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Non-profit organizations are often on the front lines combatting the biggest challenges facing our world today. Searching for survivors after natural disasters. Ensuring access to food and medicine for those in need. Shepherding displaced people to safety in conflict zones.

Despite the high stakes, there remains tremendous pressure on these organizations to show accountability. Donors want to know that every penny counts toward service delivery.

As a result, Canada’s non-profits are constantly pushing themselves to drive down overhead costs (which are largely arbitrary), leaving less room for investing in things such as technology that could actually make organizations more effective and efficient. In fact, Canada’s non-profit sector is woefully underutilizing tech across many critical business functions. This leaves even less room for innovation, especially if that innovation involves new uses of technology. Stretched budgets and teams, along with a lack of comfort in using technology, leads to an institutional aversion to risk. And without the capacity to take on risk, non-profits will fail to innovate, and their potential to make a positive impact on our world will be diminished.

So how do we incentivize risk-taking in the non-profit sector? Maybe it’s time to take a page out of the venture capital playbook and to look more seriously at directly funding non-profit innovation.

While venture funding always takes on some risks, there are ways to ensure they’re calculated risks. Aside from providing capital, any investment in non-profit innovation should include technical and capacity-building support, education and mentorship, which would give projects the best possible chance of success.

In 2013, the Impact Challenge was created to provide risk capital and mentorship that would catalyze non-profit innovation. Last year, it held the first challenge in Canada. Ten projects that had risks – but potentially big returns if they succeeded – were chosen. provided $5-million in grant funding, and in partnership with the Leap-Pecaut Centre for Social Impact, provided a blend of support that included mentorship, education and access to tech and business expertise.

Over the past 12 months, we’ve seen up close that Canadian non-profits can do tremendous things when they are given not only the tools, but also the room to fail and the freedom to spend capital where they most need it in order to meet their bigger goals.

The lessons we have learned together over the past year are applicable far and wide:

- Invest in great ideas and visionary leaders: There are lots of good ones, but be selective and only choose to invest in the best. Similarly, look for the leaders with ambition who want to drive forward a project. We look for leaders who want to open source their technology, who build models with the potential to scale, and who will speak publicly about their successes and failures so that others can learn and benefit.

- The right toolkit includes much more than money: We don’t want to fund projects that dry up as soon as our grant is spent. We help our partners scope their projects to make sure that they can sustain the work after our investment is complete.

- Learn from each other: All of the non-profits participating in the Impact Challenge have regular opportunities to connect and learn from each other. They share what’s working, what failed and how they have overcome challenges. They have built a community to continually turn to.

The money we invested in non-profit innovation in Canada is already paying dividends. Our funding recipients have done everything from deploy drones to find safe routes through disaster zones to build a digital map of climate change’s impact on sea-ice ecosystems in Hudson Bay. Together, we are ready to place calculated bets in the belief that technology and innovation truly can make the world a better place.

Hector Mujica is the regional manager, Americas (non-U.S.) for; Narinder Dhami is the managing director of LEAP | Pecaut Centre for Social Impact. Together, they manage the Impact Challenge program in Canada.

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