Nonprofit social enterprises innovate their business models; however, little is known regarding why they do this, nor what capabilities they need to innovate their revenue-generating activities.In this qualitative exploratory research, we examined five nonprofit social enterprises in South Australia, and found that these organisations consciously innovate their business models for two key reasons: to remain financially viable, and to expand the delivery of important services to the community.In addition, we identified six capabilities that enable nonprofit social enterprises to support their business model innovation.