Capacity Building in the Nonprofit Sector

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Capacity building can bring a nonprofit to the next level of operational maturity.

The term “capacity building” refers to activities that improve or support the way an organization functions. Internally focused, these efforts are not as visible as mission-oriented tasks, but they are essential to the health of any business, including those in the nonprofit sector.

What specifically is involved in this work? The National Council of Nonprofits has developed this comprehensive definition of nonprofit capacity building: “Capacity building is whatever is needed to bring a nonprofit to the next level of operational, programmatic, financial, or organizational maturity, so it may more effectively and efficiently advance its mission into the future. Capacity building is not a one-time effort to improve short-term effectiveness, but a continuous improvement strategy toward the creation of a sustainable and effective organization.”

While many people play a role in this effort, a nonprofit’s leadership team will set the overall tone of the organization’s capacity-building efforts. An online Master of Public Administration program, such as Ohio University’s online MPA, can provide the skills and background needed to manage this task and prepare candidates for public leadership or other public administration career paths.

Why Is It Important?

Capacity building sometimes gets overlooked or postponed in an organization’s push to produce visible results. But this is a mistake, says the National Council of Nonprofits. “Capacity building is an investment in the effectiveness and future sustainability of a nonprofit,” the council says. “It strengthens a nonprofit’s ability to fulfill its mission over time, thereby enhancing the nonprofit’s ability to have a positive impact on lives and communities.”

A recent study done by American University and North Carolina State University suggests that capacity building does more than just build a strong foundation for a business — it has financial implications as well. The study followed 184 nonprofits that received capacity-building grants. It found that organizations that received any type of capacity-building grant grew their budgets by about 10% in the three years following their grant. This result, the authors conclude, indicates that capacity-building support is positively associated with nonprofit financial growth — which in turn suggests that it is an important goal for nonprofit leaders to pursue.

Seven Dimensions

Where and how does capacity building take place? The organization Learning for Action identifies seven capacity-related dimensions that apply to every nonprofit to various degrees:

  • Vision and impact
  • Governance and leadership
  • Program delivery
  • Resource generation
  • Internal operations and management
  • Evaluation and learning
  • Strategic relationships

According to Learning for Action, a nonprofit that experiences challenges in one or more of these capacities can take two basic approaches. The easy approach is to perform a focused intervention, which addresses a specific problem or pain point without looking at the bigger picture. Alternately, a nonprofit can perform a developmental intervention, which seeks to understand the problem as it relates to all seven dimensions and tailor the solution accordingly. This type of approach not only solves the immediate problem, it also strengthens the organization as a whole.

Who Is Involved?

Taking a developmental approach to capacity building is not a one-person show. According to the nonprofit networking site MissionBox, this effort generally begins with the nonprofit’s board, which might offer ideas for innovation and opportunities for expansion. Involving staff, too, is essential. “Group learning improves information retention and brings the organization into the capacity-building fold as a whole,” the site says.

Outside consultants may play a role as well. Many nonprofits are reluctant to pay a consultant for input on “back office” operations when visible results are so important. However, MissionBox points out, “Returns on that investment may include greater efficiencies, more precisely targeted services, and more capable, knowledgeable staff.” These improvements can streamline a nonprofit’s efforts and lead to greater success in public-facing areas.

A nonprofit’s leadership, of course, is ultimately responsible for evaluating, directing, and driving these efforts. Leaders therefore should understand the importance of capacity building and make it a priority in daily operations.

Tips for Success

Learning for Action offers a series of practical tips to help nonprofit leaders succeed in this effort:

  • Focus on continuously assessing need across all dimensions of organizational capacity so you understand the full range of your needs at any point in time — as well as which are the highest priority needs.
  • Include capacity building activities in your organizational budget. Negotiate for general operating expenses to be included in grants received for programs or services.
  • Be discriminating about capacity building. Do not do something just because someone makes it available to you or urges you to do it. Only use supports that are relevant and appropriate.
  • Ensure that your nonprofit has both the capacity (especially time) and skills to effectively engage with a capacity-building initiative. Ensure that resources are in place to implement capacity-building plans.
  • Adopt a holistic capacity-building plan for your nonprofit.
  • Ensure that capacity-building efforts include all organizational stakeholders to promote buy-in.

By keeping these tips in mind, nonprofit leaders can give their organizations the best possible foundation for current success while also laying the groundwork for future longevity. Capacity building may not be the most visible or applauded part of a nonprofit leader’s work, but it is a recurring thread among managers with proven track records of sound management, strong governance, and dedication to achieving positive results.

About Ohio University’s Online Master of Public Administration (MPA) Program

Ohio University’s online MPA program is dedicated to preparing professionals for a career in public administration. Through the university’s prestigious Voinovich School of Leadership and Public Affairs, students gain an overview of the scope of public administration work while building skills in policy, finance, leadership, business, management, and communications. The school occupies the No. 12 spot in the SR Education Group’s 2019 Best Online Colleges Offering MPA Programs ranking.

The program, which is 100% online, offers three concentrations: Public Leadership and Management, Non-Profit Management, or State and Local Government. Students can finish their degree programs in as few as two years. For more information, contact Ohio University now.

Recommended Reading:

Seven Ideas When Budgeting for Nonprofits

Innovative Tips for Coordinating Nonprofit Organizations

Developing Successful Public-Private Partnerships



Capacity building definition and importance – National Council of Nonprofits

Financial implications of capacity building – Learning for Action

Seven dimensions – Learning for Action

Who is involved – MissionBox

Tips for success – Learning for Action