What is Capacity Building?
Capacity building is not just about the capacity of a nonprofit today — it’s about the nonprofit’s ability to deliver its mission effectively now, and in the future. Capacity building is an investment in the effectiveness and future sustainability of a nonprofit.
Distinct capacity building projects, such as identifying a communications strategy, improving volunteer recruitment, ensuring thoughtful leadership succession, updating a nonprofit’s technology, and improving how it measures its outcomes, all build the capacity of a charitable nonprofit to effectively deliver its mission. When capacity building is successful, 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.
- Tools for working with (and getting the most out of) consultants (ImpactRising)
When people inquire, “What is capacity building?†they may be wondering about “capacity building†as a verb (such as providing funding for a nonprofit to improve its own effectiveness, or actually teaching/instructing or consulting to build needed skills) or as a noun (the results of such skill-building). Nonprofit capacity building refers to many different types of activities that are all designed to improve and enhance a nonprofit’s ability to achieve its mission and sustain itself over time. Here is our definition (excerpted from,  A Network Approach to 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.
Capacity building is as basic as continually improving; some might consider it an obligation – both for nonprofits to undertake, and donors/grantmakers to support.
Why is capacity building important?
Why is capacity building essential within the nonprofit sector?
Nonprofit margins are very slim because they re-invest their resources into their mission. They need to have effective business practices to thrive. Many nonprofits are dependent on donated products or services to enhance their bottom line. The challenges nonprofits face are the same as for-profit businesses: strategic planning, financial stewardship, employeee engagement, operations management, process improvement, and achieving outcomes. Nonprofits’ focus is on their mission, driving deliverables in addition to board governance, fundraising, and volunteering that supports the implementation of the mission. Additionally, nonprofits are accountable to the community in ways that private businesses are not. Successful nonprofit organizations adopt many of the best practices and tools used in for-profit business as well as unique tools developed specifically for the nonprofit sector.But why should nonprofits adopt best practices? Best practices enhance success and sustainability. When a nonprofit builds effective processes and strong execution, they attract donors, board members, talent, and volunteers. They grow their capacity to weather economic storms, respond to change, grow, and conquer new challenges with enhanced mission outcomes.
While frequently invisible, and often overlooked, capacity building is the all-important “infrastructure†that supports and shapes charitable nonprofits into forces for good. Capacity building enables nonprofit organizations and their leaders to develop competencies and skills that can make them more effective and sustainable, thus increasing the potential for charitable nonprofits to enrich lives and solve society’s most intractable problems.
Practice Pointers
- There are many sources for capacity building assistance. Consultants are just one avenue. Web-based education, in-person training, peer-to-peer cohorts, communities of practice, and even pro bono skilled volunteers can offer your nonprofit and its board/staff excellent opportunities to build the capacity of the organization.
- Because the core focus of state associations of nonprofits is helping to build the capacity of other charitable nonprofits in the state, joining your state association of nonprofits is one of the most effective ways to learn about the spectrum of capacity building opportunities available locally. State Associations often offer workshops and training opportunities for board and staff, whether in-person or via the internet, as well as the ability for nonprofit leaders to learn peer-to-peer, collaborate, and stay up-to-date with recommended practices and new trends.
- Conducting an organizational self-assessment is one way to learn which core capacity areas may require more attention.
Some nonprofits have strong programs and activities but no leadership succession plan. For a nonprofit in that position, succession planning is key to protecting and prolonging its effectiveness, and thus is a critical step in its capacity building journey.