The study explores the innovative practice of Non-Governmental Organisations (NGOs) that work with out-of-school, unemployed youth between the ages of 15 and 24 years in Cape Town. The three research objectives of the study were to: describe the key characteristics of innovative practice; to explore the nature of NGO''s engagement with out-of-school, unemployed youth (15-24 years) in Cape Town; and to investigate the factors that promote or constrain innovative practice in these youth NGOs. Via a literature review, the key characteristics of innovative practice are reviewed and the views of NGOs as innovators, as well as the voices of the skeptics of this view, are presented. A survey among ten NGOs fulfils the second and third objectives of the study. The main obstacles to innovative practice were found to be funding constraints and the lack of human resource capacity. Despite these challenges, most respondents felt that the NGO sector was more innovative in comparison with both the government of South Africa and the private sector. Based on the findings, recommendations are offered to government, NGOs working with unemployed youth and research bodies.