Why Do Capacity-Building? Another Way to Think about Our Work

I was recently challenged to help one of my clients explain the concept of capacity-building to her board – why we should do it and why it should be funded. I’ve been doing this work for so long that it just makes logical sense to me! Why doesn’t it for everyone?! I decided to use a theory-of-change logic loop and it has proved useful. I thought I’d pass along both the tool and the logic of capacity-building.

I borrowed this very basic theory-of-change logic loop from the W.K. Kellogg Foundation’s internal evaluation unit. It looks like this:




Issues and Opportunities

To apply this logic loop to capacity-building, I had to consider first the issues that have caused capacity-building to arise for nonprofits and what opportunities become available to organizations as a result. Here’s what I put together in describing “Issues and Opportunities:”

1. Nonprofits traditionally receive funding only for programs. Many funders have had restrictions about using funding for operations, equipment and other such elements of infrastructure.
2. Therefore, nonprofits have under-developed infrastructure. Many struggle with the basics such as financial reporting, as well as functions such as quality improvement systems. A common theme is under-developed board governance and, in some cases, poorly functioning executive leadership.
3. Nonprofits cannot sustain programs long-term. When the three-year grant ends, all too often, the program ends. Or it must be reorganized to attract funding from another funder. How many of us have written grants where we said we’d find a way to fund the project long-term and we had, at best, a vague idea of how to do that?
4. As a result, there is ongoing expansion and contraction of services to the community. This makes it difficult for service seekers to know where to go to get what. And it is expensive to keep repeating the “start up” cycle that comes with new funding for a new idea (or new funding for an old idea revised). Changes in service delivery should be guided by needs, not by the availability of funding.

You may have other ideas about the issues and opportunities. The logic loop helps us to identify those.

Responses

So, now what? What is the response to these issues and opportunities? Here is how I answered:

1. Initial research has identified the elements of strong nonprofit functioning. Research done by McKinsey and Company for Venture Philanthropy Partners identified seven broad categories of capacity that nonprofits need to have to function successfully.
2. It is possible to assess functioning via capacity-building assessment. McKinsey’s work has been converted to a grid that accesses the capacities that nonprofits have in four areas: leadership, adaptability, operations and management.
3. Funders understand the need to fund infrastructure development. In our region, Rotary Charities has led the way by making grants to help agencies assess their capacities and then develop plans for how to address their gaps. Rotary also provides up to three years of funding for the implementation of capacity building activities. Many of you have or are participating in this process by completing an organizational capacity assessment and developing a plan for capacity building with NorthSky.
4. Capacity building activities are undertaken. The field of nonprofit management and consulting are beginning to develop and provide services and programs that address a variety of capacity issues. We see board development, fund development, volunteer management among the more predominant needs.

This is good news. We have a tool that can help us assess capacity. We have funders who are willing to invest in strengthening capacity. And we’re starting to develop the programs that address the capacity gaps. So, off we go? Not quite!

Outcomes

We can’t leave this discussion without talking about outcomes. We all know our funders want to know what impact their funding produced. But, most importantly, all of us as leaders and staff in nonprofits need to know what outcomes we’re trying to achieve. That is true of capacity building as well. There are three levels of outcome to consider:

1. Initial outcomes: how did the functioning of the organization improve? Are boards functioning better? Is more money being raised?
2. Long-term impact: are these organizations better able to meet their missions? Are they serving more clients? Are their services more effective?
3. Social change: is the community better off because of the investment in these nonprofits? Is the community healthier? Are its citizens enjoying a better quality of life?

These outcomes seem logically connected, don’t they? But, we really don’t know for sure unless we can answer all of these questions with sound research. And this is where it gets tough – answering the last two questions requires considerable time and resources to design and implement research studies. More about that in a minute...

Putting it all together

If I put all of this information, in abbreviated form, in my logic loop, we end up with a concise way to look at what might seem like a very complex thing called capacity-building. It looks like this:




And, if I over lay on this model an approach to evaluating capacity-building, I come up with this:


Getting back to outcomes for a minute, how much time and resource should we invest in evaluating capacity-building? We can and should be able to articulate initial outcomes. But long range outcomes and social change are better left to large funders, university-based researchers and scientists, and field theorists.

I am hopeful that the logic loop offered here will give all of us the compelling rationale for continuing the very important work of capacity-building. And I hope you can see that you can apply this approach to other aspects of your work as a nonprofit organization. I wish you the best of success on behalf of your clients and the community!

Post your comments on Chris Ameen’s capacity building model.