What’s new in nonprofit capacity building?

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Grantmakers for Effective Organizations (GEO) has provided a splendid addition to the literature on capacity building with its new report, Strengthening Nonprofit Capacity: Core Concepts in Capacity Building. The paper blends insights from interviews of grantmakers with keen examples of successful capacity building initiatives to illustrate (and thus encourage other grantmakers) the many benefits that can flow from making multi-year financial support to build the capacity of grantees so that nonprofits can be effective partners with foundations.

The paper offers a basic definition of capacity building, demystifies the process of measuring effectiveness, and stresses the important role that capacity building initiatives play in strengthening nonprofits for the long haul, as opposed to providing restricted program funding. All of these points, and the carefully documented approach, are extremely useful for the charitable nonprofit community as a whole. Additionally, other gems are sprinkled throughout the report that is primarily intended for an audience of grantmakers.

GEO’s report uses interviews and examples to shed light on the many benefits to grantmakers of investing in nonprofit capacity building, while explaining how to deploy their investments most effectively. Yet, during the course of making those and other points, GEO’s report also gives credibility to certain concerns (some might even say, “complaints”) that many nonprofit leaders have had with many funders. These concerns, whether real or imagined, include that because many foundations don’t appreciate the under-resourced environment that many nonprofits are continuously working in, it shows that foundation don’t respect the accomplishments that nonprofits achieve against great odds. Consequently, foundations too often make unrealistic demands that divert nonprofits’ time trying to meet short-term demands rather than advancing their missions.

In making its case, GEO uses examples that reflect three important shifts in how certain grantmakers are approaching their work. These three shifts recalibrate the power imbalance that too often plagues grantmaker/grantee relationships, and reflect changes in attitude and perspective that, if adopted by more grantmakers, will go a long way towards improving outcomes – for both nonprofits and philanthropy – which ultimately means improving outcomes for individuals and communities.

The first shift in grantmaker attitudes is increasing respect for nonprofit grantees: In addition to underscoring that without strong and effective charitable nonprofit grantees, foundations’ missions go nowhere, GEO points out the important role that trust plays; trust is always the fundamental first step in effective capacity building. It seems obvious, but if not: a charitable nonprofit must trust a grantmaker before it will be willing to expose where its own capacity falls short, so foundations that show respect for grantees take the first step towards earning trust.

GEO’s theme, that urging foundations to respect their grantees, runs throughout the paper. At several points, GEO suggests foundations should not require nonprofits to jump through time-consuming hoops, but instead to really listen, and indeed learn from grantees. GEO also does not shy away from acknowledging that given the power dynamics between grantmakers and grantees, a grantmaker that is calling all the shots, rather than listening to its grantees, can actually cause harm. We are pleased to see GEO urging grantmakers to avoid forcing grantees to apply prescriptive capacity building approaches, because they may or may not be appropriate for the grantee. Instead, GEO suggests first focus on trust-building, and only then move on to identify the right capacity building approach: “Strengthening nonprofit capacity starts with asking questions and engaging grantees in a continuing conversation about how they are doing and where they may need help. Given the powerful differential between grantmakers and nonprofits – grantmakers with money to invest for impact and nonprofits that need money to accomplish their work – expecting nonprofits to open up in this way can be a tall order… Supporting and encouraging grantees to be honest and open in these conversations means building a high degree of trust.”

The second shift in grantmaker attitudes is recognizing that collaboration is not only about nonprofits collaborating with each other, but also about collaborations between foundations: GEO urges, “Reach out to other funders to explore what they are already doing to support capacity building and to explore how partnering could leverage your collective efforts.” GEO uses several examples to illustrate how collaborations can accelerate capacity building initiatives, which in turn can provide nonprofits seeking funding for capacity building with ideas for approaches to try in their own communities. This paper’s suggestion that foundations listen to their own advice about collaboration builds on the excellent treatment of collaboration in GEO’s prior work, Building collaboration from the inside out.

The third shift in grantmaker attitudes is towards a more reasonable approach to evaluation and assessment of outcomes: GEO’s report reflects a realism about how to measure outcomes that contrasts markedly with the often strident demands that nonprofits must evaluate their outcomes using methods prescribed by others or fill out specific reports that, candidly, can be more burdensome than useful to all involved. (It is no secret that many nonprofits assume that the reports they spend days preparing for foundations are never read.) Consequently, when GEO’s paper suggests several practical and not very burdensome ways that nonprofits can help grantmakers assess the outcomes of capacity building support, this is a welcome shift in attitudes about evaluation and assessment. We greatly appreciate GEO’s approach that we hope will be embraced by many foundations: “Be realistic and strategic when it comes to assessing…impact – and be careful not to make assessment an overlarge burden for grantees or grantmaking staff.”

These three shifts – respecting grantees, recognizing that collaboration is as useful for foundations as it is for nonprofits, and avoiding prescriptive approaches to measuring outcomes– seem to be very positive developments. Now charitable nonprofits must do our fair share by being good mission partners with grantmakers: Let’s be candid about our true capacity building needs, work collaboratively with our grantmaker partners to leverage the limited and precious financial support for capacity building, and take our need to monitor and articulate outcomes seriously - not because a funder demands it, but because our ability to be effective, efficient, and sustainable over time depends on it. 

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