Nonprofit Capacity Needs More Investment

by Todd Cohen

Nonprofits face a crisis in their organizational “capacity,” and their boards and funders need to step up to help address it.

Traditionally expected to do more with less, nonprofits are strained to the limit because of the wounded economy, with many of them at serious risk of failure.

Facing rising demand for services because the economy has hammered their clients, nonprofits also have had to cut their budgets, freeze or cut their staffs, salaries and benefits, and intensified the pressure on staffs already under stress and often headed toward burnout and the exit.

Yet instead of actively piloting their organizations through a storm that is setting off alarm bells, nonprofit boards keep hitting the snooze button.

Funders could be doing a lot to help, but many are preoccupied with their own agendas.

Individual donors are cautious in this uncertain economy and looking for ways to be more involved in causes they care about and to have a greater impact.

A growing number of foundations are looking for “evidence-based” programs that make a big impact.

And corporate givers are looking to invest in causes that will have a big impact on social and global problems that also represent big obstacles to their own bottom line.

An effective way for individual and institutional donors to increase their involvement with nonprofits, as well as their impact on causes they care about, is to invest in building the capacity of nonprofits.

And nonprofits face a long list of capacity challenges.

• A mass exodus is expected among executive directors because of retirement, burnout and lack of board support, although the ailing economy may prompt some leaders to delay their departure.
• Boards, often selected and serving for the wrong reasons, lacking a clear sense of their role and responsibilities, and typically clueless, need rigorous training and development.
• Focusing on delivering services and making ends meet in the face of rising demand from clients and heightened caution and expectations from funders, nonprofits often short-change the need to plan strategically.
• Nonprofits have become perpetual fundraising machines yet often treat donors as automated teller machines and fail to take the time to get to know their donors, cultivate them, engage them in their organizations, and help them see the connection between supporting the nonprofit and addressing the causes they care about.
• Individual donors, foundations and corporate-giving programs want nonprofits to measure the impact of the grant funds they receive, yet few nonprofits are equipped to track and make sense of impact metrics.
• Telling their story and communicating with donors, funders, partners, sponsors and clients is critical for nonprofits, yet they often lack the time and know-how to develop and practice he communication skills they need.
• Nonprofits face huge challenges in acquiring and making productive use of technology to help run their back-office operations, and handle their fundraising, marketing and communications.
• Funders increasingly want nonprofits to form partnerships to qualify for grants, but collaborating is hard work and requires a lot of time and resources.
• Nonprofits are highly complex organizations, yet donors and the media typically expect people who work for nonprofits to take a vow of poverty, a model that is not realistic if nonprofits expect to attract the professionals nonprofits need.
• Policy work and advocacy are critical tasks for all nonprofits, yet they typically shun it either because they lack the time or expertise to get involved, or because they believe they are not supposed to be advocates or fear that engaging in policy work may be too controversial and will upset their funders.

Building all or any of that capacity requires resources, and nonprofits boards should be working hard to help their organizations secure those resources.

Nonprofits also should be working to help funders understand their need for support to build their capacity.

And funders should be working to move beyond their default position of demanding too much of nonprofits while providing too little support.

While demanding that nonprofits measure their impact, for example, too few funders provide the funds to help pay for that measurement.

Nonprofit boards and philanthropic funders can take a big step in helping to address the urgent social and global problems we face by making significant investments that help nonprofits build their capacity to operate more effectively, efficiently and strategically in serving people and places in need.

Todd Cohen is editor and publisher of Philanthropy Journal; reprinted with permission.