THE BLOG
02/20/2013 01:17 pm ET Updated Apr 22, 2013

Are You Ready to Fund a Failure?

A week doesn't go by when there isn't an article in the Chronicle of Philanthropy or Non Profit Quarterly about an amazing organization that has received funding from a major philanthropic foundation or philanthropist. The story is usually the same, non profit X has demonstrated incredible success and is being rewarded by foundation Y with a big cheque of support.

There is nothing wrong with such support or announcements, but have you ever wondered where is the article of foundation X or philanthropist Y funding a failure? Even better, when you are thinking about making a charitable donation or investing in a social enterprise have you ever asked yourself whether you are prepared to fund a failure?

Now before you dismiss this question as silly or worse, nonsensical, holding fast to the classical definition of failure as a "lack of success" and "an unsuccessful person, enterprise or thing", think about failure in a different light, namely, a person or organization that is willing to develop and implement a new solution or idea that hasn't been tested before. Failure from this perspective is about taking risks and innovating knowing that despite your best instincts and experience it could fail.

Failure in the for-profit world is a fact of life. Billions of dollars are spent on innovations, some that succeed and many that fail. But it doesn't dissuade companies, VC and individuals from investing over and over again.

The same cannot be said in the cause sector. Failure is a bad word, and by association, so is risk taking.

Taking risks is often perceived inside organizations as equaling wasted donor dollars, poor operating to program ratios (a problem I outlined in Charity Ratings Kill Innovation) and fear of negative public perception. The problem is exacerbated on the outside by watchdog groups and consumers, who put a premium on maximizing the charitable donation to direct programming rather than focusing on impact and effectiveness.

The desire to "not fail" leads charities to what I like to call the "race to be third" - i.e. let someone else prove the model works (walks, lotteries, gift catalogues, direct mail) and then replicate it when you can answer your board member who asks "has this been done before and was it successful?" The end result is that charities rarely innovate because they're too afraid to fail.

One organization not afraid to fail is Canada's Engineers Without Borders, in fact, they're taking pride in their missteps and making them public at admittingfailure.com.

So what if we embraced failure like Engineers Without Borders? What if the social sector made failure the hero, highlighting its strength as a key contributor to innovation and learning?

Imagine if failure was embraced and organizations could openly speak about the attempts at new programs and campaigns that didn't work. Even better, imagine if donors, funders and supporters rewarded the failure with more money to try again. We might find that such a culture shift (from only reporting success to including failure) generates more money, more volunteers, engages new audiences and ultimately, creates far more social impact.

So the next time you are ready to support a cause why not ask the organization how well do you fail? Because as Woody Allen once said, "If you're not failing every now and again, it's a sign you're not doing anything innovative."

Subscribe to Must Reads.
The internet's best stories, and interviews with their authors.