There emphatically is something wrong with non-profits. Just because there are some excellent ones (Sturgeon's law applies) doesn't mean that the field at large isn't ill.
An anecdote: we had a meeting with a guy who worked at a large company with a philanthropic streak. They provided, free of charge, a "dashboard" for planning, along with free training and tech support to any non-profit that wanted it (it cost considerable money otherwise). It was simple but very powerful, allowing you to do sensitivity analyses on projections to determine which courses of action would result in the best returns - both monetary and any other metric you wanted to put in (i.e. the social goals of the project).
It was like he was selling popsicles at an ice rink.
We ran into a very similar issue with Urbantastic. We had a web service that was very effective at getting small things done for non-profits: it's called micro-volunteering. There's no supervision required, you just write down what you want and someone always did it.
When we founded Urbantastic we thought the challenge was going to be in getting skilled people to help out for free. That was not a problem. The problem was that we'd go up to non-profits and say: here's a machine where all you have to do is post your todo list, and people will cross off items for you. For free. And we never got uptake.
People lined out the door offering to help, and almost no one took them up on it. Despite our offers to walk non-profits through it, and despite the recent funding cuts which meant that they needed all the help they could get.
I'm not saying that Urbantastic is perfect, but in our pilot cities this was overwhelmingly the result, and I still can't think of any incremental change that we could have done to get the non-profits engaged. A big part of it was that most of them were still uncertain about the whole email thing. It's not an exaggeration to say that some of them didn't know how to use a spreadsheet.
With our fancy web 2.0 ajaxy website, we felt like we were giving out iTunes gift cards to the lost tribes of Papua New Guinea. They didn't value it because they weren't even close to being at the point where they could use it.
I care about social good - I wouldn't have founded a social venture if not. And twice now I've been floored by the state of the non-profit world. Again, 10% of them are brilliant, but the other 90%... It's a big problem, and it's not going to get better by pretending that it's not there. That world is amazingly backwards. And it's saddening to see such important mandates being handled by such ineffective organizations.
My advice to anyone here planning on doing a social venture: drop backwards compatibility with the non-profit world. (one giant caveat: working exclusively with one or two of the few clued-in orgs might work).