Five Capacity-Building Insights

While there is not a one-size-fits-all solution to capacity building, here are five elements in successful approaches.

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

Over the years, we have worked with several foundations and their nonprofit partners to design, deliver, and evaluate capacity-building programs. We partnered with GrantCraft to publish this series of case studies that provide an in-depth look at five foundations’ different approaches to supporting nonprofit capacity.

As the case study series shows, nonprofits have widely diverse needs when it comes to capacity building, and there can be as many approaches to building capacity as there are foundations supporting it. While there is not a one-size-fits-all solution to capacity building, we identified five elements in successful approaches.

Our experience shows that paying attention to these five elements will help ensure nonprofits and foundations are entering capacity-building partnerships that will be more likely to achieve the desired results. We share these recommendations below with hopes that foundations will factor them into their capacity-building plans, and nonprofits will seek out and request this type of partnership from their funders.

1. Commit for the Long-Term

Think of capacity building as a healthcare plan for nonprofits. Their ability to be successful for the long haul requires ongoing attention to organizational capacity. Foundations that make the biggest difference to nonprofits form long-term partnerships and have ongoing conversations about capacity needs.

For example, the Wells Fargo Regional Foundation provides long-term support to community development organizations leading neighborhood revitalization initiatives in Eastern Pennsylvania, New Jersey, and Delaware—often for 11 years or longer. The foundation knows that the work grantees are doing to bring about change in neighborhoods can take decades, and it is committed to ensuring that organizations leading the charge have the skills and financial resources they need to see the change through.

“We knew that we were addressing a long-term problem, so we needed a long-term solution,” said Lois Greco, senior vice president and evaluation officer at the foundation. “You wouldn’t buy a house with a one-year loan, so why would you make a one-year grant to fund a 20-year solution?”

The foundation began by listening to grantees to understand their needs and then designed and delivered programs to meet those needs as they emerge. For example, the foundation has provided training, coaching, and support to help grantees build financial sustainability and collaborative capacity.

Working in long-term partnership has made a difference. Foundation staff members’ enduring relationships with community organizations and leaders has allowed them to more deeply understand the neighborhoods’ complexities and what community organizations must navigate. The long-term commitment also has a positive impact on the foundation’s relationships with grantees.

Grantees are more likely to be forthcoming about their needs and challenges and seek the foundation’s collaboration in identifying solutions because they are confident that the foundation is going to partner with them through thick and thin. Ultimately, this leads to better outcomes for neighborhoods that have experienced disinvestment in the regions they support. Read the case study.

2. Co-create Solutions with Stakeholders

A common criticism of capacity building is that it sometimes can feel paternalistic. This can happen when foundations make assumptions about what grantees need and design services without input from nonprofits.

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 by engaging grantees in the design of capacity-building approaches.

One funder who has done this well is the Ralph C. Wilson, Jr. Foundation. The foundation, which began in 2015, plans to spend down $1.2 billion by 2035 in Western New York and Southeast Michigan. From the beginning, the trustees named capacity building as a key strategy for strengthening these communities.

The foundation’s work in Southeast Michigan began with a year-long process of listening to grantees to understand their needs and what was already happening in the region. A key outcome of this outreach was the decision to fund the creation of a physical center—named Co.act Detroit—that will provide technical assistance and foster collaboration among nonprofits.

The center opened with a soft launch in November 2018, and as additional programs and services are created, staff at the center are bringing the same spirit of listening and collaboration to inform everything from the physical design of the space, to the center’s services and offerings, to its name and logo.

“Often community engagement is a one-time activity or a box that’s checked,” said Allandra Bulger, executive director of Co.act Detroit. “I don’t believe in the idea that if you build it, they will continue to come. If you build something folks might come, poke around, and see what it is, but for folks to truly engage in the center they have to see themselves in that space. They have to be part of cocreation.” Read the case study.

3. Strengthen the Ecosystem

Ask any nonprofit or foundation leader what challenges they encounter in efforts to strengthen capacity, and chances are you will hear how difficult it can be to find the right service provider.  Ideally, nonprofits would operate in a healthy ecosystem where there is a diverse network of support available, and consultants and technical assistance providers would offer coordinated and consistent high-quality services. In many communities, this is not yet the case. From our work, we are finding that more foundations are considering how they support this ecosystem as part of their capacity-building strategy.

One foundation that is doing this is the Evelyn and Walter Haas Jr. Fund in San Francisco. 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 to burnout among nonprofit leaders, the fund worked to help nonprofits build a culture of philanthropy within their organizations.

The fund realized a key way it could help grantees with their fundraising challenges was helping strengthen the systems of support available to them.

“The capacity-building field is largely made up of subject experts,” said Julia Ritchie, former director of strategy and special initiatives at the fund.

“Unintentionally, many capacity-building practitioners reinforce the very silos that we are trying to break down in organizations. For instance, [some] strategic planners don’t include a revenue or business plan, [and some] fundraisers think only of the tactical solutions to fundraising but don’t think about the leadership and cultural practices that are needed to build and sustain fund development.”

In response, the fund convened a range of fundraising, strategy, and financial management consultants to explore how 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 they work with. Read the case study.

4. Support Both Technical and Adaptive Capacities

When nonprofits are working to address complex problems, some of the capacities they need are adaptive. Adaptive capacities refer to things like the ability to collaborate, influence others, and 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 like fundraising, staffing, and communications.

While an organization may not necessarily need to be strong in every type of capacity, healthy organizations will need a mix of both technical and adaptive capacities. Funders should consider approaches that allow nonprofits to strengthen both types of capacities.

The Annie E. Casey Foundation has been working with a network of grantees to build capacities that influence their ability to advocate effectively. That network, KIDS COUNT, is made up of 53 state-based child advocacy organizations dedicated to ensuring that all children have economic security, supportive communities, and stable families. While advocacy capacities are critical, the foundation recognizes the importance of paying attention to other capacities as well.

“Racial equity and inclusion are not just technical work,” said Jann Jackson, senior associate at the Annie E. Casey Foundation. “It requires adaptive leadership at the personal, organizational, and systemic levels.”

Casey’s engagement with grantees starts with a capacity assessment. Data from this assessment across the network show the extent to which technical and adaptive capacities are intertwined. For example, the data show that strategic leadership capacity is a predictor of whether organizations will be 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 is important to ensure organizations have strong communications capacity as well. Read the case study.

5. Ground Capacity Building in Equity

Any effort to advance social change in America will inevitably come up against systems and structures that have created racial disparities for generations. Understanding how to advance racial equity through their programs and how to become more equitable inside their own organizations is a capacity every nonprofit needs to have.

The Kresge Foundation delivers capacity-building programs focusing specifically on leadership development through a racial equity lens. The Kresge Foundation works to expand opportunities in America’s cities. For the foundation, a key strategy for achieving equitable outcomes in communities is investing in the talent and leadership capacity of its grantees.

The foundation recognized that many grantees—who were working to advance equitable outcomes in communities—were not receiving targeted support to advance their own racial equity capacity. In a pilot program, named Fostering Urban Equitable Leaders (FUEL), Kresge formed partnerships with six service providers to offer a range of services to grantees touching on different topics critical to advancing racial equity inside organizations and aligned with grantees’ needs.

The goals of the program were 1) stronger senior teams, 2) stronger mid-level staff, 3) more diverse talent, and 4) more equitable organizations. 

“If we hope to fashion a more equitable society, we have to learn to have ongoing, frank, and inherently difficult discussions about the needs of organizations facing up to this challenge,” Rapson said. “FUEL gives us an important tool for advancing this work.”

Since the pilot program, Kresge has decided to run the FUEL program for a second year and offer a similar program specifically for grantees in the environment portfolio. Read the case study.

Community Wealth Partners

We partner with nonprofits and foundations to create strategies, implement them, evaluate them, and learn what works in pursuit of their missions.
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