Why is Capacity Building Key?
Capacity building is all about effectiveness. To build your capacity, you need to undergo improvements that make your organization more effective. This may seem broad, but there is a broad range of options for capacity building. Capacity building can cover the tangible and intangible, including information, skills, structures, and processes. Some organizations need to invest in information such as data or research. Some need an improved skillset or procedural ability among its staff. Some just need the tools for the job whether that is computers, vehicles, cooking equipment, or other particular machines. Finally, some organizations need space to work which could involve a kitchen or even an office where the work can start. You can learn more about the advantages and paths to capacity building here. Maybe you are convinced of the need for capacity building or maybe not, so let’s take a look at why it matters and how to fund that work.
Why does capacity building matter?
While internal improvement comes naturally to the for-profit industry, it is often an overlooked practice in nonprofits. So many nonprofits overlook spending money on internal improvements and upgrades in favor of putting every possible dollar into programming. It is easy to see why nonprofits are driven by their mission and vision and programming is the most correlated activity with pursuing that mission. This seems like the most natural decision and often, the most effective way to fulfill reach your vision. Unfortunately, it leads many nonprofits to a more challenging future rather than success. Investing only in programming leaves your organization without a stable base on which to build. Great programming built upon outdated equipment, deteriorating facilities, or insufficient staff to leadership communication will inevitably be destabilized by the lack of an internal foundation. You can picture capacity building as the infrastructure essential to driving. You can invest your budget into a great car that satisfies all of your driving needs right now, but if the road is left unfunded, that car will only get you so far before you are stuck. Great programming is only as great as the foundation supporting it.
How to fund capacity building
A Majority of nonprofits operate on razor-thin budgets. Because organizations are not swimming in reserve cash, dedicating funds to internal improvements such as new technology, building repairs, replacing broken tools or machines, and more may seem unreasonable as it detracts from the funds available for programming. Programming is the goal after all right? Programming is the goal as it is the manifestation of mission strategy that drives organizations toward their vision. Despite this, programming is driven by more than the active program.
Therefore, investing in capacity building is an investment in programming. That is the argument for the first strategy for investing in capacity building: designating a portion of your operating budget for capacity building. This will cut into the amount of funds available for programming which is why the understanding that capacity drives programming is important. If your organization does not have the budget to support this strategy, don’t despair and don’t abandon capacity building. There are many opportunities for nonprofits to receive capacity-building grants. These are grants that foundations give for the sole purpose of capacity building because these funders recognize the importance and impact of building out an organization’s internal effectiveness on program success.
Unlike the finds you may already possess, grants are not ready to be spent immediately. Grants must be found, applied for, received, and then spent. Despite this, grants are a highly desirable method for building capacity because it allows your budget and programming to remain as is. So where do you start? We have compiled a list of grants and how to apply for them which can be accessed here. Additionally, communicate with your large donors and open a dialogue about capacity building and the advantages it can provide to your organization specifically. As technology and specialized skills, because increasingly necessary and available, many donors are recognizing the important need for a capacity-building budget. These donors may have an interest in a gift designated for capacity building.
The final note on capacity building is that if it seems challenging, don’t forget that is! There are many specific kinds of grants that apply to specific uses. Additionally, knowing what is the most important area to spend funds on is complicated. These are crucial funds and choices that can potentially lay a sturdy and highly effective foundation for an organization. Having a knowledgeable nonprofit leader to make these decisions is advantageous. Additionally, many grants can be used for strategic planning which allows developing nonprofits access to an important process. Learn more about strategic planning by checking out our blogs on What is the Value of Strategic Planning to Your Organization?, What is the Purpose of Strategic Vision in a Strategic Plan?, and Why Vision-Based Strategic Planning Matters.
Ready to start building your organization’s capacity? At NMBL Strategies, we develop strategies that bring value to nonprofits. Whether it’s change management, fundraising or strategic planning, leadership development, and more, we deliver cutting-edge insights and decades of experience to our clients.
