What does nonprofit capacity strengthening mean and why is it important? How has it evolved and what are emerging trends in the field?

As part of its Organizational Effectiveness (OE) strategy refresh, the Hewlett Foundation’s Effective Philanthropy Group set out to answer these questions and better understand the current field of nonprofit capacity strengthening. Since 2004, the OE program has offered supplemental funding for current grantees of the foundation to prioritize organizational capacity needs. OE grants can be used to support a range of efforts, such as communications planning, executive transition, and financial capacity, as well as diversity, equity, and inclusion.

The primary purpose of the field scan was to inform our OE strategy refresh; hence this report is not meant to be a comprehensive review of the field of nonprofit capacity strengthening. The authors focused on reviewing recent literature and speaking with a group of 15 interviewees, comprising mostly peer foundations who already invest in grantee capacity strengthening and a select few capacity-building providers. We know that flexible funding and partnerships built on trust are the best ways funders can help nonprofits strengthen capacity, but what are other creative ways to provide support? We sought to learn about funders’ different grantmaking approaches, including what is working well and lessons learned. We also wanted to hear about emerging areas of focus and promising practices for funders.

The study found noteworthy trends and shifts in the field, including the following:

  • A distinction emerged between short-term capacity-building efforts and a longer-term organizational development approach that’s focused on more holistic investments in organizational effectiveness, sustainability, learning, adaptability, well-being, and resilience. Both types of capacity strengthening are important and require different approaches and levels of commitment.
  • There is a recognition of historic biases that have excluded many BIPOC-led nonprofits from capacity-strengthening resources — which is pushing funders to rethink resource allocation and grantmaking practices.
  • We saw an emphasis on shifting toward nonprofit ownership of, and asset-framing models for, organizational assessment.
  • A shift is happening from centering individual organizations to broadening support for networks, coalitions, and movements.

Read the full article about nonprofit capacity building by Jennifer Wei at Hewlett Foundation.