Historically, NFPs have been reluctant to take risks; they don’t like to take risks with how their money is spent either from fear of negative backlash from funders and the general public or the fear of wasting money and not achieving the desired impact. The reputation of an organisation can quickly be tarnished with one or more poor decisions. So people play safe. But does this approach lead to the best outcomes for people who need the services of NFP organisations?
Challenging traditional operating practices and program offerings can take a big leap of faith from management and take much convincing of the board - but don’t be put off by these challenges. The 2016 Innovation Index Report shows that it’s actually the more innovative NFPs that attract more funding and that it’s the innovation that attracts more funding, not the other way around. Innovation means taking risks and taking risks means stepping outside what you already know and daring to try something new.
But how do you even begin to approach risk taking? Here are a few pointers to help:
1. Go for a portfolio approach
Start with some small projects that are high risk, high impact, but don’t let these form the largest part of your operations or services. Start small, test often and fail fast - learn what works and why and keep iterating until you find the right fit.
2. Leverage where you can
Look at what others are doing, talk to those around you who have tried and failed and learned. Consider what has been done overseas that might be relevant to you. Why did things work and why didn’t they? Good Foundations worked with Good360 Australia recently who modelled their business on what was happening in the US and built really strong relationships with the US team. Since 2014, the Australian team has distributed $2 million in critical goods to serve people in need, working to close the gap between corporate excess and people who need goods most.
Consider collaborating with other organisations; this will allow you to share resources, experiences and potentially some of the risk. Don’t be afraid to ask for help or approach carefully selected funders who share your innovative values - you are unlikely to lose anything from simply reaching out and asking.
3. Get the right people on board
Literally and figuratively - you want to be sure you have people on your board who support you when times are tough, and also have the right skills and experience that you can utilise. Having a team around you, potentially including volunteers, who are ready and able to help and offer expertise is invaluable. The most successful organisations have a diverse range of people - different skills, views on life, ages, genders, backgrounds and experiences, which will help you to see ideas from differing points of view and help you to take the most informed risk.
4. Learn from mistakes
Many funders (the more sophisticated ones) will want to hear what didn’t go well and what you learnt from your experiences. Being transparent about your failures builds trust and shows them that you’re honest and can learn from your mistakes - no organisation has ‘feel good’ stories 100% of the time!
Be sure to have a plan for your risk taking activities and communicate it with everyone involved. What’s your contingency if it all fails? What’s your worst case scenario and are the consequences manageable? It will help convince the sceptics around you if you can show that the risk you want to take is considered and well thought out. Make it easy for the sceptics to say yes to your new and innovative ideas.
Good Foundations believes that the NFP sector should embrace innovation and that funders should reward the brave and bold ideas, even if some fail (‘failing’ is just a learning experience to get it right next time as they say…). The sector needs to stay relevant and more impactful in an ever-changing environment. Most importantly, it’s the beneficiaries of the communities we serve who are the reason we should be consistently seeking new ways to improve - they are the ones who will ultimately benefit most. Innovation and risk taking go hand in hand – more risky than taking a risk is taking no risk at all.