The Return of Capacity Building

Capacity building—the process of building the systems, structures, and skills organizations need to succeed—is getting left behind, and it has nothing to do with the quality or effectiveness of the work. In fact, in 2012, Grantmakers for Effective Organizations (GEO) reported that “capacity building support was here to stay” and that 30 percent of grantmakers increased the amount of dollars allocated for capacity building in the previous two years. I don’t have any evidence that that trend has changed.

The issue is not that capacity building is not happening, but that other aspects of the field have co-opted the term. The hot topics of today—things like impact investing (or not) and scaling—are advancing the sector, while many long-time practitioners see capacity building as a rubric that organizations either set aside or assume as implicit.

Since TCC Group was founded 35 years ago, the social sector has developed alongside a rapidly changing world. Capacity building has played an active role in the sector since at least the 1970s, but it has not kept pace with the sector’s evolution. In a new publication, we argue that the time is right for a renewed conversation on capacity building in the social sector. Here are a few highlights:

Setting the Stage

In reviewing the history of capacity building, the field of practice has evolved considerably. The capacity-building 1.0 emergence as a critical component to effective social sector support and preparedness advanced to a 2.0 version that was more professionalized, based on greater insights, and focused on the nonprofit as a holistic entity. Far from the one-directional perception of nonprofits as underdeveloped entities in need of greater sophistication, today’s capacity building incorporates actors and resources from across the social sphere, but the term has stagnated and the discussion has lacked a cohesive dialogue.

From our work with nonprofits, funders, and businesses, including evaluations of dozens of capacity-building programs, the sector is on the cusp of a new stage of development: capacity building 3.0. This phase builds on existing work, rather than supplanting it.

In considering 3.0 capacity-building work, it is helpful to dissect and explore three distinct elements: who is building capacity, what kind of capacity they are building, and what process or mechanisms they use to do it. The who, what and how of capacity building each bear the hallmark of evolution and, in their 3.0 version, serve to achieve organizational actualization.

1. The “who” of capacity building

   The social sector has historically framed capacity building as something that nonprofits receive from funders and outside parties. However, it’s now clear that all actors within the social ecosystem stand in need of capacity building. While initial efforts focused on nonprofit individuals (such as board members and executive directors) and later efforts focused on nonprofit institutions as a whole, a new vision of capacity building must include all aspects of the social sector. Funders, businesses, management support organizations, networks, and government all stand to improve their effectiveness through focused work on capacity building.

2. The “what” of capacity building

   Early capacity-building efforts focused on the knowledge and skills individuals needed to carry out concrete tasks. The list of topics was long but program skills, fundraising skills, and basic organizational skills featured most prominently. Later efforts recognized that knowledge and skills are a linked set of capacities, leading to a focus on interconnected capacities within an organization.
   
   Organizations in today’s social ecosystem are poised to understand their own capacity in the context of the larger social ecosystem. Institutions within the social sphere have already expanded their focus, going from focusing strictly on skills and knowledge to understanding capacity in terms of organizational function. Capacity-building 3.0 efforts can now focus on “organizational actualization,” allowing organizations to move forward toward greater efficiency together. Some of the specific capacities necessary to do this include:

    

   • Capacity related to understanding how an organization fits into its ecosystem. Related capacities include power analysis, network analysis, understanding an issue lifecycle, and an R&D approach to evaluation and learning.
   • Capacity to respond to the ecosystem. Related capacities include change management, the ability to find and create shared value, and collaborative and advocacy skills.
   • Capacity to structure the organization in response to the ecosystem. Related capacities include coalition and network functioning, the ability to function as movement actors, and more shared leadership models.

    

3. The “how” of capacity building

   The methods of building capacity have also evolved through new techniques, advancements in technology, and, frankly, experience. In the 1950s, researchers brought the work of organizational improvement out of the laboratories and into the organizations themselves, launching organizations’ focus on capacity building. As it gained prominence, the techniques and methods grew as well. Education of nonprofit management workers, a growing push for corporate social responsibility, and a shift to “strategic philanthropy” strengthened the social sector and capacity-building work. In the same period, professional associations like the Alliance for Nonprofit Management and GEO began to take on focused roles that built the capacity of capacity builders.
   
   Grounded in a wealth of experience and armed with new innovations, the field is moving toward more sophisticated methods of helping ecosystems actualize their performance. A number of new techniques have emerged for building capacity, including: developing more sophisticated diagnostic tools; engaging teams (rather than individuals); ensuring that change management is included as a part of the capacity-building process; engaging diversity, equity, and inclusion; and helping build the capacity of partner organizations.

Going Forward

The world has changed, and the social sector has been responding. It is now time for capacity-building support for the sector to catch up. It is not to say that new ideas and practices are not in place—to the contrary. We see a lot of evidence both in our own practice and in the capacity-building work our colleagues are doing throughout the world. We see an opportunity in our increasingly networked environment for a fresh dialogue on the frameworks we use for discussing and building capacity. Nonprofits, funders, governments, and companies are acting together more often, whether forced by budget cuts or drawn by the promise of collective impact. And by focusing on the who, what, and how of capacity building, we believe the capacity-building infrastructure of the sector can provide enhanced backbone support for social impact.

A Call to Collective Action

We don’t imagine that any one organization can claim a corner on the market of insight for capacity building, and so we see this as an ongoing conversation. We look forward to being a part of the emergent conversation and to working with our colleagues in a more targeted and nuanced dialogue about the future of capacity building. The needs of the day demand no less.

Read more stories by Jared Raynor.