Leading for tomorrow demands new ways of thinking

Posted on 12 Sep 2024

By Adele Stowe--Lindner

NFPs would be wise to consider innovative ways to diversify their income and the benefits of doing so, says Adele Stowe-Lindner, executive director, Institute of Community Directors Australia.

We hear a lot about the importance of innovation. But when a large proportion of a not-for-profit’s budget comes from risk-averse grantmakers, or when the speed with which income needs to be expended makes existence feel hand-to-mouth, the quest to innovate can feel intimidating, unrealistic and irrelevant.

Grants are almost always bequeathed for a certain ring-fenced purpose and almost never labelled “take a managed risk with this funding”.

However, with the cost-of-living crisis on everyone’s lips, and brand loyalty to NFPs looking shakier as workplace activism becomes more common, it would be wise for NFPs to consider how to diversify their income and the benefits of doing so.

A key benefit, of course, is that less reliance on grants – which inevitably suck up time on reporting and paperwork and require you to compromise to fulfil the funder’s vision – means more time on fulfilling your own vision and mission.

"Leading community organisations for tomorrow involves considering how your multitude of stakeholders will want to engage with you in the future and how best to adapt to that."

In the commercial world, “innovating” can require a three-month customer experience project plan, which means you outlay significant investment to design a perfect product before launching it. In contrast, an NFP that is accustomed to working on a shoestring budget can turn around a fantastic new – and, yes, innovative – program fast by keeping some cost-saving and risk-management measures in mind:

Adele Stowe-Lindner, executive director, Institute of Community Directors Australia.

Always start conversations with the problem you are trying to solve, not the solution you wish to build. This will encourage creativity, not quash it.

From the outset, ask your customers about the problem you have identified, and use what they tell you in designing your solution.

Think about the prolific talents you have in-house to make a prototype or pilot version. Ask staff about the skills they have outside their usual job. If in-house staff lack the expertise required for a particular innovation to proceed, seek volunteers who are willing to donate their skills.

Aim for 80% quality and completion, not 100%, as a prerequisite to launch. This helps to prevent “investment bias”, whereby you put so much money and time into a product or program that you keep it going even if you can see it isn’t working.

Test the impact. If your program or product isn’t working as it should, kill it.

Communicate openly with the board about the need to innovate to keep them on side, and to ensure that the managed risks match the board’s risk appetite and governance obligations.

The funding, staffing, culture and branding of NFPs have changed enormously in the past decade.

Leading community organisations for tomorrow involves considering how your multitude of stakeholders will want to engage with you in the future and how best to adapt to that.

At the same time, you must maintain your commitment to your own mission and vision and encourage them to engage with you on your terms.