Foundations and innovation in the nonprofit sector

Using a sample of 17 foundations that are at the forefront of encouraging innovation this study explored foundations' motivations behind funding innovation, their perceived ability to impact the levels of innovation in nonprofit organizations, and strategies that foundations are using or can use to encourage innovation in nonprofit organizations. The results showed that among the major motives behind funding innovation were leveraging the capital, honoring the foundations' core identity (mission and values), and desiring to encourage innovation in nonprofit organizations. Five strategies/mechanisms that foundations are using/can use to encourage innovation in nonprofit organizations were identified: (a) offering innovation awards/grants as catalysts for innovation, (b) providing risk capital and supporting early stage idea development, (c) educating other foundations on the value of innovation and serving in a convener role, (d) serving as thought leaders, and (e) increasing nonprofit organizations' capacity for innovation. Implications for practice are discussed along with recommendations for future research.