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Nonprofit Knowledge Matters | Funding for capacity building - What is most effective?

Posted: 
March 19, 2014

Effective capacity building support is contextual, continuous, and collective

To gain insights to what grantmakers are currently thinking about nonprofit capacity building, Jennifer Chandler, our vice president and director of network support & knowledge sharing, recently interviewed Lori Bartczak, vice president of programs at Grantmakers for Effective Organizations (GEO). GEO is a community for grantmakers committed to building stronger and more effective nonprofits.

Jennifer Chandler, National Council of Nonprofits: Lori, at GEO you are in a unique position to observe how grantmakers think about funding for capacity building. What are you and your colleagues at GEO seeing?

Lori Bartczak, GEO: What we’re seeing is that as the demand for services from nonprofits continues to rise in communities everywhere, more funders are recognizing capacity building as a critical way to support strong organizations that are equipped to rise to the challenge.

JC: Are there specific types of capacity building funding that grantmakers find more valuable than others to invest in?

Lori Bartczak: In our most recent study in 2011, Is Grantmaking Getting Smarter, we found that a slight majority (65%) of the grantmakers that participated in our survey provided some type of capacity-building support to grantees. The areas they funded tended to be: leadership development, fundraising capacity, evaluation capacity, communications, and technology. When we publish our new report later this year we’ll see whether those categories remain at the forefront.

JC: Can you give us a sneak peek into the new findings?

Lori Bartczak: What we know so far from a listening tour with both funders and leaders of nonprofits is that questions persist about how to build strong nonprofit boards; how to build and track budgets in uncertain times; and how to look at questions of decision-making and leadership. We have also learned that one solution does not fit every problem, because each leader and organization is unique, and circumstances are always changing, so capacity building has to be contextual.

JC: What exactly do you mean that capacity building support needs to be “contextual?”

Lori Bartczak: By “contextual” we mean that it’s essential for capacity building to be tailored to meet the unique characteristics and needs of individual nonprofits, because effective capacity building is influenced by variable characteristics such as the organization’s geography, life cycle stage, and revenue sources, among other factors. Grantmakers want to support their grantees in having the greatest impact possible, and capacity building is a key means of achieving that end. But the diversity of the organizations that grantmakers support makes it difficult to be clear on best practices. Based on fifteen years of experience with our members and conversations with nonprofit leaders, GEO believes that by taking an approach that is contextual (tailored to the unique needs of the grantee), continuous (taking the long view), and collective (considering how the parts add up), grantmakers will be well positioned to provide capacity building support in ways that effectively support nonprofits to achieve lasting impact.

JC: Can you share an example of “contextual capacity building” assistance?

Lori Bartczak: One example is capacity building support through an award established by the Evelyn and Walter Haas, Jr. Fund, called the “Flexible Leadership Awards” program, which provides long-term, customized leadership support to grantees. The award recognizes that there is no one-size-fits-all approach to leadership development. Access to longer term support allows the nonprofit board and staff to step back and think expansively about what their organization wants to achieve and the leadership challenges ahead.

JC: Do you have any suggestions for how nonprofits can help their funders take a more contextual approach?

Lori Bartczak: Last year we traveled around the country and held focus groups with nonprofit leaders to get a better understanding of their capacity needs. One nonprofit leader described an exemplary relationship with one particular program officer. She said: “She will have lunch with us, she visits, she’ll call us because she heard something that might be of relevance to our work. I see her in the community, at coalition meetings, in city meetings. She’s not just sitting in her office. I’m impressed with her because she cares about what we—her funded organizations—are doing. That’s big. We have a relationship, and because of this I am more likely to call her with a concern or a problem, or to let her know what we’re up to so she won’t be blindsided.”

JC: I can imagine that funders might not be wild about GEO’s second finding, of “continuous” capacity building funding, so how should a nonprofit make the case for longer-term support?

Lori Bartczak: Nonprofit leaders repeatedly tell us that funders are not providing capacity-building funding with an appropriate time horizon. At the listening sessions we heard many stories of partially completed capacity-building projects that ended up not meeting their original objectives due to the lack of funding to cover costs required to implement and maintain the work. So we are seeing the need for continuity --

Funders build our capacity, and then what?” one leader asked. “The funders are going to walk away, and we have to be able to sustain whatever they helped us build. A lot of the challenge with capacity building is the question of how we’re going to sustain the work after the funders are done helping us.”

JC: Are foundations aware of the realistic need for long term capacity building, or “continuous” funding as you call it?

Lori Bartczak: Yes, some are. Grantmakers who do this work well devote a considerable share of their time and resources to capacity building and endeavor to establish a strong and open relationship with grantees. For example, one program officer advised fellow-grantmakers to take the long view in their capacity-building work like this: “Be willing to stick with programs longer than three years… While it’s always good to be open to new ideas, funders can sometimes jump from one fad to the next without giving programs enough time to produce results or taking the time to learn from both success and failure.”

JC: In addition to understanding the context, and accepting that capacity building is not usually effective as a short-term intervention, what other measures has GEO noted are needed to promote effective capacity building?

Lori Bartczak: Many successful capacity-building programs reach beyond the executive director role to engage a team that is drawn from multiple levels of the organization. Since people remember and respond to learning new things better when they are in a group, effective capacity building often benefits from a “collective” approach. Also, grantmakers can look for opportunities to collaborate with other grantmakers to leverage investments in capacity and provide more organizations comprehensive support to grantees. Because building capacity requires a significant, ongoing investment, grantmakers might look for opportunities to collaborate with other grantmakers to leverage their individual investments and thereby collectively provide more comprehensive support to grantees. Another way to look at the collective approach is to think about the overall capacity of the set of organizations that are vital to the issue you work to address—whether that set is bound by a geographic area or an issue area – take a systems approach to building capacity.

JC: Can you share an example of this type of collective approach?

Lori Bartczak: In Washington State nine funders were working collectively to build the capacity of the nonprofit ecosystem across the state. The funders came together in 2009 in response to the challenges facing the nonprofit sector as a result of the economic recession. They commissioned an assessment of capacity building in Washington State that found a disinclination for thinking systematically about capacity building at a state or community level, and recommended specific investments and strategies—from providing more general operating support, to filling gaps in knowledge and service delivery. Since 2010, investments from the collaborative include an online directory of vetted consultants and resources related to capacity building, targeted funding to rural areas in the state, and the creation of an organization (Washington Nonprofits) that aims to provide a voice for nonprofits across the state through advocacy, education, capacity building, and networking.

JC: Thank you, Lori, to you and your colleagues at GEO for highlighting practices that can help grantmakers feel more comfortable with funding capacity building.

For even more information on this topic, we recommend that you read this article by Lori that inspired this interview: Supporting Nonprofit Capacity: Three Principles for Grantmakers (Nonprofit Quarterly, December 2013).

Should you go global with your nonprofit’s domain name?

You’ve heard the expression: “Think globally, act locally.” That expression usually applies to our imprint on the environment. But it also is a fitting description of how potential donors and others find your nonprofit via the internet. Today your nonprofit may be using a domain name ending in “.org,” but starting in late summer 2014, two new domain names will be available for nonprofits: “.NGO” and “.ONG.” Unlike .org, the new domains will be available only to charitable nonprofits and other tax-exempt organizations, as well as non-governmental organizations (commonly referred to as “NGOs”) – thus creating for the first time an international database of verified or “genuine” NGOs (according to the Public Interest Registry, the entity that was originally created to manage the .ORG domains). Why might a nonprofit decide to reserve or use a new domain name in addition to its existing URL? Reserving one of the new URLs may help avoid future confusion in the event another organization reserves the same name with a different ending. To make sure your nonprofit has the opportunity to reserve a domain name using one or both of the new endings, you’ll want to visit GlobalNGO.org and fill out an “Expression of Interest” so that you are contacted and have the opportunity to reserve the new domain names when they are released on a first come, first serve basis later this year. Learn more.  

 

How does your budget grow?

Just announced! We are happy to announce that nonprofits now have two affordable, easy-to-use tools: one to develop their budget and another to help manage their cash flow. These tools were developed specifically with the needs of small and mid-sized nonprofits in mind. It doesn’t take someone with an accounting degree to use them, and they offer the ability to create reports for your board members. Both toolkits are intuitive and easy to use even though they have lots of accounting rules built-in. For example, the budgeting tool makes sure your nonprofit allocates costs in accordance with nonprofit accounting requirements. We are proud that these tools were developed by staff members of the New York Council of Nonprofits with the needs of small nonprofits in mind. Through a generous arrangement with NYCON, any member of our state association network is eligible to receive a member-only discounted price on the toolkits.

 

If you would like to know more about the NYCON Budget and Cash Flow Toolkits, try the demo, and if your nonprofit is a member of its State Association of nonprofits be sure to contact your membership liaison at the State Association in you state for special discounted pricing and details on other member benefits. If you are not a member of your State Association, learn how being part of the nation’s largest nonprofit network can advance your mission!

 


 

 

Nonprofit Trends

A new nonprofit sector report from New Jersey could be a harbinger of 2014 trends for nonprofits.

  • 82% report increase in demands for services
  • 31% expect expenses to exceed financial support

Interested in what economic trends impact nonprofits in other states?

Did you know?

The new domain name for nonprofits ending in “ONG” has the same meaning as “NGO” (the widely recognized acronym for non-governmental organizations) but it is specifically used in regions of the world that speak Romance Languages (e.g., Spanish, French, Italian, and Portuguese). Learn more.

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