What Is the ‘Secret Sauce’ That Makes a Nonprofit Innovative? | Mercatus Policy Digest

Putting economic knowledge to use can make all the difference for those hoping to make a difference.


Nonprofits are solving some of the world’s most pressing problems and building civil society. Some punch far above their weight. What makes some nonprofits inspired, creative and innovative while others misfire? Is there a secret sauce?

My new book, “Innovation for Social Change: How Wildly Successful Nonprofits Inspire and Deliver Results,” explores stories of social entrepreneurs and nonprofit powerhouses like the Mayo Clinic, the American civil rights movement, Fred Rogers’ nonprofit production company, Rhinos Without Borders, and many others.

For example, facing crisis and likely extinction, the leadership team of St. Benedict’s Prep School, a 100-year-old private school in New Jersey, turned difficulties into opportunities, transforming its educational experience and outcomes by creating a student-run school. Through bold experiments, bottom-up empowerment, and radical listening to the needs of stakeholders, the school’s dedicated leadership created a novel approach to teaching at-risk young men which changed lives.

As we look under the hood of wildly successful nonprofits like these, we can identify six basic, mutually reinforcing principles to apply within our own nonprofit teams. These insights are applicable to nonprofit professionals, consultants, donors, charities, and the classroom:

  1. Like a detective, be a fearless and relentless problem solver. Identify hidden needs.
  2. Ideate. Start small but dream big. Whether designing small experiments or identifying partners and building ecosystems for social change, boldly think through where you want to go and how you might get there.
  3. Unlock potential. Create a collaborative workplace culture that leaves room for experiment and play, spontaneity, and discovery.
  4. Unlock even more potential. Empower bottom-up decision making, encourage savvy risk taking, and reward tough-minded trade-off thinking.
  5. Clarify what’s working and what’s not through continuous learning and stress testing to accelerate your impact. Build a commonsense evaluation approach that supports agility, experimentation, and team learning. Avoid measurement pitfalls that bog teams down.
  6. Persuade. You must be really good at this. Stand out from the crowd, secure resources, and win buy-in for your idea.
Innovation for Social Change

For each of the six principles, this book provides practical how-to steps accompanied with real-world stories that bring the lessons to life. And equally important, the book includes cautionary tales of nonprofit misfires.

As the senior director of strategy and innovation at the Mercatus Center at George Mason University, it is my privilege to work alongside heterodox thinkers and economists who work to discover the aspects of institutions and culture that help societies prosper. To them, economics is not just an abstraction, but a way of thinking and working. Concepts like incentives, trade-offs, unintended consequences, public goods, externalities, and opportunity costs can be translated for the workplace. These insights can create an engine of innovation and help us make better decisions. Economic thinking sparks innovative thinking.

But be prepared—these practices might require a change in thinking. In the words of astronaut Buzz Aldrin, you may have to “get out of your comfort zone and be willing to take some risks.”

Nonprofit innovation is central to making our world a better place. What kinds of human endeavors and social good will come about 50 years from now that we can’t even imagine now? My hope is that the case studies and practices in this book will inspire current and future social entrepreneurs and those with generous spirits to continue to dream big, ask the right questions, experiment, and innovate boldly.

Leah Kral is the senior director of strategy and innovation at the Mercatus Center at George Mason University and the author of “Innovation for Social Change: How Wildly Successful Nonprofits Inspire and Deliver Results.” She is a sought-after speaker at nonprofit industry events, writes frequently about her research, and offers tailored consulting to help nonprofits innovate and further social change. She is an active volunteer in her community.