NFP Innovation on a shoe string
The not-for-profit (NFP) sector exists to tackle humanity’s biggest challenges – poverty, homelessness, climate change, inequality. These are problems that are unlikely to be solved with business-as-usual approaches. They demand fresh ideas, bold thinking, and new ways of working.
Yet innovation in NFPs is often seen as a luxury, something reserved for tech start-ups or well-funded corporations. Many NFPs operate under tight financial constraints, relying on grants from risk-averse funders who prioritise accountability over experimentation.
The sector’s funding model is built on predictability, not risk-taking. But this safety comes at a cost – without the ability to innovate, NFPs risk stagnation, inefficiency, and ultimately, reduced impact.
Innovation is not about chasing the latest trend or adopting flashy new technology. It’s about finding smarter, more effective ways to achieve your mission. It’s about creating practical solutions that stretch limited resources further, improve service delivery, and respond to the evolving needs of the communities you serve. It’s about ensuring that your organisation does not just survive but thrives in a rapidly changing world.
This guide explores how NFPs can embed innovation into their DNA – without needing deep pockets or unlimited capacity. From using existing resources differently to embracing strategic risk-taking, it offers practical insights to help NFPs think differently, experiment wisely, and drive lasting change. Because in a sector dedicated to solving society’s toughest problems, standing still is not an option.
What is innovation?
Dictionary definitions refer to innovations as new ideas or methods. In the context of NFPs, innovation often refers to the introduction of new ideas, methods or approaches that improve our ability to achieve our goals. This could involve creating something entirely new, adapting existing practices in a novel way, or redefining objectives to better meet the needs of the communities we serve.
However, innovation is not an end in itself. To be meaningful, it must be purposeful and relevant, directly contributing to our mission and making a tangible difference.
In short, innovation is about fresh, practical solutions to pressing challenges. This does not discount what we are already doing or what we have already tried, but it is a commitment to a continuous improvement journey, knowing there are always more problems we can attend to, and more effective and efficient ways to solve them.
The problem: it starts with funding
Many NFPs exist in a landscape shaped by philanthropic grants. They are subject to the way grantmakers allocate grants and the way grantmakers measure success. The risk-averse culture of many grantmakers, who operate in terms of responsible spending and successful outputs rather than in terms of impact, lessons and experimentation, means that having spare cash to use to give untried things a go is a pipe dream for many NFPs.
What’s more, when we work in areas that involve vulnerable people, such as child welfare, gendered violence, human trafficking, aged care or disability care, or in areas that involve existential threats, such as climate change, disaster relief, endangered species or environmental protection, our appetite for experimentation is often low precisely because the stakes are so high: we desperately want to be able to have a positive impact. If we know something works, we are likely to keep doing it, even if there is a possibility that if we tried something new it would have an even greater impact.
Lastly, staff, board members and volunteers at NFPs often prioritise their beneficiaries over their own professional development. Without suitable training, the idea of innovating can feel overwhelming. Where would we start?
The solution: it starts with mindset
Innovation for NFPs does not require large budgets or the latest technology. Most of all, it requires a shift in mindset. Beyond that, it’s handy to have a few free tools. The key to innovation on a shoestring is making the most of existing resources, embracing adaptive thinking, and creating a culture where experimentation is valued, whether or not this is demonstrated in the external funding environment. You never know: new ideas and pilots may lead to new and more sustainable ways to fund your organisation!
NFPs can start by rethinking how they use what they already have. This means identifying untapped skills within teams, leveraging partnerships, and making small, incremental changes that build towards bigger shifts. Innovation does not have to be high-risk. Testing ideas through pilots, gathering feedback, and refining solutions allows organisations to adapt without jeopardising their mission or their current program of activities.
Boards and leadership teams play a crucial role in enabling innovation. They must create space for new ideas by facilitating a culture where failure is seen as a learning opportunity, not a setback. Funders and stakeholders, too, need to be engaged in conversations about the value of experimentation and the importance of measuring impact, not just outputs.
This guide offers practical strategies for embedding innovation into daily operations – whether it’s improving internal processes, rethinking service delivery, or finding new ways to measure success. By taking a structured approach to innovation, NFPs can increase their impact, build long-term sustainability, and remain responsive to the evolving needs of the communities they serve.
Download the full guide below
This help-sheet is the introduction of a full 32 page advice guide on NFP innovation on a shoestring. Download the full document below and share with your colleagues and community sector peers.