Capacity Building, Now More than Ever

By Kathleen Enright, Christine Essel, Nancy Jamison and Ellen LaPointe

At this moment, many nonprofits are facing greater fiscal uncertainty than ever before. Government funding is precarious, with budgets and priorities changing daily.

However, nonprofits that have focused on capacity are faring better than most. With reserves, general operating funds, and partners with whom to collaborate, these organizations are better able to weather instability, continue providing essential services to their communities, and plan for the future.

These are just a few of the themes that came out of a series of capacity building workshops our organizations have been hosting across California. For more than a year, we have been bringing our members together for frank peer-to-peer conversations to get at the heart of why capacity building is an essential part of the philanthropy toolkit. At these convenings, we heard firsthand from our funder community what effective capacity building looks like and why it is more important than ever to do this work well.

This is a moment of profound change—politically, socially, economically—and we are hearing from funders throughout the state that capacity-building support is needed now more than ever. Beyond these shifting circumstances, grantmakers want to ensure nonprofits are able to continue their work and be responsive in the face of both global events, like economic downturns, and more localized events, like forest fires or earthquakes.

So, if we want our grantee partners to be as effective as possible by focusing on long-term progress, we need to help build their capacity. This requires all of us to learn together about what works well—and really listen to what our grantees need. To get started, here are four questions you can ask yourself and your nonprofit partners:

What do the nonprofits you support need?

If we want to strengthen nonprofit capacity, we need to start by asking questions and creating relationships that provide space for grantees to be open about where they may need help. For example, through its Organizational Effectiveness program, the David & Lucile Packard Foundation in Northern California conducts capacity building work based on the understanding that nonprofit partners are in the best position to define their own organizational and strategic challenges. Packard fosters a supportive, coaching relationship with each grantee to determine the best use of resources (beyond program support) for their situation. In addition, the foundation looks to grantees to select their own capacity building partners, as they have found these relationships can make or break a capacity building project.

Successful capacity building efforts embrace the idea that organizational development is an ongoing process for all healthy organizations—and they yield the greatest impact when grantees have the ability to openly voice their needs. Funders also have an important role to play in supporting nonprofit partners as they ‘build the muscle’ to integrate a capacity building mindset into their regular operations.

What is the right format for our support?

It is possible to offer capacity-building support that is more burdensome than helpful for nonprofits. Once you’ve uncovered what kind of support grantees need, spend time exploring the right format and size for that support—questions that must be answered in partnership with your nonprofits partners. For example, the Social Equity Collaborative Fund made six grants totaling more than $800,000 to nonprofits engaging in collaborative work to address racial and economic justice in the San Diego region. The steering committee also set aside $50,000 to provide technical support. Rather than telling the grantees, that X, Y & Z will be provided (or worse, is required of them); the committee brought grantees together to learn about their goals and priorities, their vision of how to work together, and their capacity-building needs. The technical support design is also being driven by grantees’ feedback and ideas.

Working together, funders and grantees can figure out what it will take to fund the full costs of building capacity and ensure there is a plan to secure all the necessary funding to complete the work. Additionally, consider different ways to minimize the burden on nonprofits, like establishing key milestones instead of formal reports.

What can we do to support systems-level change?

As so many of us in the social sector have come to learn, systems-level change requires long-term engagement in complex problem-solving work. Many of the issues we seek to ameliorate (chronic health challenges, poverty, etc.) have been many years in the making, and will take many more years yet to move the needle. In the funder world, we have the benefit of formulating long-term plans to tackle such issues with relative confidence that we’ll have the resources to fulfill them. But nonprofit partners work from a patchwork of resources, and times of economic, political, and social volatility can easily throw a wrench in their ability to plan and work effectively toward systems-level change.

By strengthening nonprofit capacity, we can ensure our grantees have the resiliency to be in the work for the long haul. It also gives funders an opportunity to look outside our own walls and get creative in how we support grantees. Who can we collaborate with to share programming, align resources, or pool funds? How can we learn what has worked well from other grantmakers? How can we think about funding to support an ecosystem, in addition to individual organizations?

Following three years of planning and stakeholder engagement on behalf of the Fostering Futures Initiative, connections among service providers emerged as a consistently cited weakness in the system. As a result, one of the three action items that FFI has taken on is hosting regular briefings for nonprofit, government, and philanthropic stakeholders. In collaboration with the County of San Diego, FFI brings expert speakers to a free-of-charge breakfast and provides a forum for learning and networking among the hundreds of professionals supporting transition age foster youth in San Diego County.

How do we make sure our support is not perpetuating inequities?

Supporting capacity building gives us the opportunity to make real progress in challenging systemic inequities. In these moments of crisis and uncertainty, we must be even more intentional about our recipients and how our efforts are designed—otherwise, we risk placing additional burdens on already stressed nonprofits. Are the organizations we’re supporting reflective of the communities we serve? Are we seeking out new partners led by women and people of color? Is our application process accessible to nonprofits that may be in the greatest need of capacity-building support? Are the consultants we work with culturally competent and reflective of our communities?

For example, Liberty Hill Foundation in Los Angeles intentionally supports seed organizations, including those that not have received any foundation support in the past. Their seed funding and capacity building support help nonprofits—many led by people of color—develop their organizations and compete for bigger grants in the future. This approach helps keep a level playing field of competition and ensures resources are going to community groups with the greatest need. Liberty Hill also runs training programs that meet the needs of nonprofit partners as articulated by the grantees themselves. Trainings and grantmaking are run separately, so that grantees are free to express challenges and explore solutions without concern that it may impact future grantmaking decisions.

Looking Ahead

As our statewide partnership continues in the coming months, we’re excited to uncover more about what it means to successfully build the capacity of the nonprofits we support—and help them achieve more. Some opportunities to do so in the coming months are:

• Funders across California can join in-depth workshops on the related topic of Full Cost Funding.
• Check out Strengthening Nonprofit Capacity, and use the related discussion guide with your colleagues.

We also encourage our colleagues across the country to get the capacity conversation going in your own organizations!

Kathleen Enright, President and CEO, Grantmakers for Effective Organizations
Ellen LaPointe, President and CEO, Northern California Grantmakers
Nancy Jamison, President and CEO, San Diego Grantmakers
Christine Essel, President and CEO, Southern California Grantmakers