Capacity Building

data cloud


Is this your organization?

"Organizations that build robust infrastructure-which includes sturdy information technology systems, financial systems, skills training, fundraising processes, and other essential overhead-are more likely to succeed than those that do not. This is not news, and nonprofits are no exception to the rule. Yet it is also not news that most nonprofits do not spend enough money on overhead. That's an incredibly, incredibly powerful message."

Ann Goggins Gregory and Don Howard,
The Nonprofit Starvation Cycle,
Stanford Social Innovation Review



Nonprofit capacity building refers to activities that improve and enhance a nonprofit’s ability to achieve its mission and sustain itself over time.

When capacity building is successful, it strengthens the nonprofit’s ability to have a positive impact on lives and communities.

 

Capacity building impacts all aspects of a nonprofit’s activities. Examples include: identifying a communications strategy; improving volunteer recruitment; learning about complex new IRS and state regulations, and responding to them by adopting new governance practices; developing a leadership succession plan; identifying more efficient uses of technology; and engaging in collaborations with community partners.

Background information

  • Read why capacity building matters, key elements, success factors, and lessons learned from this seminal study for Philanthropy Venture Partners by McKinsey & Company (2001).
  • Review The Foundation Center’s resource list of publications on capacity building for nonprofits.

How much does it cost to deliver your mission?

  • Learn how to calculate full costs with a Cost Analysis Toolkit developed by Bridgespan.
  • Read a helpful article by Bridgespan, Costs are Cool: the Strategic Value of Economic Clarity, stressing the importance of resource allocation and the need to identify full costs as part of that analysis. See the Appendix of the article above for a full explanation of "full costs."
  • Understand how to account for various costs such as "management and general" and "fundraising" costs. The article, What is Overhead? from the Nonprofit Assistance Fund, can help you classify expenses correctly.

Self-Assessment

  • Measuring the Efficiency and Effectiveness of a Nonprofit’s Performance - By Marc J. Epstein and F. Warren McFarlan, October 2011 - STRATEGIC FINANCE - View PDF
  • The Fundraising Effectiveness Project, by AFP and the Center for Nonprofits and Philanthropy at the Urban Institute, is a web-based questionnaire that aims to “help nonprofit organizations measure, compare and maximize their annual growth in giving.” You can download the 2010 Fundraising Effectiveness Project (FEP) Survey Report (PDF) – it’s free – or learn more at through the Association of Fundraising Professionals website, AFPnet.org.
  • Nonprofit ethics tools launched online: A new set of online tools and information now is available to help nonprofits conduct business in an open, transparent and ethical manner. The Resource Center for Good Governance and Ethical Practice, launched by Independent Sector, contains over 250 model policies, research papers and other resources, most of which are free.The information in the Resource Center is based on a report, "Principles for Good Governance and Ethical Practice: A Guide for Charities and Foundation," that was developed in 2007 by the Panel on the Nonprofit Sector with input from thousands of nonprofits and foundations across the U.S.
  • Check out the Capacity Building section on SANDAN's Nonprofit Resources page.
  • Read about the life cycle of nonprofits and use the Organizational Self-assessment matrix provided in this article to determine where your organization fits in the cycle, which can help you determine areas where your nonprofit can benefit from capacity building.
  • The Drucker Foundation Self-Assessment Tool provides a process for nonprofit organizations to clarify mission statements, define results, set goals, and develop focused plans.
  • What are your nonprofit’s greatest needs for capacity building? Conducting a self-assessment such as using the organizational capacity assessment tool developed by the Marguerite Casey Foundation, can help nonprofits identify capacity strengths and challenges, and establish capacity building goals.
  • The Innovation Network, Inc. also offers an organizational assessment tool, among other tools, through its "Point K" website resources. Free registration required.
  • The TCC Group has developed a Capacity Building Self-Assessment tool that nonprofits can use to assess and prioritize their capacity building needs. The tool is also useful in the analysis of what type of capacity building would yield the most impact at your nonprofit’s current stage of development.