From Private to Nonprofit | Inside the Culture Shift, Part 3

Plenty of people switch from the private to the nonprofit sector hoping to make a difference. But what happens when you go for the sector switch and land in unfamiliar territory?

The for-profit and nonprofit worlds have some noteworthy distinctions—and similarities—that make this change both compelling and surprising. This article is the third in a series offering tips to guide your sector switch. Here, we take a look at private sector innovation, and how to apply it in the nonprofit world.

Vague but valued

Innovation is just as important in the nonprofit world as it is in the private sector; organizations need to stay competitive by delivering relevant services and scaling their impact. Similar to for-profit companies, nonprofits compete for resources, including funding and non-financial assets, such as qualified staff, volunteers, and beneficiaries—and the ability to innovate plays a big role in attracting those resources.

In fact, a survey of nonprofit leaders by the Bridgespan Group, a nonprofit management consultancy, indicates that most believe innovation is mission critical.

Once you learn the ins and outs of your new nonprofit job and organizational culture, there are plenty of reasons that you should strive to think outside the box and come up with game-changing ideas. There are just a few points to keep in mind when you do.

Tips for innovation

Decide up front what you’re willing to invest

According to Bridgespan, organizations with high innovation capacity have six key elements: catalytic leadership, a culture of curiosity, diverse teams, free flow of information, systematized methods to test and develop ideas, and available resources such as time and money.

Less than half of the nonprofit leaders Bridgespan surveyed feel their organizations are set up for innovation. Freeing up resources is a particular challenge, as pressure to deliver on day-to-day tasks leaves staff with little time to brainstorm.

Having a realistic view of potential constraints will help you plan around them. Pay attention to whether you can carve out time in your day for deep thought. If time pressures or access to training are the main obstacles, decide early on how much time beyond standard working hours you can commit.

Think beyond financial returns

In the nonprofit world, looking at Social Return on Investment (SROI) is a way nonprofits measure—and communicate—the financial value of their social and environmental impacts, enabling them build a business case for their work. For instance, using this method, organizations can make statements like: “For every $1 invested [in youth development], $45 are generated in economic and social value for youth, their families, and communities.”

There are several stages involved in SROI analyses: identifying stakeholders, mapping outcomes, assigning value to those outcomes, and adding up benefits.

Keep this framework in mind while conceptualizing a new program or service. It helps you think in concrete terms when forecasting impact and value-added, an attractive way to pitch an idea within your organization and to funders.

Have a sustainability plan.

Funders look for indicators that suggest your work can sustain core functions beyond initial funding. This requires an understanding of not only available financial resources, but also human capacity, technologies, and political support.

Why is sustainability important? After growing accustomed to a new service or resource, beneficiaries may experience a sense of disappointment—or even grow wary of future interventions—if the benefits are short-lived.

So, remember to think through what needs to be in place to ensure your idea is sustainable. Try following these steps: define what should be sustained, determine costs, and assess your operating environment.

Think outside the box when it comes to funding models.

Innovation can also mean applying funding models outside the more common suite of funding options, such as fees for service or foundation grants.

For example, Jane Chen, co-founder of Embrace Innovations, set up a for-profit arm of her nonprofit to manage the capital-intensive parts of their work. Other nonprofits, such as Worldreader, have borrowed lean experimentation from the business sector, which means they invest as few resources as possible in early solutions-testing.

If your idea involves capital costs your organization can’t afford up front, consider these types innovative business models to bring in the resources you need.

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by Jen Bogle