Capacity Building: What It Is and Why It Matters

Investing in future strength and capability

Capacity-building is the process of developing an organization's strength and sustainability. More than just important, it is essential for your nonprofit's health and longevity. Capacity-building enables you to focus on your mission—not simply on survival.

What capacity building means

By definition, capacity-building is a measurable improvement in an organization's ability to fulfill its mission through a blend of sound management, strong governance, and dedication to assessing and achieving results.

Capacity-building is a specific effort to strengthen:

Organizational infrastructure. This includes things like facilities (both workplaces and service locations), equipment (computers and other technology, office supplies, equipment essential to services) and workplace operations (such as payroll and accounting).
Management and governance. This refers to your nonprofit's board and executives.
Staff capacity. This includes education and professional development.

Imagine a food bank that improves its inventory management system so it can deliver more food, more quickly, to more people. The food bank boosted its performance by enhancing its internal management. That is capacity-building in action.

Why capacity-building matters

Improving management practices is a well-accepted tenet in the business world. The practice traditionally has received short shrift in the nonprofit realm, however, where the focus has more often been on projects rather than infrastructure.

Without capacity-building, you risk focusing all of your energy and attention on providing services and expanding projects. This lack of a strong foundation may lead to organizational instability, which might appear in old and deteriorating equipment, poor communication between leadership and staff, and "mission drift"—a loss of focus on your nonprofit's founding principles.

Don't make the mistake of being so absorbed in seeking support for your signature program that you fail to assess whether the program is functioning as well as it could—or even if it's the best vehicle to achieve your nonprofit's goals in the long run.

Where to target capacity-building efforts

With capacity-building, you will maintain focus and determine the best ways to deliver your vision and mission. You will create and maintain strong foundations for projects, measure internal effectiveness and external impact, and plan and cultivate strategic relationships.

Consider this grid from the Center for Public Skills Training to assess where to target capacity-building efforts:

Mission, vision and strategy Strategic planning Organizational planning Accountability Systems	Strategic relationships Collaboration and strategic restructuring Marketing and communications
Governance and leadership Leadership development Board development Succession planning	Resource development Fund development Business planning for revenue generation
Service delivery and impact Program design and development Outcomes measurement Program analysis and evaluation	Internal operations and management Human resources management Financial management Operations Technology and information systems Facility planning Legal and risk assessment Volunteer development

Who to involve

Capacity-building generally begins with board members, who might offer ideas for innovation and opportunities for expansion. Involving staff in capacity-building is also key. Group learning improves information retention and brings the organization into the capacity-building fold as a whole.

Outside consultants may play a role here, too. While it may seem counterintuitive to pay a consultant for input on the "back office" operations of a program-oriented organization, returns on that investment may include greater efficiencies, more precisely targeted services, and more capable, knowledgeable staff.

How to find the funds

Earmarking some of your operating budget for a capacity-building initiative is an investment in your organization's future strength and capability. You might also seek dedicated capacity-building support from grantmakers wishing to leverage their philanthropic donations. Alternatively, pro bono or in-kind consulting services might be available from such firms as the Taproot Foundation or the SISGI Group. In the U.K., the database GoProBono lists dozens of pro bono providers.

Keep timelines and goals realistic

Effective capacity-building requires ongoing assessment and attention, while specific capacity-building initiatives may have timelines ranging from months to years. Access – The Foundation for Social Investment, a U.K.-based capacity-building firm, has a one-year timeline beginning with a strategy announcement and concluding with the collection of evidence of outcomes 12 months later.

The broad result of a capacity-building effort should be an overall strengthening of purpose, but more concrete improvements are key. According to a study of nonprofits in Minnesota, concrete goals for reorganizing might include completion of a strategic plan, improved fundraising techniques, improved communication with clients and addressing changes in client demographics.