There is growing global interest in capacity building for nonprofits. In the last year alone there have been at least a dozen reports on the subject published by Rockefeller Philanthropic Advisors, Packard Foundation, Synergos, Open Impact and others. Regionally, organizations like the Indian School of Development Management (ISDM) have weighed in on the subject.

Recurring areas of focus in these reports include the need for givers to support capacity building; the power dynamic between funders and grantees; and financial and non-financial ways through which funders can engage with their grantees for lasting impact.

At Dasra, we’re seeing a promising trend: funders and social organizations increasingly agree that impacting more lives necessitates investing in not just programs, but also scaling organizations that deliver them.

This is an important development. Despite the trillions of dollars that have been invested in the social sector, the world still has a long way to go before all of humanity can live with dignity and equity. In India for instance, more than 260 million people continue to live below the poverty line. Changing this requires organizations with the potential to reach millions, working at full potential. Nothing less will enable us to achieve the Sustainable Development Goals (SDGs) by 2030.

Start Right, With a Collaborative Needs Assessment

The fundamental yet often overlooked reality is that NGOs and for-profit businesses are both composed of people pursuing common goals, bound together by systems, processes and culture. Many business principles apply to nonprofits as well (although business acumen often needs to be ‘translated’ to suit development sector realities before being applied). Like businesses, nonprofits looking to grow require support in many areas beyond their programs such as HR or Finance. But with finite resources, how should a donor choose between numerous potential areas of investment?

To start capacity building on the right foot, it is very helpful for funders to engage in a collaborative needs assessment exercise with their grantees. This enables an honest and collaborative review of  an organization’s  capabilities in relation to their ambitions.

Use a Tool to Assess and Develop Organization Capacity

The good news is that there are many broad, open-source capacity assessment tools available to funders and nonprofits today. These include McKinsey & Company’s Organizational Capacity Assessment Tool (OCAT), USAID’s Organizational Capacity Assessment (OCA),  and the Dasra Capacity Assessment Tool (DCAT) which is based on our experience of building the capacity of hundreds of NGOs over the last two decades. The DCAT views organization capacities in terms of 7 key components (mentioned below), 28 sub components and allows you to evaluate the organization’s level of maturity on each.

The snapshot above illustrates the tool’s offering using one sub component of Leadership and Talent.

While the framework of seven components ensures a holistic assessment organization’s capacity, a maturity scale for each of the 28 sub components permits an insightful and comparative discussion on what the organization must prioritize first.

Using a formal tool such as the DCAT to identify areas of development—in consultation with your grantee—is a powerful way to drive alignment and momentum around capacity building, while ensuring your choice of investment areas is not ad hoc but based on comprehensive assessment.

Scaling high-potential nonprofits is perhaps the most dependable way for funders to impact more lives. As grant makers engage more deliberately with scalable organizations, a collaborative approach and comprehensive needs assessment is a great place to begin.

DCAT - A program-agnostic capacity assessment tool designed to create deep visibility around institutional maturity and spur conversations around capacity building. Please contact dcat@dasra.org if you’d like to use the DCAT with a grantee.

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By Govind Mukundan from the Knowledge Creation and Dissemination Team at Dasra.