THE IMPACT LEAK – Capacity Building without Funding. No such thing.

- What impacts the good we do?

“Capacity Building” is definitely a catchphrase, used by funders expecting significant changes and by Boards expecting few changes. Both perspectives are off the mark. I like Madeleine Monson-Rosen's short yet apt description “Capacity-building is the process of developing an organization's strength and sustainability.” That’s it, the full enchilada so to speak, but the twists and contortions that organizations go through to achieve ‘development’ are often beyond measure. And that’s a pun because ‘measure’ is the main tool of Capacity Building.

Photo by eskay lim via Unsplash

The areas usually covered by Capacity Building are a) Organizational Infrastructure, b) Management and Governance and c) Staff Capacity. Except for staffing, most nonprofits focus on client services, members services and program change. While these 3 areas of a nonprofit work deserve attention, they belong in a Theory of Change defined as “a comprehensive description and illustration of how and why a desired change is expected to happen in a particular context.” They don’t fall under Capacity Building but such is the experience of the ever demanding state of change forced on a sector resistant to change; they become the (wrong) drivers.

As someone who has done Strategic Planning for a few decades, the most surprising aspect of Capacity Building is that no one can pay for it. Funders will give grants at certain times for Capacity Building, yet those grants are often about expected programming changes, not the overall development of the charity. As a case in point, Capacity Building to set up a new language offering for a newcomers settlement agency with no offer of continued funding. The agency will take the money, provide interpreters and language training and depending on the size of the grant, perhaps financial education or employment readiness for 1 or 2 years and then… Exactly how would this nonprofit continue to fund the program? More grants – maybe, if they win them. Donations? Highly unlikely considering the population served and the high cost of programming. Sponsorship? Even more unlikely unless they can find a whole community with businesses wanting to see this happen. Clients? You know the answer to that is ‘no’. So in this scenario, exactly how was the capacity of the organization developed? It wasn’t but for a short time, it looked like it could be and that was enough to support the short term focus of grant funding but not the long term focus of strengthening the organization so that it can sustain its mission.

Capacity Building is presently considered a consulting specialty; helping organizations get to where they want to go, but there is little framework for achieving ‘sustainability’. And if few organizations are sustainable, then imagine the state of the whole sector. Hence the unpredictability and volatility of the charitable sector in Canada. While we take the blame for not having sustainable plans, the truth lies not in the planning but how to achieve those plans with no money to do so.

Photo by Evie S. via Unsplash

As a community, nonprofits are expected to fundraise for their own capacity building but exactly which funders/donors are interested in governance and management? Even building infrastructure, often confused with capital builds, doesn’t garner interest from individuals, foundations or government. There is a significant need for digital transformation in the nonprofit sector as indicated by research from Charity Village. Unfortunately, this often translates to a good amount of talk. Will Funders (all types) focused on pursuing trends and individual interests really work to fund capacity building in the sector? Will core funding, not short-term funding, become available for sustainable development plans, so as to support the sector in long-term thinking? The recent announcement of federal government funding holds out this dream but it is short-term in its delivery. For individual nonprofits, a donor program cannot be relied upon to sustain the full development of an organization and yet, other forms of funding, specific to programming, don’t even cover the main areas of capacity building because 15% of project admin costs are not adequate to sustain development, let alone administration, of an entire organization.

Capacity Building is presently, an unattainable buzzword, further pushing nonprofits to hide and obscure the work they do. For the business sector, a business that cannot sustain itself is not a business; it’s just an idea. In the nonprofit sector, it’s everyone’s way of working. How have we limped along for so long, achieving the support needed by Canadians? Cloak and dagger and hiding from the truth. It’s time funders figured out their own mechanisms for long term change and fully support the organizations capable of making those changes.