Late last year, Pierre and Pam Omidyar announced a six-year commitment of $50 million to the Hawai’i Community Foundation to fuel their philanthropic investments in Hawaii. As part of this commitment, the Omidyars asked the Foundation to consider how best to spur innovation in the nonprofit sector.

To some, it may seem an odd time to think about innovation. After all, the nonprofit sector is under stress as never before. The economic recession has resulted in decreasing revenue from virtually every source (government, foundations, corporations and individuals) and increasing demand for nearly every field (health, human services, arts and culture, education, environment, etc.). For many organizations, it is difficult to focus energy on creative long-term approaches while struggling to stay afloat today. But there is a case to be made that the time to innovate is now.

As we move past the first decade of the 21st century, there are large, external forces that are challenging the way nonprofit organizations work. The marketplace for talent is changing and competition for talent increasing, requiring new human capital strategies for staff and volunteers. Technological advances, especially social media/Web 2.0, are recasting how organizations and their customers or clients communicate, organize, engage, learn and deliver or receive serv-ices and galvanize action. Further, technology is providing faster, cheaper ways to gather and use data to demonstrate the efficacy of programs. Networks are altering the way the world works, shifting from organization-centric models with centralized structure, closely held knowledge and a focus on organizational longevity to network-centric models that value decentralization and fluidity, openness and a rapid pace of connectivity and mobility.

At the same time, nonprofits are challenged to do more with less. And for nearly all organizations, the complexity of their work and mission has increased dramatically. Nearly all of us in the sector would say we have done the best we can in light of the circumstances, but few can claim to have truly moved the needle. Albert Einstein defined insanity as "doing the same thing over and over again and expecting different results." It is time for change.

The time is ripe for innovation and widespread adoption of successful innovations. Yet, innovation in Hawaii is constrained for several reasons. As said earlier, it is hard for organizations to carve out the energy for innovation in the midst of tough times. Organizations in Hawaii tend to be insular due to geographic isolation from each other as well as from national and global entities. Hawaii’s nonprofit sector is small and fragmented, with about 6,000 registered nonprofits, of which approximately 20 percent have annual revenues greater than $25,000. Few organizations feel they have the safe environment to take a chance as opposed to sticking with proven programs and strategies even if they are achieving only modest results.

On Nov. 1 the Hawai’i Community Foundation will launch a three-year, $3 million effort to address these challenges (www.islandinnovation.org). Most funding in the nonprofit sector, especially government dollars, supports programs and models that have proved to get established results, no matter how modest. As a result, risk capital for innovation has been largely nonexistent. This initiative will support the implementation of innovations that have the potential to generate significant impact on a given field or the entire sector by transforming how organizations work or deliver services.

Besides risk capital, it is equally important to create an "innovation culture" within the nonprofit sector and promote corresponding behavior changes that are needed. Currently, there are few incentives for organizations to share successful innovations or for sister organizations to actively learn from each other. The initiative will create a transparent marketplace for innovation by requiring that all proposed innovations be nonproprietary, are shared publicly and encourage collaboration across fields. Finally, the initiative will continually spotlight the need for innovation, and help nonprofit board members and staff consider how to encourage innovative ideas in the midst of an environment largely focused on containing risk.

We hope that new investments, coupled with a transparency around innovations, and a "safe harbor" for organizations to take chances, will spawn new ideas, encourage open discussion and sharing among organizations and spur the sector to create new solutions to some of our most vexing challenges. Our community needs no less.