Around 95% of NFP organisations are actively pursuing innovation or improvement strategies, with the sector also leading the adoption of several cutting-edge technologies, Andrew Sadauskas reports.
Australia’s not-for-profit sector is taking a leading role when it comes to adopting innovation, with a Commonwealth Bank report showing 95% of organisations in the sector are implementing an innovation or improvement strategy.
According to the 2018 CommBank Not-for-Profit Insights Report, this rate is well above the national average, with 82% of organisations across all sectors actively implementing improvements.
The report examined numerous categories of innovation and improvement, including embracing new marketing techniques, policies to unlock the creative potential of staff, organisational willingness to adopt changes and the implementation of new technology.
Overall, around 40% of NFPs are implementing large-scale innovations that meet to the Oslo Manual guidelines, with a further 55% actively improving their organisations on a smaller scale.
The rates are even higher among charities, with 62% of organisations implementing changes that could be categorised as innovations and a further 36% making improvements.
Over the past year, the average NFP has invested $290,000 in innovation activities, although this figure is skewed by larger organisations, as 60% are investing less than $100,000 per year in innovation.
The changes are generating a clear return of investment, delivering an average of $379,000 in revenue growth or cost savings each year.
Beyond the financial benefits, major motivating factors cited by NFPs implementing innovation strategies include improved efficiency (64%), customer or community outcomes (64%) and workplace satisfaction (60%).
NFPs lead the way in brainstorming to generate new ideas (76% versus a national average of 62%), actively looking for creativity and innovation skills in the hiring process (64% versus 49%) and ensuring employees are not afraid to take risks and fail (72% versus 59%).
Organisations in the sector are far more likely than other organisations to invest in reducing their environmental impact (21% compared to the national average of 8%), staff training and expertise (41% versus 36%), as well as improving customer or donor experience (28% versus 16%).
However, there are some areas where charities and other nonprofits are lagging when compared to other businesses and organisations. This includes innovation around sales and marketing (31% to 36%), operational efficiencies (29% to 30%) and technology (25% to 36%).
Despite fewer NFPs investing in technology, organisations in the sector are at the cutting edge when it comes to the technologies they are embracing. Investment in chat apps (29%), video assistance (16%), augmented reality (11%), and the Internet of Things (11%) are all well above the national average.
The major factors holding up further innovation and change varied by sub-sector.
For social advocacy organisations there was a pronounced focus on budget restrictions (42%) and a lack of time (36%), while community services are hampered by organisational issues (37%). Charities must deal with issues of understaffing, with around one-third saying they lack the human resources necessary for innovation to occur (34%).
In the report, Commonwealth Bank head of schools and not-for-profit sector banking Julienne Price said NFPs are “responding positively to a demanding environment, re-engineering their processes, services and their cultures to better fulfill their missions”.
“As governments at all levels continue to look to NFPs to provide a wider range of services, they are also changing the nature of the funding landscape, particularly in areas such as disability, and implementing deregulated models that put more power in the hands of consumers,” Price said.
“The result is a need to do more with less, but also heightened competition among service providers, and NFPs are rising to this challenge and finding innovative ways to boost efficiency and productivity and improve community outcomes.
“In addition, while the research shows that just one in four NFPs are investing in technology, those that do are far more likely to invest in emerging technologies than the average Australian business.”
The full report can be downloaded here.