in Australia is often cited. (See Getting our act together). However, as so many of these organisations are small, distinctive, and/or local and work in discreet specialist fields, consolidation may not be helpful.

Costello emphasised that the freedom of citizens to imagine, to organise, to form and grow new organisations, and to experiment is fundamental to the magic of the sector.

With the plethora of crowd funding and social media platforms, there will clearly be no stopping this magic doing its thing.

And in some cases this magic can be harnessed to take these organisations to scale such as international NFP charity: water has done. Over three years, it raised $20 million via its dedicated fundraising platform my.charitywater.org helping to grow the 2006 startup to a $33 million turnover in 2012.

However the question that needs to be asked is how can you scale or merge these organisations without killing this magic?

As Costello put it: how do we let it flourish and escape the deadening hand that kills off innovation.

The debate clearly recognised that more mergers and collaboration in the sector are needed to help fulfill some NFPs’ objectives, improve performance and create more impact. It also acknowledged that there are increasing numbers of collaborations – many of them deep and tight – that are not particularly visible outside of the collaborating organisations. For example, Owen cited FYA and Beacon Foundation exploring redesigning how young people receive career education – a collaboration which SVA Consulting provided the initial research and pitch for.

However, it is clear that there is a unique quality to the sector that must not be quashed in the consolidation process. It is the singular feature of the sector that connects one person’s vision for a better world to another’s, igniting action to change things for the better.

At the breakfast, I met Mandy Burns, CEO of the Ardoch Foundation, who recalled one such vision. Martin Luther King ‘had a dream’ which guided and fuelled a movement that transformed the world.

The debate reminded me of this more mysterious force for change.

Is this ‘magic’ important in your non-profit area?

How can this magic be maintained as we scale and grow non-profits?

I’d love to hear your thoughts.

More: Pro Bono News reports on the debate (external link)