Does "Small is Beautiful" apply to nonprofits?

There is so much emphasis on getting to scale, and the relationship of scale and sustainability, but as I said last week in class, most of the large organizations I've worked for suck. Organizations get bigger, more risk averse and restrained, less empowering of their front line workers, less fun to work for, and more institutional in the way they relate to their clients. This emphasis on scale is an analog of capitalism's emphasis on economies of scale, which have been challenged in such books as Schumaker's "Small is Beautiful" or Piore's "Second Industrial Divide." I haven't heard the argument against mass production nonprofits, yet.