Five Elements for Success in Capacity Building

Ask any nonprofit leader and you're likely to hear that investments in capacity make a meaningful difference to organizations. Research backs this up. A study of Meyer Foundation grants found that investments in capacity produced positive, long-term financial results for grantees, regardless of the type of capacity-building grants provided.

Recent research from Candid and the Council on Foundations shows that from 2011 to 2015, U.S. foundation funding for capacity building and technical assistance targeting beneficiaries outside the U.S. jumped from $555.4 million to $900.1 million — a sizable increase but still less than ten percent of total international giving.

There are certain barriers that may help explain why foundations aren't devoting more funding to capacity building. Nonprofits may be reluctant to share information about their capacity-building needs with funders because they're not sure whether such sharing will have repercussions on future funding decisions. We're also learning that because organizations have unique needs, tailored approaches to capacity building tend to be the most effective, but they also make supporting capacity building more resource-intensive for foundations.

While there isn't a one-size-fits-all solution to capacity building, there are commonalities in the approaches that have proven to be successful. Over the years, Community Wealth Partners, a social sector consulting firm, has worked with several foundations and their nonprofit grantees to design, deliver, and evaluate capacity-building programs. Now we're partnering with GrantCraft to publish a series of case studies that provide an in-depth look at five foundations' approaches to supporting nonprofit capacity.

Looking across our work over the years, we have identified five elements we think should be part of any capacity-building effort. We share these recommendations with the hope that foundations factor them into their capacity-building plans and that nonprofits seek out and request this type of partnership from their funders.

1. Commit for the long term. The ability to be successful over the long haul requires ongoing attention to organizational capacity — think of it as a sort of personal healthcare plan for nonprofits.

The Wells Fargo Regional Foundation is one funder that provides long-term support to community development organizations leading neighborhood revitalization initiatives — often involving commitments of eleven years or more. The foundation knows that the work grantees are doing to bring about change at the local level can take decades, and it is committed to ensuring that organizations leading the charge have the skills and financial resources they need to see that change through. To that end, the foundation begins by listening to grantees to understand their needs and then designs and delivers programs to meet those needs as they emerge, including training, coaching, and assistance designed to help grantees build financial sustainability and collaborative capacity.

2. Co-create solutions with stakeholders. A common criticism of capacity building is that it can feel paternalistic. And this is more likely to happen when foundations make assumptions about what grantees need and design services without their input. Capacity building should be grounded in two-way conversation between foundations and nonprofits. Nonprofit leaders know best the context of their work and what types of support are likely to make the biggest difference. Grantmakers should seek out these insights and engage grantees in the design of capacity-building approaches.

The Ralph C. Wilson, Jr. Foundation is one funder that has embraced capacity building as a key strategy for strengthening its target communities. As a limited-lifespan foundation committed to spending down its $1.2 billion endowment over twenty years, the foundation initiated its grantmaking activities with a year-long process of listening to nonprofits to understand their needs and work. A key outcome of this outreach was the decision to fund the creation of a center — Co.act Detroit — in southeast Michigan that will provide technical assistance to and foster collaboration among nonprofits in the region. The center opened in November, and as additional programs and services are created, it will work to infuse the same spirit of collaboration in everything from the physical design of the space to the center's services and offerings.

3. Strengthen the ecosystem. Ask any nonprofit or foundation leader about the challenges they encounter in efforts to strengthen capacity, and chances they'll tell you how difficult it can be to find the right service provider. Ideally, all nonprofits should operate in an ecosystem with a diverse network of support available, including consultants and technical assistance providers. Through our work, we are finding that a growing number of foundations, the Evelyn and Walter Haas Jr. Fund among them, are considering how they can best support such an ecosystem as part of their capacity-building strategy.

For more than a decade, the Haas Jr. Fund has invested in supporting nonprofit leadership. When the foundation learned that fundraising challenges were a significant driver of burnout among nonprofit leaders, they convened a range of fundraising, strategy, and financial management consultants to explore what they could do to help build a culture of philanthropy within the nonprofit sector. One outcome of that convening has been increased coordination and collaboration among the service providers who participated — all with an eye to providing better support to the nonprofits with which they work.

4. Support both technical and adaptive capacities. When nonprofits are working to address a complex problem, some of the capacities they need are adaptive. Adaptive capacities are things like the ability to collaborate, to influence others, and to share leadership. At the same time, research from the Center for Effective Philanthropy shows that the areas in which nonprofit leaders say they need the most support are technical capacities — things like fundraising, staffing, and communications. While an organization may not necessarily need to be strong in every aspect of capacity, healthy organizations need a mix of both technical and adaptive capacities, and funders should investigate approaches that take into consideration both types.

The Annie E. Casey Foundation in Baltimore has been working with a network of grantees to build capacities that strengthen their ability to advocate effectively, including capacity in the area of racial equity and inclusion. That network, KIDS COUNT, comprises fifty-three state-based child advocacy organizations dedicated to ensuring that all children are raised in stable families, supportive communities, and economically secure environments.

Casey's engagement with grantees starts with a capacity assessment. Data from the assessment show the extent to which technical and adaptive capacities are linked across the network. For example, the data may show that strategic leadership capacity is a predictor of whether organizations are strong in other areas, such as advocacy capacity and racial equity and inclusion capacity. The data also show that when investing in advocacy capacity, it's important to invest in their communications capacity as well.

5. Ground capacity building in equity. The Kresge Foundation delivers capacity-building programs focusing specifically on leadership development through a racial-equity lens. For the foundation, a key strategy for achieving equitable outcomes in communities across America is investing in the talent and leadership capacity of its grantees.

Kresge has long recognized that many grantees working to advance equitable outcomes in their communities were not receiving support targeted on strengthening their own racial equity capacity. In response, the foundation launched a pilot program, Fostering Urban Equitable Leader (FUEL), through which it formed partnerships with six service providers and tasked them with providing a range of services to grantees that were critical to advancing racial equity inside organizations and, at the same time, aligned with their individual needs.

Building a strong foundation for successful capacity-building partnerships

As the case study series demonstrates, nonprofits have diverse needs when it comes to capacity building, and there can be as many approaches to building capacity as there are foundations supporting it. Our experience shows that paying attention to these five elements will help ensure that nonprofits and foundations are forming capacity-building partnerships that achieve the desired results.

Carla Taylor is director of strategic capacity-building services at Community Wealth Partners (@WeDreamForward). Taylor has twenty years of experience developing and managing capacity-building initiatives that help accelerate results for social sector organizations. With a focus on advancing equity, her core areas of expertise include multi-sector collaboration, place-based strategies, results-based leadership, strategic learning, meeting design and facilitation, program design and management, and stakeholder engagement.

Lori Bartczak (@lbartczak) serves as Community Wealth Partners’ (@WeDreamForward) senior director of knowledge and content, overseeing the firm’s content strategy, development, and distribution. In that role, Bartczak identifies compelling topics and themes, designs original research and learning experiences to advance them, and creates and disseminates content that assists CWP clients and the sector more broadly in advancing their missions.