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The Honolulu Advertiser
Posted on: Friday, June 5, 2009

Innovation can help nonprofits prosper


By Kelvin Taketa

Every time you hear about our economic recession, you inevitably hear about when or how the economic recovery will occur. Recession and recovery: the yin and yang of global economics in 2009.

The problem with recovery is that it implies a return to a state of affairs, conditions or, to the hope of many, the economic prosperity we enjoyed just a few short years ago. Yet there are two fundamental flaws with this belief.

We are quickly moving away from where we were. Advances in technology, global competition, shifting demographics around race and age, and growing concerns around issues such as global conflicts and climate change all contribute to a dynamic, fast-changing picture. In addition, where we were ain't so hot. To paraphrase the song, Summertime, the living ain't easy, there's not a lot of fish jumping and the wages ain't high. Too many people have been left behind in the 21st century Hawai'i.

Rather than recovery, the more compelling challenge right now is reinvention.

In the nonprofit sector where the Hawai'i Community Foundation works, all of us need to recognize that the conditions and assumptions we work with are changing and demand a different way of thinking about our services and opportunities. And we must do this in the midst of crisis, like re-engineering a car while driving at 70 mph.

Our signature grantmaking program for the past 10 years has focused on building the leadership and organizational capacity of the sector (to learn more, go to www.hawaiicom munityfoundation.org). Rather than funding projects or ongoing programs, we chose to support efforts to build good governance, planning, systems and management practices. For instance, we funded the marketing plans or the ticketing system of a theater group, instead of the production of a play, with the hopes that more public awareness would translate into new audiences or a more efficient ticketing process that would outlive any single production while strengthening the resiliency of the organization.

It is that resiliency that is being tapped right now as groups must find ways to reach beyond survival to reset. Waiting it out is not an option. Our belief is that well-run organizations with good leadership and internal systems have the capacity, specifically the time and energy, to evaluate the external forces that affect them and determine the best strategies to adapt and capture existing opportunities.

As difficult as it may seem for those in the nonprofit sector at this time, they should take solace in the interesting lessons to be learned from many non-profit groups as we shift into a new economy. First, mission matters. Consumers are increasingly confronted with choices where the value proposition extends beyond pricing to the authentic societal benefit of a product or service. And as part of the national "back to basics" mood, workers are considering retooling or looking for work that has intrinsic meaning in their lives making mission a compelling edge for talent.

Second, nonprofits live in a world where cash is king. Contrary to the beliefs of some, nonprofit organizations are generally well managed from a financial perspective. They don't have extensive borrowings or credit and keep a keen eye on the cash in hand to cover expenses. They are conservative fiscal managers.

Finally, the nonprofit sector as a whole may be poised for significant growth, even as specific groups may decline. As our manufacturing base shrinks, service industries such as health care and education that have a major nonprofit component will grow, along with a continuing transition of prior government services to nonprofit service providers. In addition, a number of social enterprises have emerged around areas such as technology and energy that are non-profits in spirit, if not name.

As we think about needed changes in our organizations, businesses and government in Hawai'i, nonprofit organizations deserve our support as essential contributors to the fabric of our lives and as sources of significant social innovation in our country. What we must seek in return from these organizations is the commitment to reset their mission and work and to provide the necessary leadership for decades to come.