Innovation has been a key driver of business for many years. Leaders at the most profitable companies are always looking for ways to reinvent themselves. Look at Apple, Samsung, and Amazon. Need more proof of the power of innovation? Try Airbnb, Uber, and Snapchat. They are transforming the way we do business.

Nonprofits are tackling the most pervasive problems we face in modern society like hunger, homelessness, and research to eliminate life-threatening illnesses. Each organization approaches these problems based on the people it serves and its available resources.

There has never been a more exciting or scary time to make a positive difference in the lives of others. In last year’s annual Employment Practices Survey, Nonprofit HR, the nation’s only full-service consulting firm dedicated to meeting HR needs for the sector, sampled 362 entities, including BoardSource, The Clinton Foundation, and Wellspring Family Services. Fifty percent plan on creating new positions, while 74% are not reducing staff size in the near or long term. Good news to be sure, but leaders in the nonprofit sector face challenges.

Recruiting and retention continue to be issues for nonprofit leaders with limited resources. Their profit-making counterparts attract the best talent with higher pay and more opportunities for growth. Nonprofits also face a potential leadership drain with pending retirements of Baby Boomers who are leading the organizations.

Another challenge is the number of new charitable organizations. According to the IRS 2014 Data Book, there are just over 1.4 million 501(c)(3) charities. With more funds, time, and other resources being requested from the public every year, it is not surprising that fundraising and attracting people to their causes are the biggest challenges nonprofits face.

Nonprofits operate in an environment that requires quantitative and qualitative proof that they create value or impact. There are two definitions of the word impact that I like. The first comes from author Wendy Lipton-Dibner’s Focus on Impact:

Impact is the measurable difference you create in people’s lives as the direct result of contact with you, your team, and your company’s message, marketing, products and services.

Tom Ralser, author of Asking Rights: Why Some Nonprofits Get Funded (And Some Don’t), equates impact to effectiveness. Nonprofits must be effective in every facet of operation. This does not mean that the organization must be perfect (and none probably are). It does require full understanding of where the organization stands and the changes needed to increase its credibility.

Leaders in the nonprofit sector can benefit from a more expansive view of the work they do. They are not just fighting hunger, poverty, or homelessness. They are in the transformation business. Incremental solutions must give way to larger more collaborative and innovative approaches. How can you tell if a nonprofit, or any organization, has a High Innovation Quotient or HinQ? They have:

  1. Clear Value, Vision, and Purpose Statements understood and modeled at every level.
  2. Transformational leaders at all levels of the organization.
  3. A success framework that defines every facet of who they are, who they serve, and how they do it.
  4. A culture that supports fundraising as an organization-wide responsibility.
  5. A culture that embraces learning and investment in development of all its team members.
  6. Fully inclusive planning processes for all stakeholders.
  7. Systems for effective communications and management of all resources.
  8. Evaluation and benchmarking frameworks that measure impact as defined by their stakeholders.
  9. Collaboration processes that allow everyone to stick to their strengths.
  10. Continuous improvement processes in place.

Impact is in the eye of the beholder. Transformational leaders engage the most talented people they can find, set the parameters for success, give their teams the tools they need, and then get out of the way. They provide the big picture focus needed for innovation.


Russell Dennis is CEO of RD Dennis Enterprises, LLC, in Aurora, Colorado. He has 12 years of community economic development experience, is an award-winning small business advocate, and spent five years as an auditor in the Small Business Self-Employed Division of the Internal Revenue Service. He created the 90 Days to Fundraising Effectiveness Program, and is a member of the facilitation team of the SynerVision Leadership Foundation.

This article is reprinted from Vol. 3, No. 2, of Nonprofit Performance Magazine. Subscribe today!
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