The aim of this study was to promote a better understanding of the factors influencing innovation in the provision of health services by branches of the Catholic church's 'Sacred House of Mercy' (Santa Casa de Misericórdia) operating in Portugal, and to determine the effects of innovation on the performance of individual staff and the local organisations as a whole. The chosen method for data collection was the questionnaire survey. The unit of analysis is constituted by the staff of Misericórdias in the North of Portugal that provide health services. To evaluate the relationship between innovation and performance, recourse was made to a structural equation model and AMOS 20 software. The results of the study suggest that the Misericórdias analysed display innovative behaviour that contributes positively to individual employee satisfaction, team spirit and overall organisational performance. The study provided a better understanding of the factors that influence innovation in this type of not-for-profit organisations.