In long run innovations will lead to NPO's sustainability and performance. Superior values that are created through various innovative initiatives in the primary and support processes in NPOs will lead to higher efficiency, effectiveness, quality, productivity, saving cost, quick response to society's demand etc. Eventually the society's wellbeing and degree of happiness, general and common interests and security and quality of life will be increased and protected. 

Best, sazali

The importance of innovation among NPO's are seem very meaningful now a days. If we look into recent literature, one school of thought says that innovation has significance role among NPO's at start up phase, because  of awareness and social values increment. However, in maturity phase of NPO's the innovation is not so importance like profit based organization which persistently engaged in new product development and opportunity seeking. On the other side NPO's now a days are shifting their activities like Profit base organizations, thus is argument somewhat disagree the first one. Despite, innovation seems to have significance in today dynamic market either NPO's or PBO's. 

The social and environmental problems that we face are complex. Governments lack the political will and resources to address them and businesses will only act if they see a market opportunity. As a result, NPOs must play a larger role in addressing these problems. This includes the creativity to invent new solutions and the entrepreneurial skill to bring these solutions to the markets that need them (innovation). This will require that NPOs think and act more like entrepreneurs, which highlights the importance of social entrepreneurship and the need to be able to assess and develop entrepreneurship skills within NPOs.

This is not a simple question to answer.  There are three main types of innovation, product, process and system.  All three will have implications for NPOs.  The problem is that NPOs are many and varied.  Advances in technology will lead to process innovation. As processes change so systems transform.  We only need to engage in some limited speculation in respect of driverless cars, robots, algorithms and artificial intelligence to realise that advances in these domains will transform operating environments for different types of NPO in various ways.  NPOs often have both stakeholders and clients. To ensure future flows of funding stakeholders must be kept informed and happy.  Product and service provision will also demand new approaches.  Innovation is generally regarded as a good thing, however there is always an upside for some and a downside for others.  New jobs and roles are created whilst others are lost.  New service possibilities emerge that deliver significant benefits for one group whilst transformng roles and responsibilities for others in negative ways.  

Never forget that the 2008 finanical crises was triggered in part by innovations in financial services that we have come to know as credit default swaps.  As other respondents have suggested, innovation will impact the NPO sector in the same way as it will result in transformative change in industry, commerce and wider society. 

I have attached a PP presentation about the Challenges of the Not-for-Profit Organizations using the Delta Model, the most advanced business strategy in the world that I teach around the world as my answer to your question.

Of course, I am watching valuable comments. There is no doubt that innovation has several types and all the types have importance on specific time and in specific organization. For example, there will be some innovative process which may not be so important for services firms due to their nature of activities, meanwhile the same innovative process will be important for manufacturing firms followed by trading firms. The discussion give something new for learning.