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How To Fix The Nonprofit World’s “Innovation-Aspiration” Problem

Nonprofits know they need to change–but they’re pretty sure they don’t know how.

How To Fix The Nonprofit World’s “Innovation-Aspiration” Problem
“Most respondents say that if they don’t come up with fresh solutions to the sector’s myriad challenges… they won’t achieve the large scale impact they seek.” [Image: RadomanDurkovic/iStock]

Nonprofits are suffering from what’s been dubbed an “innovation-aspiration” problem: While 80% of the top 145 nonprofit leaders say the sector needs to change practices in order to make greater societal gains, only 40% believe they have the capacity to do that, according to a survey by Bridgespan, a nonprofit consultancy, and the Rockefeller Foundation.

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The results of that survey appear a recent Stanford Social Innovation Review report entitled “Is Your Nonprofit Built For Sustained Innovation?” The answer to the question posed in the headline, of course, is “obviously not” for most organizations. “This gap worries us because most respondents say that if they don’t come up with fresh solutions to the sector’s myriad challenges… they won’t achieve the large scale impact they seek,” writes Nidhi Sahni, a Bridgespan partner and co-author in a memo accompanying the report’s release. Many cash-strapped groups are trapped in a cycle of business as usual, which amounts to plodding gains instead of the large (and ultimately cost-efficient) impacts necessary to close educational, nutritional, or health care gaps.

Many cash-strapped groups are trapped in a cycle of business as usual, which amounts to plodding gains. [Image: RadomanDurkovic/iStock]
In a buzzword-driven era, the report notes, many nonprofits may have lost sight of what innovation really means and why it should be coveted. Per the researchers’ definition, innovation is “a break from practice large or small, that leads to significant positive social impact.” The team goes on to point out six common elements that groups making breakthroughs generally share.

Those, in still quite buzzword-filled terms, are: “catalytic leadership” (empowering employees to take initiative), a “curious culture” (questioning classic assumptions and challenge the status quo), “diverse teams” (with different backgrounds and skill sets for more perspective), “porous boundaries” (sharing knowledge across both the organization and its beneficiaries), “idea pathways” (a formal structure for generating, testing, and rolling out new concepts), and “ready resources” (investing in the money, time, and probably toolkit required to make all of this happen).

On the leadership front, Higher Achievement, an academic mentoring group for at-risk middle schoolers in Baltimore, Washington D.C., Pittsburgh and Richmond, Virginia, which has created its own set of key performance indicators, easily tracked things like school attendance and performance that allows staffers who might have a new way to encourage learning or enthusiasm try it, and then properly grade the result (while maintaining a core curriculum, of course). The excitement of a more involved staff may spread to those the aid: In general, their students exhibit reading and math gains that are well ahead of their learning curves well ahead of their peers.

Innovation is “a break from practice large or small, that leads to significant positive social impact.” [Image: RadomanDurkovic/iStock]
In the case of the international micro-loan platform Kiva, the group’s internal curiosity about what a U.S. version might look like ultimately led to Kiva Zip, a concept pioneered, in part, by one of its volunteers who eventually joined full time. For small businesses owners with little or no credit history, the process hinges on a new way to establish trustworthiness called “social underwriting”: if entrepreneurs bring enough new lenders onto the platform to back them—even in small increments—then their request will be rolled out to more people who see many small votes of credibility as a reason to invest. Since going live in 2012, the program is responsible for half of the new lenders on the service and has driven $25 million in new loans.

Of all the factors listed, the one many leaders still felt was the least important is diversity. That’s not surprising, although it will likely be costly. As Fast Company has reported racial bias within nonprofit ranks may be driving some of the folks with the best perspective out of the industry entirely. That lack of parity sadly holds true for LGBT employees.

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[Image: RadomanDurkovic/iStock]
While not dealing explicitly with race, gender, or sexual orientation equality issues, one of the ways that the International Rescue Committee, which delivers humanitarian aid to refugees, has ensured that it’s exposed to fresh ideas is through an outside R&D lab called The Aribel Center, where employees working in cross-disciplinary teams build and test new concepts the group might not have had the time and vision to consider. To communicate better, other nonprofits are using more tech, like SMS-based polls to figure out how things are really going in the field, hosting innovation summits with others in their space, and launching challenges that come with more funds and coaching that are open to other entrepreneurs and aid-minded organizations who might have their ideas about that’s lacking in modern philanthropic approaches.

For groups that still need help diagnosing how best to get ahead, Bridgespan and Rockefeller have created an Innovation Capacity Diagnostic For Nonprofits. It’s another survey to grade exactly how innovative an organization may be currently, and what it might do next to move forward faster.

About the author

Ben Paynter is a senior writer at Fast Company covering social impact, the future of philanthropy, and innovative food companies. His work has appeared in Wired, Bloomberg Businessweek, and the New York Times, among other places.

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