Following the concept of "Web 2.0," we can talk about "Nonprofit 2.0," which was the title of a Sonny Cloward post [1] in October 2005 (referring to a post [2] by Marnie Webb of Compumentor about nonprofits and Web 2.0). Others [3] have used the term, but I'm especially interested in a July 8 post [4] at nonprofittechblog.org focusing on one aspect of Web 2.0, "the long tail,"

a statistical phenomenon that says that the niche players in any Internet-driven market, become, in aggregate, a larger market force than the “brand names” of that market. For us non-profit types, that means all those little mom-and-pop non-profits are actually a bigger force in toto than the Red Crosses, United Ways and Salvation Armies of this world. In a sense, your average donor is now going to be confronted with a Netflix-like selection of charities he or she can donate to. Sure, they might want to donate to the Red Cross but then there’s the indie non-profit just trying to help out literally in the neighborhood of that donor.

All this “2.0” stuff basically says that paradigms are changing as the web experiences a mainstreaming effect and becomes part of the social fabric. And the long-tail thinking says that when the world is at everybody’s fingertips, they’ll make more nuanced or niche choices from an exponentially broader set of possibilities. When our choices were limited by what we could buy at our local bookstores, the more limited universe of book selections would get most of the sales. With the Internet, we can by any book in print; as a result, the online sales of books that sell few copies far outnumber the sales from bestsellers.

This is relevant to the nonprofit world, because potential donors have far more choices. Every nonprofit, however small, can have a web presence with an engine for processing donations. In fact, facilitated by the increased ability to limit overhead by organizing virtually, more and more small nonprofits are appearing. This is going to be reflected in revenues from small donors - all nonprofits will be effected. All will find it harder to attract donations, but large nonprofits with established large overheads will be especially vulnerable. This will also affect large companies that provide relatively expensive support services to nonprofits (e.g. Convio, Kintera).

The survivors will be smaller, lighter nonprofits (who will establish networks and partnerships to extend their capabilities). They’ll be even more successful if they innovate in the kinds of value they provide to their supporters, and how they provide it.

This is happening now, and it’s an exciting and sometimes difficult time to be operating an NPO. But I think this diversification is ultimately very healthy, and I think there are advantages in evolving away from monolithic organizations to networks of small orgs. Mammals did pretty well compared to dinosaurs, and dinosaurs had to shrink and sprout wings to survive.