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I recently gave a talk on social ventures, which included some trends that I see in this increasingly competitive space.
- The number of non-profits in the U.S. is too large, over 1.5 million, which results in many incremental approaches and too few large scale ventures
- Competition in social services is increasing as for-profits enter the space, driven by large market opportunities, Michael Porter's shared value and the popularity of social entrepreneurship.
- The concept of "social" is becoming very cloudy as more and more people realize that objectives can be achieved without any consideration of the "do good" tag
The discussion of my ideas was very vigorous as the attendees basically stopped the speech to discuss some of the ideas. First time that ever happened. One idea that got a fairly thorough debate was the idea that non-profits should merge in order to reduce overheads and achieve larger scale. M&A in the non-profit world...what is this world coming to.
If you think this idea is far fetched, this story in Concurring Opinions talks about a "hostile takeover" of a foundation.
Of course, the best example of this merger concept may be that Warren Buffett put his billions in the Gates Foundation. Mr. Buffett understands capital efficiency and scale.