Two Must Read Reports on Nonprofit Capacity Building | Beth's Blog

Two Must Read Reports on Nonprofit Capacity Building

Capacity Building

Two reports have been released on the topic of capacity building:   “Supporting Grantee Capacity: Strengthening Effectiveness Together,” from GrantCraft, a service of the Foundation Center and “Strengthening Nonprofit Capacity” from GEOfunders. This post summarizes gems from both reports.  While the reports are guides to funders, if you do work as a capacity builder, you will find some useful insights for your practice.


Supporting Grantee Capacity:  Strengthening Effectiveness Together

This report offers an overview of the different types of capacity-building approaches that funders provide for nonprofits as well as advice on designing and implementing effective capacity building programs.    Capacity building is fundamentally about improving organizational (or network) effectiveness.    According to the survey of funders about capacity building completed by GrantCraft, the top five areas of capacity building that funders most likely support include: leadership, strategic planning, financial management, governance, and fundraising.   Other areas include: communications, executive transition, evaluation/learning, networking/convening, and professional development.   Capacity building includes both money (grants), consultants/technical assistance, peer learning/communities of practice, and collaboration.

The report offers a useful section called “Lenses to Focus and Inform Grantmaking.”    Two particular lens stood out for me:

1: Readiness

As the report points out, there are many reasons why an organization may or may not want to engage in capacity building.  The key is for the funder to understand readiness – so the capacity building can be tailored to the organization’s internal circumstances.   This is “meeting the organizations where they are it.”   Having grantees co-create and drive the capacity building efforts is key to success.

2:  Culture Change

Understanding the institutional ways of thinking and acting is critical to the success of capacity building.  The guide provides some good diagnostic questions as well as two excellent examples of how to understand organizational culture.

The guide also includes some advice and tips for funders on how to engage the right capacity builder, including a set of interview questions.    The report also includes a section that explores accessing impact and answering the question, “How do we know if capacity building will make a difference?”  Here’s the advice:

  • Define the capacity building theory of change and then design different investment approaches that support – individual grants, training workshops, or peer learning networks.
  • Manage expectations – don’t expect grantees to demonstrate meta-impact for micro-investments
  • Consider benefits and risks of using grant applications and reporting process to assess grantee capacity-building
  • Engage grantees in the evaluation design and implementation
  • Make creative choices about what to evaluate

Strengthening Nonprofit Capacity

This report is a practical guide to help funders design capacity building efforts that have impact.   It starts off with a synthesis of key concepts in the field based on a listening tour with nonprofits.    Capacity building is defined as helping nonprofit leaders and organizations develop skills, knowledge, capabilities, and resources to make their work more effective.    The reports identifies three similar definitions from the field:

  • TCC Group:   The ability to monitor, assess, respond to, and create internal and external changes.
  • Venture Philanthropy Partners: Capacity building includes 7 nonprofit elements: aspirations, strategies, organizational skills, human resources, systems/infrastructure, organizational structure and culture.
  • Bridgespan Group: Highly effective nonprofits are strong in five areas:   leadership, decision-making and structure, people, work processes and systems, and culture.

The report also defines and identifies the pros/cons of five different approaches to capacity building, approaches that are described in the Grantcraft report.   This report identifies three basic principles about what capacity building should look like, called the 3 C’s:

  • Contextual: Capacity building must be contextualized to meet the unique characteristics and needs of each organization.   This requires a lot of trust and relationship building between funder and grantee.
  • Continuous: Capacity building requires the long view with an organization or across a portfolio of grantees because the need for attention to capacity building never goes away.  One-year investment is rarely enough to cover the full costs of the change taking place inside an organization.  One-time workshops on specific topics can not be expected to produce significant changes in capacity building.
  • Collective: Collective approaches help with getting buy-in, build deeper leadership and might help streamline investments.   The report suggests three possible directions:  Focusing multiple levels of leadership within the organization; working with other grantmakers; and supporting a cohort of grantees.

The report also includes some points about assessing impact of capacity building.   It recommends four-step approach:

  • Start with baseline information
  • Set goals and clarify expectations
  • Have honest conversations for maximum learning and sharing
  • Make evaluations a two-way street

Capacity builders or consultants are part this equation.  If you are a nonprofit consultant, these guides are well worth reading.

8 Responses

  1. Kayla says:

    Good article! BDO’s nonprofit blog also publishes a lot of helpful reports and advice similar to this. Thanks for the read!

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  3. Donna Okell says:

    Thank you for sharing these valuable reports Karl. It’s becoming increasingly important to create connections between voluntary organisations and businesses with the aim of building capacity and building stronger communities. The evidence in the reports is compelling.

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  5. Holly Ackerman says:

    Capacity building is important for any organization or company. You should aim to be as effective as possible to get the best results. Leadership, strategic planning, financial management, governance, and fundraising are all very important topics, but there are many more some people may forget about that you have laid out as well. This is a great article and is well-constructed to help people figure out the best way to build up their organization.

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  7. Great info! ive almost got my brew figured out now finally produced a reasonable batch. Still have to crank up the heat a little I think.

  8. Delores Lyon says:

    Thanks for sharing this advice on increasing your nonprofit’s capacity building. It sounds like it really is an important aspect for any nonprofit group if it affects your readiness for growth. In fact, I think I should start looking around for workshops on capacity building to see if it could help me and my group out.