In both the For-Profit and Not-for-Profit sectors, impact is sustained by innovation (as well as focus, commitment, teamwork and hard work).

Since innovation takes persistence, imagination & experimentation, there needs to be a certain tolerance to failure (trial and error) on the part of funders.

For-Profits and Not-for-Profits basically have opposite time and money challenges. To elaborate, For-Profits can access funding relatively easily. However, funders typically want a fast return on their investment and an acceptable risk-return ratio. The kind of business flexibility that For-Profits need relates to buying time or playing for time. 

Meanwhile, for Not-for-Profits, funding is hard won and scarce. A charity can control charitable programme timing, so time is less critical. That said, charities know that in order to get repeat donor funding, they’ll have to show proof of impact. 

The kind of business flexibility that Not-for-Profits need is threefold. (1) Flexibility in approaching first time versus repeat donors. (2) Diversity of income sources (donor funding is uncertain compared to say commercial trading, investment income and office tenant rents) and (3) Internal tolerance (lack of a blame culture) towards innovation trial and error.

Simon Leicester

SME Consultant