The executive directors of children’s museums are some of the most creative people on the planet.
Introducing kids to learning, play, and problem-solving is their life’s work. Yet as I found out when I recently gave a talk to a group of museum leaders, these proven innovators face limits in their ability to experiment, to test fascinating concepts that could substantially improve their organizations’ enterprises or the nonprofit world at large.
For most of them, two things stand in the way of carrying out good ideas: They lack the money to carry out ambitious changes—what the Nonprofit Finance Fund calls change capital–and they are surrounded by boards, donors, and others who fear failure.
Change capital is to the nonprofit world what venture capital is to the for-profit world. It is money that can be used for excellent growth opportunities and to incubate innovation. It is different from “walking around” money or the money used to pay bills and support programs. When providing change capital to a nonprofit, an investor expects a healthy return of monetary, intellectual, or social value. But this type of financing can be hard to come by, because it requires investors to accept the fact that they could lose money. The fear of failure is a natural impediment to bold, unconventional thinking.
In an essay for public radio, Jon Carroll, a San Francisco Chronicle columnist, said, “I believe in the power of failure. ,,, Failure is how we learn.” He went on to say that success is merely “proving that you can do something that you already know you can do.”
Mr. Carroll’s observations are easily applied to the world of nonprofit finance, where nonprofits are often rewarded for their ability to effectively produce more of the same even if there are potentially better opportunities on the horizon.
Tim Harford, author of Adapt: Why Success Always Starts With Failure, says “the whole process of learning from failure means discarding stuff that’s not working” instead of throwing more money and energy into it.
The for-profit world is full of fabulous failures, businesses and products that struck out a few times before hitting on the right formula or model.
Henry Ford failed with two auto businesses before he created the Ford Motor Company, which was immediately profitable. Ford revolutionized manufacturing through a process of trial and error. Nonprofits can revolutionize the causes they serve with capital that allows them to grow, change, and adapt.