(Illustration by iStock/Viktoria Kurpas)
A few years ago, I argued in this SSIR article that strategic capacity building and trust-based philanthropy are not opposing ideas. Funders do not have to choose between being responsive, relationship-centered partners and offering hands-on support that helps nonprofits strengthen as organizations.
But as capacity building has become a more common part of philanthropy, another question has become harder to avoid: How do we know whether it works?
Too often, funders answer this question with the easiest data to collect, which offers surface-level insight into whether grantees were satisfied with the support they received. Satisfaction is important. It can tell funders whether a consultant was responsive, whether an engagement felt relevant, and whether the process was a productive use of time, but it fails to tell us whether the work impacted organizational practice, improved performance, or helped an organization make progress toward the outcomes they seek.
This distinction matters because capacity building is never free for nonprofits, even when funders pay for it. It requires staff time, leadership attention, and organizational bandwidth. At a moment when many nonprofits face acute resource constraints, funders should be able to answer a basic question before encouraging partners to take on additional work: Will this time investment be worth it?
Capacity building has matured as a philanthropic practice. Its measurement has not. If funders believe support beyond the grant is a strategy for impact, then we need to move beyond asking whether grantees appreciated the support and toward asking whether it led to desired and durable change.
Why Satisfaction Is Not Enough
Funders’ reluctance to robustly measure capacity-building is understandable. The work is complex, long-term, and nonlinear. Outcomes are often indirect and context dependent. A strategic planning process, revenue model project, data system redesign, or executive coaching engagement may not produce measurable results for months, or even years. Attribution is difficult, and additional measurement activities can easily become another burden placed on grantees.
These concerns are real. But the absence of measurement also has costs.
Without better evidence of impact, funders risk repeating activities that feel useful in the moment but do not lead to sustained change. We may continue recommending providers and projects because grantees liked them, not because their support improved organizational practice. We may invest in offerings that absorb nonprofit time without helping leaders make progress on mission-critical activities. And we may miss opportunities to learn which supports are best positioned to help organizations at different life stages, and why.
Satisfaction data matters, but it offers an incomplete picture. A capacity-building project can be well-run and well-liked but still fail to lead to lasting and desired change. Conversely, support that feels challenging in the moment may lead to important shifts in decision-making that can improve financial sustainability, program quality, or organizational focus.
An Improved Measurement Approach: What Changed?
There’s no single formula for measuring the impact of capacity building. But funders can start by organizing around simple logic: Capacity-building support should be assessed across time, with different questions at each stage.
At Overdeck Family Foundation, we have been building and refining this approach since launching our capacity-building model in 2020. Since then, we have invested nearly $6 million in more than 200 capacity-building projects with over 80 grantee partners. Our work has spanned areas such as revenue sustainability, cost-effectiveness, evidence-building, strategic planning, leadership development, and scaling strategies.
Across that work, we have found it useful to measure capacity-building support across three time horizons: short-, medium-, and long-term outcomes.
First, at the end of a capacity-building engagement, funders should ask: Did the support meet an immediate need?
This is the moment to assess satisfaction. Post-engagement surveys or debrief conversations can help funders understand whether the support was relevant, timely, well-delivered, and respectful of the grantee’s goals and constraints. This data is especially useful for assessing provider quality and grantee experience. But this should be treated as the beginning of the measurement process, not the end.
Second, six to 12 months later, funders should ask: Did anything change in organizational behavior or practice?
This is the stage many funders skip. It is also where some of the most useful learning happens.
A follow-up survey, check-in conversation, or revisiting a pre-engagement diagnostic can help determine whether the organization is applying new skills, making different decisions, or using new tools. For example, is a team using a new financial model to guide planning or pricing decisions? Are staff using data differently to inform program design? Has a revenue strategy moved from an Excel spreadsheet to regular operating practice?
These medium-term indicators show whether capacity-building outputs are becoming part of the organization’s workflow rather than remaining a one-time project.
Third, at least a year after an engagement, funders should ask: Did the support contribute to improved organizational performance?
At this stage, the focus shifts from whether the support was useful to whether it plausibly contributed to measurable progress. Depending on the goals of the engagement, this might include changes in program reach, cost per participant, earned revenue, financial sustainability, evidence-building, or progress toward grant goals.
Importantly, these measures do not always require a new reporting system. Much of this information may already be available in grant reports, renewal conversations, annual data collection, or other existing touchpoints in the grantmaking process. The goal should be to use existing data more intentionally, not to create new measurement burdens.
This three-horizon approach helps funders distinguish among three different questions that are often collapsed into one. Did grantees like the support? Did they use it? And did it contribute to measurable progress?
What Measurement Can Reveal
When funders consistently measure capacity building over time, they begin to see patterns that satisfaction surveys alone would miss. Across our own portfolio, internal measurement has shown that capacity-building efforts are associated with meaningful organizational gains, including an average 18 percent reduction in program cost, 114 percent increase in earned revenue, and 125 percent increase in reach. These outcomes cannot be attributed to capacity building alone, but the data helps us understand whether the support correlated with the kinds of organizational changes it was designed to advance.
Consider DiscoverE, a nonprofit organization that promotes student engagement in science, technology, engineering, and math (STEM). Since becoming an Overdeck Family Foundation grantee in 2021, DiscoverE has intentionally sequenced grant funding and capacity-building supports toward goals related to scale, sustainability, and impact.
DiscoverE’s first challenge was developing a more diverse and sustainable revenue model. After participating in a workshop series, the organization was able to identify mission-aligned earned revenue opportunities that informed an updated revenue strategy with a new fee structure for its high school STEM program. With a strategic revenue model in place, DiscoverE was in a position to gain deeper understanding of its programmatic cost, which uncovered pathways to cost-effective scale. The team also received funding to complete a cost analysis exercise, which helped identify areas where programs can earn revenue to cover operational costs and where contributed revenue can ensure continued participation for students and classrooms in need of financial support. Lastly, DiscoverE received support to utilize lean testing methodology to explore potential solutions to address educator retention—a key barrier to growth.
Over this period of funding and capacity-building support, the organization saw 12 percent growth in total revenue, 65 percent growth in earned revenue, and a 24 percent increase in reach in its most recent year of operation. It also saw an increase in regions with greater than 40 percent educator retention.
It’s unlikely that capacity building alone caused these results. Rather, this example shows how funders and nonprofits can use measurement to better understand whether a series of supports is contributing to the organizational conditions that make growth and sustainability more likely.
Measurement is just as valuable when it shows us what doesn’t work.
In some cases, we found that projects with high satisfaction scores at the end of the engagement did not lead to sustained changes in organizational behavior six to 12 months later. Grantees appreciated the support, but the work did not translate into the longer-term shifts they hoped to see. That finding led us to phase out certain providers and offerings. Without medium-term measurement, we likely would have kept funding support that grantees experienced positively but ultimately did not use.
Measurement Strengthens Trust
One reason funders may hesitate to evaluate capacity-building support is concern that measurement will feel punitive. That risk is amplified if funders use data to evaluate grantees rather than improve their own support of grantee work.
Done well, measurement builds trust rather than erodes it. The key is to be clear about what is being evaluated. The purpose is not to grade a nonprofit’s performance or determine whether a grantee “used” the designated support correctly. It’s to understand whether the support was well-designed, well-matched, and useful enough to justify the time and resources it required.
That distinction should shape the entire impact measurement approach. Funders should be explicit with grantees that feedback will be used to improve or discontinue offerings, not to penalize organizations. They should right-size data collection, using existing information whenever possible, and reserve new data requests for questions that will actually inform decisions.
Funders should also be disciplined about what different data can and cannot answer. Quantitative measures can help identify patterns across a portfolio, but they may not explain why change happened or why it stalled. Qualitative insights, case studies, and conversations are often essential for understanding context, testing hypotheses, and improving support.
In our experience, this kind of measurement has not come at the expense of trust. Our foundation’s most recent Grantee Perception Report from the Center for Effective Philanthropy put us in the 92nd percentile among funders providing capacity-building support. The report also found that grantees who received capacity-building support rated us higher on trust and impact than those who did not.
The broader point is not about any foundation’s scores. It is that accountability and trust are not opposites. When funders are transparent about why they are collecting data and how they will use it, measurement can become part of a learning relationship rather than a dreaded compliance exercise.
What Funders Can Do
If the field wants capacity building to be more than a well-intentioned investment, funders need a more practical measurement standard. Three shifts would help.
- Move beyond measuring only satisfaction. Post-engagement feedback is useful, but it should not be the endpoint. Funders should define what change they expect a capacity-building engagement to support and revisit that expectation after enough time has passed for those behaviors or practice to take hold.
- Use existing data whenever possible. Capacity-building measurement should not create a second reporting framework. Funders can often learn from grant reports, renewal conversations, financial data, program metrics, and regular check-ins. More data is not the goal.
- Act on what you learn. Measurement only matters if it changes decisions. Funders should use data to adapt their recommendations, refine scopes of work, and discontinue offerings that do not lead to meaningful change. Some investments won’t pay off; that is not failure if the lesson improves future decision-making.
Capacity building remains one of the most promising ways funders can help nonprofits strengthen their organizations beyond the grant. But good intentions are not enough. If funders ask nonprofit partners to invest time and attention in capacity-building support, we should be prepared to examine whether that support changes practice, improves performance, and contributes to goals. A stronger evidence standard will help funders make sure capacity building is worthy of the organizations we serve.
Read more stories by Lucy Brainard.