Non-Profit Innovation Charter - Response to Seth Godin

Innovation - Finance FoxThis morning Seth Godin wrote about the charter that non-profits have to be innovators.  It is timely that this post came out; just yesterday I was chatting with a couple community investment professionals (one energy company and one media company) about their role as funders in the social innovation space and what failure looks like to them when charities cannot or are unable to deliver on what they received funding for.

Our charitable sector is not set up to fail.  But in order to innovate, you have to fail.  Innovation is a direct result of learning from mistakes and finding a solution that disrupts the status quo.

In fact, as a board that represents the interests of society, we have created a fiduciary responsibility to not let charities fail.  Then on top of that, we tell them how much we are going to give them to solve the problem that they have been mandated to solve, instead of asking the charities what is the actual cost of the problem.  Like, "What does it cost to solve poverty?" or "How much are we, as a community, paying in services for every homeless person living on the streets?"  The questions usually are, "What does this program cost?" or "Who else is funding this?" or "What is your timeline for deliverables [read - does this fit my funding/disbursement schedule]?"

So while what Seth says is something that is needed, we need to empower charities to take those risks.  We need to fund the opportunity for risks.  We need to ask different questions and set different expectations of our charities.  We need to let charities fail, help them document what they learned from those failures and then encourage them to share their failures without fear of recrimination. We need to provide security for boards of directors to take risks and encourage their leadership to explore the bleeding edge of some of these social issues.  Finally, we need communicate with government, on behalf of the charities that we support, what is happening on the ground so that organizations are not forced to play the along the sharp edge of the sword between educating government officials and lobbying for social change.

There are some funders out there that want this and are working with charities to get them to the point of feeling comfortable, or at least embracing, the failure space so that innovation can occur.  Please, share your stories.  It is from your experience that other funders can learn and explore with their donees what funding innovation could look and feel like.