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About the Project, Practice Matters The Improving Philanthropy Project presents a series of papers that. explore and ultimately aim to advance key practices in philanthropy Written by. national experts the titles address ten core philanthropic practices using intermediaries. sponsoring policy commissions effecting community change attracting and managing. talent creativity in grantmaking using ideas in building a field building organizational. capacity communications for social good foundation partnerships and evaluation. The series starts from the premise that philanthropy as a field needs to understand good. philanthropic practice much better than it does now and that there is a discernible. craft that can be taught and improved The papers and accompanying discussion. guides are available for free download at the Foundation Center s web site at. foundationcenter org gainknowledge practicematters. Practice Matters The Improving Philanthropy Project is supported by the California. Endowment and the Robert Wood Johnson Ewing Marion Kauffman John S and. James L Knight and David and Lucile Packard Foundations The project is housed at. the OMG Center for Collaborative Learning in Philadelphia Patricia Patrizi Principal. Patrizi Associates directs the project Abby Spector serves as project manager and Kay. Sherwood is the principal manuscript editor,For more information please contact. Patrizi Associates,1528 Walnut Street Suite 805,Philadelphia PA 19102. 215 732 2200 ext 235,practicematters patriziassociates com. About the Foundation Center, Established in 1956 and today supported by hundreds of foundations the Foundation.
Center is the nation s leading authority on organized philanthropy It maintains the most. comprehensive database on U S grantmakers and their grants conducts research on. trends in foundation growth and giving and operates education and outreach programs. Thousands of people visit the Center s web site each day are served in its five regional. learning centers and its national network of Cooperating Collections For more informa. tion visit foundationcenter org or call 212 620 4230. For more information please contact,The Foundation Center. 79 Fifth Avenue,New York NY 10003,212 620 4230,foundationcenter org. Copyright 2006 by The Foundation Center All rights reserved. ISSN 1545 6781, The Capacity Building Challenge A Funder s Response 2. PRACTICE MATTERS THE IMPROVING PHILANTHROPY PROJECT. The Capacity,Building Challenge,PART I A Research Perspective. Paul C Light,Elizabeth T Hubbard,Part II A Funder s Response.
starts on page 63,Editor s Note, When we commissioned The Capacity Building Challenge A Research Per. spective by Paul C Light and Elizabeth T Hubbard we took advantage of. a study the authors already were conducting on organizational effective. ness and nonprofits The Nonprofit Effectiveness Project directed by. Light and based at the Brookings Institution had received funding from a. diverse group of funders1 to study how nonprofits achieve and sustain. higher performance The final report from this research Sustaining Non. profit Excellence The Case for Capacity Building and the Evidence to Support. It will be published in summer 2004, At the time there was a real wave of interest in philanthropic circles in. the topic of capacity building The number of funders investing in build. ing nonprofit capacity was on the rise but some were beginning to ques. tion whether their grants were really as effective as they could be In. this paper Light and Hubbard report on interviews with diverse grant. makers about the kinds of capacity building programs they were support. ing including the desired outcomes change strategies champions and. resources involved In our experience it is funders who shape the field of. capacity building based on their prevailing concepts of what works. Although The Capacity Building Challenge A Research Perspective can. not answer every question about what leads to effective programs it makes. a very real contribution by providing a more orderly scientific understand. ing of the types of foundation supported capacity building approaches. now in the field and the key differences among them Also it suggests a. way of thinking about comparing outcomes across different capacity. building activities and funding programs This represents an important. step toward meaningful evaluation of how and when capacity building. produces stronger organizations,Patricia Patrizi,Kay Sherwood. Abby Spector, 1 Funders include Atlantic Philanthropies the David and Lucile Packard Foundation the. Eugene and Agnes E Meyer Foundation the Ewing Marion Kauffman Foundation the. Fieldstone Foundation Grantmakers for Effective Organizations the Irene E and George A. Davis Foundation and the James Irvine Foundation, The Capacity Building Challenge A Research Perspective 4.
Executive Summary,Introduction, Investments to enhance the organizational capacity and performance of. nonprofits have increased dramatically in recent years Yet despite the. popularity of the concept relatively little research is available that clearly. demonstrates the value of nonprofit capacity building or links it to. improved program outcomes, What is needed are more comparable and comprehensive findings. about the outcomes of capacity building both to ensure the ongoing com. mitment of funders to support this work and to demonstrate what kinds. of capacity building efforts have the greatest effects and when This paper. proposes a system for understanding the various approaches to capacity. building and a strategy for measuring the outcomes of capacity building. activities, The findings reported here are drawn from 1 analyses of the capacity. building efforts of eight diverse funders that are home to some 16 distinct. capacity building programs 2 telephone surveys of 250 assistance provid. ers in the organizational effectiveness movement and 250 executives of. high performing nonprofits conducted as part of the Brookings Institu. tion s Nonprofit Effectiveness Project and 3 ongoing research on the. state of the nonprofit sector,Toward a Theoretical Framework. In practice nonprofit capacity building refers most often to activities that. are designed to improve the performance of an organization by strength. ening its leadership management or administration However organiza. tions are not the only focus of capacity building activities Capacity. building efforts can be designed to serve individuals organizations geo. graphical or interest communities or the nonprofit sector as a whole Fur. ther the intensity and duration of the effort can distinguish a capacity. building engagement as either aimed at implementing new systems short. term or achieving wider organizational change long term These efforts. can further be usefully classified based on the areas of organizational life. they seek to affect external relationships internal structure leadership. and or internal management systems, The Capacity Building Challenge A Research Perspective 5.
Executive Summary, Four key elements play a significant role in determining the scope. design and ultimate success of any capacity building engagement 1 the. desired outcome or defining goal 2 the change strategy selected to help. realize that goal 3 the champions guiding the efforts be they internal or. external and 4 the resources time energy and money invested in the. A Scan of the Field, The 16 programs of the eight funders studied fall into three general cate. gories 1 direct response programs which provide funds or services to. nonprofits to address defined capacity building needs 2 capacity building. initiatives which target a select group of nonprofits and usually address a. broad range of organizational effectiveness issues and 3 sector strengthen. ing programs which support knowledge development by funding research. projects or educational institutions knowledge delivery by funding. management support organizations nonprofit consulting firms or the dis. semination of research findings or knowledge exchange by funding. convening efforts such as affinity groups or conferences. Most capacity building approaches are characterized by either a. focused problem centered approach or a broader commitment to work. on a range of organizational issues In most cases direct response capacity. building programs are problem centered and capacity building initiatives. take a broader approach to organizational development When discrete. capacity building projects are selected as the means to improve organiza. tional effectiveness the funders working in this way place the greatest. emphasis on efforts to improve internal management systems followed by. external relations leadership and internal structure. The researchers uncovered great diversity in program design and. approach ultimately making use of 103 different categories to track pro. gram characteristics These were then collapsed into the four key elements. of capacity building previously described which reflect key program. design choices and provide a framework for discussing prevailing practices. among funders engaged in nonprofit capacity building. 1 Desired Outcomes, Outcomes vary in nature and scope The first step toward achieving the. desired outcome may actually be organizational diagnosis to determine. the true scope and nature of the challenge Although most programs stud. ied made small investments in working to build the capacity of their grant. ees some made sequential grants enabling grantees to address complex. systemic issues, The Capacity Building Challenge A Research Perspective 6. Executive Summary,2 Change Strategies, In terms of change strategies funders favor strategic planning fundraising.
and financial planning and governance Executives of high performing. nonprofits report that their organizations have fresh plans and benefit. from engaged and hard working boards confirming in large part the. funders own perspective on where the capacity building leverage may be. greatest It is interesting to note however that although funders faith in. planning seems unshakable nonprofit executives expressed the growing. concern that traditional strategic planning models may be outdated Exec. utive directors also reported that leadership is the keystone of effective. organizations,3 Champions, Funders rely heavily on consultants as the primary champions for promot. ing and or assisting with organizational improvement Findings from the. Nonprofit Effectiveness Project also suggest that outside assistance is seen. as a proven means of promoting organizational improvement Executive. directors demonstrated less confidence in the value of outside assistance. and believe that successful capacity building does not necessarily require. outside support or assistance,4 Resources, Capacity building engagements must involve sufficient resources in order. to succeed The direct response programs in this study make relatively. small grants of 10 000 or less On average these grants constitute less. than two percent of their grantees budgets The relatively small size of the. investments through these programs increases the importance of making. the right investments Part of determining if the investment is right is. assessing whether the organization is ready and willing to work on the. capacity building opportunity Some funders make this assessment. through site visits others require a cash contribution from grantees to help. ensure commitment to the capacity building project. Toward an Evaluation Strategy, Currently nonprofit capacity building lacks clear metrics that might dem. onstrate its effectiveness to boards funders and potential consumers The. current debate over measuring capacity building is centered on where the. grantmaker evaluator or organization should look for outcomes There. are at least three levels of outcomes that themselves make up a logical. chain 1 grant outputs were the immediate objectives of the grant met. 2 organizational outcomes did the engagement improve the function. ing or performance of the organization and 3 mission impact did the. engagement allow the organization to more effectively serve its mission. The Capacity Building Challenge A Research Perspective 7. Executive Summary, Currently most efforts to evaluate capacity building engagements focus. on grant outputs whether the immediate grant objectives were fulfilled. and on the process of the engagement strengths and weaknesses lessons. learned unexpected challenges The grant outputs approach to evaluation. is most common among funders with relatively small capacity building pro. grams is logical and offers many benefits It meets the grantmaker s first. requirement for accountability ensuring that grant funds are spent as. promised It is cost effective as it is based upon grantee self reports It is. timely as reports are due when the grant closes In short the outputs. approach is a feasible method of collecting information that can be imme. diately incorporated into improved future grantmaking. However the grant outputs strategy of evaluation does not necessarily. offer any evidence that meeting the objectives of the grant actually matters. in any meaningful way A mission based view of success is most common. among larger more comprehensive capacity building programs Given. available resources and focus on mission measuring success according to. mission impact is logical and appropriate for large scale comprehensive. capacity building programs, Most capacity building resources are invested through relatively small.
short term grants Holding such grants accountable for significant. increases in mission related outcomes may not be realistic Yet failing to. hold these grants accountable for affecting the next step in the logic. chain organizational outcomes does a disservice to both the nonprofit. sector and the capacity building field, The challenge is to develop a set of easily applicable measures that can. demonstrate with greater rigor how capacity building engagements con. tribute to organizational effectiveness The goal would be to shift the eval. uation focus from outputs to outcomes from whether an organization has. a strategic plan to what difference that plan has made in terms of organiza. tional functioning and performance Developing such measures requires. articulating more clearly how certain engagements are expected to con. tribute to organizational effectiveness or sustainability. One promising approach would involve a 360 survey of everyone. involved in a given capacity building effort including grantmakers cham. pions board members clients and community stakeholders Such a sur. vey could be used to measure post engagement outcomes against pre. engagement expectations The resulting data would allow researchers to. search for patterns in outcomes according to organizational size age or. type or even executive director tenure or provider qualifications This. would make a significant contribution to the field of capacity building by. pushing the knowledge base beyond anecdotal evidence and compiling. findings across engagements and even funders, Evaluating the outcomes of engagements would however show how. capacity building contributes to organizational performance And the. measures to do so such as productivity efficiency and mission focus are. likely to be strongly correlated with programmatic impact. The Capacity Building Challenge A Research Perspective 8. Executive Summary,Conclusion, The commitment and passion that nonprofit organizations and funders. bring to their work will continue to drive the quest for stronger more sus. tainable organizations and improved mission impact Concern about. organizational performance is not likely to diminish Yet without evi. dence demonstrating how capacity building produces stronger organiza. tions and lacking a baseline against which to declare success or failure it is. difficult for nonprofit executives and funders alike to justify spending. scarce resources on capacity building efforts, Building a better knowledge base about the impact of capacity building. requires standard measures for organizational outcomes and a methodol. ogy that allows comparison across different types of capacity building. engagements and programs Further work on the measures of organiza. tional outcomes would generate knowledge that would help capacity. builders sort through what engagements might have the greatest impact. under given conditions and what kind of capacity building programs are. most effective Findings could help transform the recent spurt in capacity. building activities into a more lasting commitment to organizational. effectiveness within both the nonprofit and philanthropic sectors. The Capacity Building Challenge A Research Perspective 9. Introduction, Capacity building is a popular term in the nonprofit sector these days It is.
a concept that is discussed at conferences written about in journals pro. moted by consultants and funded by foundations In fact an Internet. search for nonprofit and capacity building produces nearly 25 000. hits 1 Yet despite the popularity of the concept relatively little research is. available that demonstrates the value of nonprofit capacity building. The focus on capacity may seem to suggest an interest in the size and. scope of a nonprofit s services implying perhaps that building capacity. would involve building larger facilities hiring more staff or receiving. more program dollars However the term capacity building is most. commonly used to describe activities that strengthen an organization so. that it can more effectively fulfill its mission 2 Capacity building focuses. on improving the leadership management and or operation of an organi. Investments in zation the skills and systems that enable a nonprofit to define its mis. organizational sion gather and manage relevant resources and ultimately produce the. outcomes it seeks, capacity and Interest in improving nonprofit performance is neither new nor revolu. performance tionary It can be argued that capacity building is simply the latest term for. have increased activities that were once called organizational development leadership. dramatically in training technical assistance or management improvement What is new. perhaps is the level of interest in and resources directed toward capacity. recent years, building That interest can be gauged in many ways not the least of which. is the rapid growth of the Grantmakers for Effective Organizations. GEO Founded in 1997 GEO is the fastest growing affinity group of. the Council on Foundations and now includes more than 600 members. devoted to creating a community of practice among funders interested. in organizational performance That interest can also be seen in the. growth of the Alliance for Nonprofit Management which was formed in. 1998 to improve technical assistance to the nonprofit sector and in the. rapid expansion of The Nonprofit Quarterly which was launched in 2000. as a national source of advice on building capacity. Fortunately there is more than just talk about capacity building While. measuring funding for capacity building is a nearly impossible task avail. able data suggest that investments in organizational capacity and perfor. mance have increased dramatically in recent years 3 According to. Foundation Center data investments in management development a cat. egory that includes staff training strategic and long range planning. The Capacity Building Challenge A Research Perspective 10. Introduction, budgeting and accounting and technical assistance operational or man. agement assistance increased from 2 1 percent of foundation giving in. 1994 to 2 8 percent in 2000 an increase of a third 4 Given the overall. rise in foundation giving during this period the dollar value of this. increase was significant In 2000 422 million was granted for manage. ment development and technical assistance up from 132 million in. 1994 Adjusting for inflation this represented a real increase of 269 mil. lion for capacity building, It seems clear that foundation funding is helping spur or at least. underwrite the nonprofit sector s interest in capacity building This. raises a crucial question Can this level of philanthropic investment in. capacity building be sustained Or put another way does interest in. capacity building reflect a deeper commitment to nonprofit performance. or is it simply a passing fad The answer is not yet clear Given the. increased emphasis in the philanthropic sector on measurable outcomes. however it seems likely that funding for capacity building will wane. Funding for capacity unless there is clear evidence that capacity building does indeed build. building will wane stronger more effective organizations. unless there is clear This is not to suggest that there is a complete lack of knowledge about. evidence that it the outcomes of capacity building activities Anecdotal stories abound and. a number of foundation funded programs have been evaluated 5 What is. does build stronger, needed however are more comparable and comprehensive findings about.
more effective the outcomes of capacity building Better information is needed about. organizations both the outcomes of different types of capacity building activities or. engagements such as strategic planning board retreats or new account. ing software and different types of funding strategies short term versus. long term grants targeted versus more comprehensive approaches etc. Without this kind of information there is little guidance available to. funders who are trying to determine whether and how to invest in capacity. building And perhaps more worrisome for those interested in organiza. tional effectiveness there is little basis for arguing that capacity building is. a good use of scarce philanthropic dollars 6, The challenge facing the capacity building movement is to build the. knowledge base about the impact of its work Developing a broad and. broadly shared knowledge base about capacity building is an ambitious. goal to be sure Capacity building encompasses a wide range of activities. foundation funded capacity building programs reflect a wide range of. funding strategies and nonprofits differ drastically in terms of mission. size need readiness for change and available resources Trying to sort out. what kind of capacity building activities seem to be most effective while. taking into account the differences among nonprofits is a major undertak. ing Trying to come to research based conclusions about the advantages or. disadvantages of different funding approaches is similarly difficult Both. research tasks however begin with the same first step determining a. methodology for identifying and measuring capacity building outcomes. The Capacity Building Challenge A Research Perspective 11. Introduction, This paper proposes a strategy for measuring the outcomes of capacity. building activities, The paper is divided into three main parts Analyzing Capacity Build. ing A Theoretical Framework focuses on clarifying terms in this section. of the paper we examine how the term capacity building is commonly. used and offer a model that describes the key elements found in capacity. building work The next section Funding Capacity Building A Scan of. the Field presents the findings from a review of foundation funded. capacity building programs and identifies some of the key differences. among these programs In the final section Measuring Capacity Build. ing Toward an Evaluation Strategy we suggest a way of thinking about. comparing outcomes across different capacity building activities and. funding programs, Eight funders are featured in this analysis together these funders offer. 16 different capacity building programs that distributed more than 28. million through approximately 380 grants in 2001 7 The paper also draws. upon research by the Brookings Institution s Nonprofit Effectiveness Pro. ject including a telephone survey of 500 leaders in the organizational. effectiveness movement in depth follow up interviews with 50 of these. leaders and ongoing research on the state of the nonprofit sector 8. The Capacity Building Challenge A Research Perspective 12. Analyzing Capacity Building,A Theoretical Framework.
Clarifying Terms, Capacity building is one of the most fashionable yet least understood. terms in the nonprofit sector today As Ann Philbin noted in her study on. capacity building Within the field of capacity building there is a striking. lack of a shared definition of capacity building its features and essential. elements 9 In the report In Other Words A Plea for Plain Speaking in. Foundations Tony Proscio describes capacity as an empty word with a. comfortably wide girth He writes Making grants and providing expert. advice aka technical assistance to help these organizations run better is a. profoundly philanthropic mission and smart besides So why has such a. Within the field of good idea brought with it such an infestation of vague quasi occult terms. capacity building beginning with capacity 10, Interviews with nonprofit leaders funders researchers and consultants. there is a striking confirm that the term capacity building is at best loosely defined 11. lack of a shared When asked to define capacity building respondents offered a wide range. definition of capacity of answers In the simplest form it is staff development said one. building its features researcher Meeting the needs of the community said a nonprofit exec. and essential utive Improving nonprofits ability to move toward their mission and. also to reach more constituents offered a provider of technical assistance. elements Anything that strengthens the organization as an organization as. opposed to those things that strengthen its programs and services said a. grantmaker Developing networks which in turn leads to social capital. which in turn increases the community s capacity to provide services. suggested a scholar, In practice nonprofit capacity building refers most often to activities. that are designed to improve the performance of an organization by. strengthening its leadership management or administration 12 As the. next section will show however organizations are not the only focus of. capacity building activities One way to distinguish among capacity build. ing programs is to identify whether they are designed to serve individuals. organizations geographical or interest communities or the nonprofit sec. tor as a whole, The Capacity Building Challenge A Research Perspective 13. Analyzing Capacity Building A Theoretical Framework. Distinguishing Among Capacity,Building Programs, An emerging view of capacity building places it within a broad theoretical.
framework that links capacity building to a vital civil sector and thus to a. strong democratic society 13 From this perspective capacity building s. ultimate goal should be to achieve and sustain high performance in the. nonprofit sector to meet the needs of a complex rapidly changing society. Capacity building programs however operate on many levels they serve. individuals organizations geographical or interest communities or the. nonprofit sector as a whole These levels are interrelated Working to build. the capacity of an interest community such as environmental advocacy. groups involves working with organizations and ultimately individuals. Similarly investing directly in developing the skills and abilities of indi. viduals can in turn contribute to building stronger organizations com. Capacity building munities and the nonprofit sector. To start the process of sorting the widely varying capacity building pro. programs operate grams that currently exist in the nonprofit sector a simple two dimen. on many levels they sional map can be developed Programs are placed along a horizontal axis. serve individuals according to their targets for assistance which extends from individuals to. organizations organizational units such as development or financial management units. geographical or to organizations as a whole subsectors of organizations interest commu. nities geographical communities and to the broader nonprofit sector. interest communities The map s vertical axis representing duration of programs ranges capac. or the nonprofit ity building programs from short term to long term which roughly dis. sector as a whole tinguishes efforts to implement new systems from those intended to. achieve wider organizational change 14 On the map below programs that. take a venture philanthropy approach which often have a long term. subsector focus would be located in the middle of the top right section. see point A below Leadership development programs with a shorter. term individual level focus would be located in the bottom left section. see point B below,Figure 1 Mapping Capacity Building Programs. The Capacity Building Challenge A Research Perspective 14. Analyzing Capacity Building A Theoretical Framework. Distinguishing Programs Grants and,Engagements, Part of the problem in defining capacity building involves the unit of anal. ysis Funders tend to talk about capacity building programs which can be. defined as portfolios of individual grants while providers of technical. assistance often talk about capacity building engagements which is a term. of art from the consulting industry that is often used to describe specific. contracts or activities Executive directors often talk about capacity build. ing as an ongoing stream of activities that involve multiple funders and. engagements while scholars often write about broad philosophies of. capacity building rooted in different images of what constitutes a high. performing nonprofit organization, From a funder s point of view it is useful to segment the term into three. Funders tend to talk 1 A capacity building program refers to an effort to help. about capacity nonprofits through a specific approach that is defined in. building programs grantmaking guidelines As noted above a program can serve. technical assistance a small number of organizations or a geographic region a. providers talk about handful of executive directors or a specific subsector of. nonprofits in the arts environment human services or other. capacity building field For example a management assistance program may. engagements and make consulting funds available to grantees or a. nonprofit executives comprehensive community building program may support a. talk about a stream range of activities in targeted neighborhoods The eight. funders discussed below offer 16 different capacity building. of activities programs most of which operate by making grants. 2 A capacity building grant provides support to a single. organization to undertake capacity building activities or if. the grant is made to an intermediary organization to provide. capacity building services to others, 3 A capacity building engagement refers to a specific capacity. building effort within a single organization Although funders. often use grants and engagements interchangeably some. grants support more than one type of engagement For. example a single grant may support both a strategic planning. process and the installation of new accounting software. Figure 2 shows the layering of these three levels of capacity building. The Capacity Building Challenge A Research Perspective 15.


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