Organizational Development

The Return of Capacity Building

It’s time for a renewed conversation about building the systems, structures, and skills for social sector excellence.

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.

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COMMENTS

  • Cheryl Gooding's avatar

    BY Cheryl Gooding

    ON November 19, 2014 12:56 PM

    Thanks for drawing attention to the issue of capacity building Jared.  In my work with nonprofits and the funders funding them I have often been perplexed by the reluctance to invest in strengthening nonprofit’s capacity to deliver the outcomes they aim for.  It is important for the nonprofit and philanthropic sectors to cultivate a culture of greater comfort with, and dialogue about, the learning needs of both sectors.  We continue to be overly cautious about that dialogue.

  • Jared Raynor's avatar

    BY Jared Raynor

    ON November 20, 2014 08:10 AM

    Thanks for your comment, Cheryl!  While I would say there are some great examples out there of funders committed to the dialogue (like the Packard Foundation, Deaconness Foundation, Rapides Foundation, Weingart Foundation, just to name a few), it is a conversation that needs to be further developed.  I particularly appreciate your emphasis on the need for the dialogue to be about learning the needs of both the nonprofits AND the philanthropic actors.  I believe GEO and CEP are advancing that conversation, but the direct dialogue between funders and their grantees seems to be far too rare.

  • Andrew Knott's avatar

    BY Andrew Knott

    ON November 20, 2014 10:49 AM

    Thank you for this excellent resource!  Do you have any suggestions for new non-profits looking to tap into capacity building resources that might be available? Perhaps good places to look to find grant makers interested in funding capacity building?  I am currently working on fund development for an international NGO that is looking to build capacity of its newest partner branch in the US.

  • BY Julia Coffma

    ON November 21, 2014 09:42 AM

    Excellent article and insights, Jared. I want to emphasize two points in particular.

    1) The who: Totally agree that we need to think about the capacity of all members of the sector, including intermediary organizations (like evaluators) who work with and support both nonprofits and funders. Intermediaries touch a lot of organizations, and it’s not always clear that we are thinking enough about our capacity and whether we are growing and adapting our knowledge, skills, thinking, etc. to support the social sector as it continuously evolves.

    2) I like your framing of this as 3.0. As you say, “This phase builds on existing work, rather than supplanting it.” Like the concepts of Web 1.0, 2.0, 3.0, it signals that the field is learning and getting better and more dynamic, but not abandoning prior concepts and approaches that are still relevant and important.

    Thanks for the work that TCC has done historically in this space, and continues to do.

  • Jared Raynor's avatar

    BY Jared Raynor

    ON November 23, 2014 06:15 PM

    Thanks, Julia, for your kind words and always insightful comments!  You emphasize two points that I think are particularly important—the second acknowledging that there is great work that has gone on and continued to go on in capacity building.  On the first, I have been thinking a lot about the role of evaluators in the sense of capacity building.  There has been a lot of emphasis in the last 5 to 10 years about building the evaluative capacity of organizations, be they foundations or nonprofits and even in some cases intermediaries.  I think we miss the other capacity-building roles of evaluation.  I have a blog post written on that topic if I can find a venue!  Interested in hearing from other evaluators about what capacity-building 3.0 means in the evaluation arena.

  • Lori Bartczak's avatar

    BY Lori Bartczak

    ON November 25, 2014 12:01 PM

    Thanks for this great piece on capacity building, Jared. GEO has even more good news to share about the growth of support for capacity building. Just last week, we released our 2014 field survey (http://www.geofunders.org/smarter-grantmaking/field-study), which again found that a significant number of grantmakers (27%) are giving more money to capacity building support than they were three years ago. Another trend we’ve noticed that could fall under “the how”, is that more funders are looking at capacity building through the lens of networks and collaboration. For example, many capacity building approaches targeted at supporting leadership take a collective leadership approach, working to engage multiple levels within organizations and networks, thereby building the bench strength of nonprofits. Another thing we heard from focus groups with nonprofit leaders and grantmakers on capacity building is an increased attention to how grantmakers can support nonprofits capacity to collaborate, recognizing that there are skills and organizational capacities required to do this well. Finally, we’ve also seen many examples of grantmakers who are looking across a group of organizations at the collective capacity of a community or field to determine capacity-building priorities. GEO recently published new examples of and guidelines on capacity building in our Smarter Grantmaking Playbook. http://www.geofunders.org/smarter-grantmaking

  • Jared Raynor's avatar

    BY Jared Raynor

    ON December 10, 2014 11:31 AM

    Great information, Lori!  Very exciting to see increase in capacity-building giving.  Also appreciate calling out the capacity to collaborate as something that folks need help with—our experience is that those capacities include the ability to understand the collaborative system, an assessment of the strategic value of the collaboration to the organization, and a careful consideration of the resources that can be brought to the collaborative.  Thanks for posting.

  • Jared Raynor's avatar

    BY Jared Raynor

    ON December 10, 2014 11:35 AM

    Andrew, as a starting place for information on capacity building, you might look at some of the resources that Lori posted as well as at the Packard Foundation’s organizational effectiveness wiki site: http://packard-foundation-oe.wikispaces.com/

    In terms of finding specific funders, I recommend looking to funders that are most interested in your issue area to see if they support capacity building.  Good luck!

  • Andrew Knott's avatar

    BY Andrew Knott

    ON December 10, 2014 11:47 AM

    Thanks!

  • BY James W. Shepard, Jr

    ON December 18, 2014 09:15 AM

    Great work as always, Jared. After overseeing nearly 1000 capacity building consulting engagements when I was VP Programs at Taproot, our impact data clearly showed that the work we were doing in leadership development and strategic HR was having the greatest impact, even though this type of work was not well understood by nonprofits or funders. That appears to be changing. What we are seeing at AchieveMission is a shift of capacity building focus by both nonprofits and foundations towards those approaches and practices that are most able to create systemic, long-term improvements in nonprofit’s capacity, particularly in organization centric leadership and human capital management.

  • Jared Raynor's avatar

    BY Jared Raynor

    ON January 5, 2015 12:21 PM

    Thanks for the comment, James.  I"m glad you raised the leadership development and strategic HR issues—things that are hard for a lot of people to understand what an effective intervention (or even assessment) might look like.  Glad there are organizations like AchieveMission that are doing good work in these areas.  From my perspective, these are particularly important capacities in order for effective change management to happen, something that we highlight in the capacity building 3.0 paper as critical to effective capacity building.

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