Eight Lessons for Foundations Interested in Building the Capacity of Nonprofits

How does an organization become healthier and stronger? Many foundations are interested in the answer to this question so that—through capacity-building grants and other support—their grantees can become more effective in realizing their larger goals and mission. Following are some key lessons and reflections from SPR’s organizational effectiveness studies conducted for philanthropic clients.

  1. Devote adequate support for implementation and follow-up. A top priority area for both grantees and foundation staff is devoting sufficient support—in the form of additional funds and time—for the critical implementation stage of capacity-building efforts. Conducting more follow-up is also seen as important for understanding the broader and longer-term effects of capacity-building grants beyond the final reporting period, and determining whether the capacity building project “stuck” with the organization.
  2. Recognize the importance of consultant fit. Based on our own, and field research, foundation staff and grantees agree that finding an appropriate consultant is the most critical factor of success in grantees’ capacity-building efforts. Specific ingredients of success are the depth of the consultant’s knowledge in the relevant field and their ability to build rapport with the grantee. Common reasons given for a poor fit were: (1) ultimately needing a different expertise area than what the consultant possessed, (2) requiring more work from grantee staff than anticipated relative to the consultant, and (3) the consultant providing recommendations or products that were too general in nature for the grantee’s particular situation. Supplementing what we have learned across our evaluation projects, organizational effectiveness research confirms the importance of consultants adopting a flexible and customized approach to building the capacity of grantee organizations.
  3. Ensure a clear theory of change with reasonable outcome expectations. At the outset, it is critical for foundations to define and communicate to grantees reasonable outcome expectations from capacity-building investments. Considering the size and duration of capacity building grants, are these investments expected to result in discrete short-term accomplishments and improvements, such as the formulation of a strategic plan? Or are they expected to have larger, “transformational” outcomes for the organization as well—such as greater resiliency and capacity to achieve mission-driven goals? Foundations might also consider whether different types of capacity-building grants—e.g., ones focusing on strategic planning versus on fund development—might have different sets of expectations. A clearly articulated theory of change, with underlying assumptions, is critical.
  4. Understand the value-added of targeted funding for capacity building. While it may be more efficient to roll capacity-building grants together with programmatic and general operating support, grantees often appreciate separate, targeted funding. This ensures a concentration of time and resources on building organizational health and avoids the need for grantees to “justify” to their boards spending funds on capacity building efforts instead of on operational or programmatic expenses. Separate funding also allows an opportunity for honest conversation between foundation staff and grantees about organizational challenges and needs without the fear of jeopardizing other funding.
  5. Understand the importance of flexibility. Our research shows that foundation staff, in particular, highlighted the importance of quickly and effectively meeting the needs of diverse grantees by allowing them to self-determine their own capacity-building focus and scope of work.
  6. Align data collection efforts with outcome expectations. Once outcome expectations for capacity-building grants are clearly defined, foundations should carefully consider how data collection tools are lined up with these expectations. For example, if capacity-building grants are expected to boost organizations’ capacity to achieve their mission and larger programmatic goals, how are proposal and final report materials set up to encourage reflection and document evidence in this area on an ongoing basis? Are there appropriate pre- and post-grant assessment tools in place to measure change in desired areas?
  7. Harness the power of peer exchange. One of the top priorities of both grantees and foundation staff alike was to provide opportunities for peer exchange in order to deepen staff’s capacity-building knowledge and guide their grant making, and to facilitate learning and best practices among grantees. Grantees were particularly hungry to share capacity-building and consultant experiences with their peers working on similar issues. This would not only bolster the sharing of lessons learned and tips for hiring appropriate consultants, but also reveal potential opportunities for collaboration in their respective fields. To harness the power of peer exchange, some foundations have deliberately designed their capacity building opportunities and programs for grantees using a cohort model.
  8. Support candid reflection on capacity-building challenges as well as successes. Given that grantees are understandably inclined to report favorably on their capacity-building efforts, how can foundations encourage candid sharing of challenges and failed efforts? While this might be partially achieved through the “safe space” created by a trusting relationship between grantee and foundation staff, foundations might consider additional ways to plumb unsuccessful capacity-building grants for valuable lessons, and how additional perspectives—from consultants or grantee board members for example—might be used to balance self-reported data from primary grantee contacts.

This blog was written by Jennifer Henderson-Frakes, Senior Associate, of Social Policy Research Associates.