When I was young, I wanted to follow in my father’s footsteps and make a difference. My father, an architect, was very involved in social causes as a founding member of the Committee of 1,000, which worked to help children orphaned during the war in Vietnam.

But, unlike my father, I wanted social good to be my vocation, not my avocation.

Armed with a couple of degrees—and corresponding student debt—I wanted to offer my passion, my purpose, and my endless supply of ideas and energy to a nonprofit. But the low pay—and the fact that many groups had organizational structures that thwarted innovation—forced me to give up my dream of a nonprofit career. I instead explored working in the for-profit world.

The world has changed significantly since my early-career decision. But most nonprofits still offer below-market salaries and remain maddeningly inhospitable to innovation.

If nonprofit organizations want to attract the best and brightest, and really solve social problems, they need to do more on both fronts.  

Living Wages

While salaries for CEO’s of major nonprofits can be sizable, salaries for most nonprofit employees are modest compared with those that for-profit companies offer. This is especially the case for the best-educated employees who graduate from the top schools. Using 2007 data, the Bureau of Labor statistics found that managers in the private sector earned 22 percent more than their nonprofit counterparts.

Nonprofit organizations need to find ways to close the compensation gap to tap into the passion and purpose of potential employees. One option is to borrow from academe, government, and private think tanks by creating sponsored fellowships and tie those fellowships to innovation.

Charities could raise money to fund an individual or group of individuals to brainstorm new approaches to addressing the organization’s cause. Give the fellows the resources and access to all the information they need to think and act creatively, dissect the problem, and develop a new set of solutions. 

The Innovation Void

Most nonprofit organizations have not institutionally embraced innovation; they lack a dedicated group whose sole focus is to brainstorm and develop creative new solutions or breakthrough approaches.

Instead, nonprofit organizations are structured and managed to optimize costs, minimize overhead, and attract new donors.

In the business world, leading companies like Apple, Google, GE, and IBM have made innovation a core pillar of corporate growth strategies.

In the case of Apple, CEO Steve Jobs helped return the company return to its culture of innovation by investing in new ideas —whether they be products or business models.  Those innovations helped propel Apple from a computer company to a company that sells a huge digital entertainment library of music, books and video and a family of devices (iPods, iPhones and iPads) that can access that library.

Like Steve Jobs, IBM CEO Samuel J. Palmisano believes growth is intrinsically tied to innovation:

“The way you will thrive in this environment is by innovating—innovating in technologies, innovating in strategies, innovating in business models,” Mr. Palmisano told business leaders this year.

Investing in Innovation: Patience Required

Innovation doesn’t always pay off immediately. In fact, many times, it requires patience and capital to generate ideas that over time may turn out to be breakthroughs. Other times, it can spawn ideas that are just dead wrong but provide learning all the same. The marketplace, after all, is full of failed innovations.  

But it is also full of successes. For example, The New York Times reported last month about a 10-year data-sharing collaboration among scientists, drug companies, and Alzheimer’s activists to uncover new information about the disease and its progression. That collaboration is now paying off with a new understanding of the disease and some promising drug trials that could help treat it.

Fostering innovation doesn’t have to require huge investments. In fact, the private sector has used the Internet and its customers to create innovative solutions for their companies.

Companies like Starbucks and Dell are using the wisdom of their customers to brainstorm ideas for solving social problems.

The private sector has also entered the social-good space with contests that provide money to organizations that are working to address problems. The best of these contests—like the American Express inaugural Members Project in 2007 and Pepsi’s Refresh Project—look for innovative ideas to fund and rely on the public to help them identify those ideas.  

Taking the Lead

While the private sector has been the early mover, nonprofit groups are infinitely better qualified to frame these innovation challenges. They understand social problems. They know which strategies work—and which ones don’t. They can bring together supporters, staff members, volunteers, and donors.

All of these constituencies have a vested interest in creating and nurturing innovative solutions to complex problems.

The federal government is using similar groups to uncover new ways to share data, enhance public access to government information, and reduce fraud and waste. It’s an approach that foundations like the XPrize Foundation and the Knight Foundation’s News Challenge have used to focus attention on underserved areas.

Finally, investing in innovation has the added benefit of positioning an organization as an exciting place to work.

This is particularly important for tapping into the passions of the millennial generation. Like their baby-boomer parents, they are interested in pursuing meaningful careers that offer intellectual challenge and the opportunity to generate new ideas, according to a recent study.

As nonprofit groups look to the future, finding ways to offer more competitive salaries and opportunities to be innovative will help attract a new wave of people with passion, purpose, and ideas to lead the change the world needs.