The Funder’s Investment in the Nonprofit Organization: Building Capacity
Today’s funders, whether they are among individual donors, foundations or grant making organizations, look upon their contributions and allocations as an investment in the nonprofit organization. They envision their funds as not only supporting the delivery of services but also strengthening the organizations’ ability to provide those services. They are looking for the added value of the resources they are making available to the agency.
During the process of soliciting a donation or negotiating a grant or allocation, the donor or funder often focuses on the issue of the organization’s sustainability. There is a desire to not only fund a program for one or more years but also to be assured that the agency will be providing services in the coming future. There is a dual focus both on the nonprofit as well as on the quality of the services that will be implemented as a result of the funds received.
One of the ways funders can ensure an organizations’ sustainability is to allocate resources for the agency to strengthen its capacity to function and implement the services it provides to the community. This means the donors and the funders are prepared to either allocate resources so the nonprofit can improve its capacity to function both as an organization and as the deliverer of services to the community. Traditionally these are known as capacity building grants. They are either in the form of funds made available to the organization to either develop a program internally or a consultant is made available to them to provide the appropriate services to them.
For example, a funder provided grants to a number of nonprofit organizations that have support services to victims of family violence. In addition to funding the programs there was a decision to allocate resources to create a forum that includes all of the organizations. The purpose of the forum was to facilitate the communication among the agencies so they could share experiences and learn from each other. A consultant was engaged to facilitate the group process and to be a resource for each of the member agencies.
The consultant was also available to meet with the professionals from the agencies individually and to assist them with challenges they had in reaching out to potential clients and in implementing the needed services. By providing these additional funds the funder was strengthening the capacity of the organizations to work cooperatively with each other, and to learn from each other’s experience. Ultimately, the clients benefited from the collective wisdom of the organizations and the ability of the agencies to plan their programs together and share their knowledge and experience.
Another approach was demonstrated by a foundation that sponsored seminars and training programs for board members and professionals of funded agencies. These programs were on a variety of topics from board development to staff development. The foundation also provided a seminar for directors of finance on fiscal management in nonprofit organizations and for program directors on program evaluation.
A third approach was exemplified by the provision of remedial services ot the nonprofit. When the agency submitted its quarterly report on the grants it had received the funder identified that there were challenges the organization was facing in implementing the programs, then consulting services were provided to assist the organization in resolving the issues. The funder’s allocation of these additional resources for these services not only ensured the effective use of the allocated or contributed funds but also strengthened the agency as a nonprofit organization.
In each of these examples the funders provided additional resources that enabled the agencies to confront challenges and to further development and enhance their functioning as voluntary organizations. The investment in capacity building services for nonprofits has been adopted by more and more foundations and grant making organizations. Those that understand the importance of making resources available to assist nonprofits in this way exemplify a commitment to enhance the functioning of the sector and not just the funding of a series of independent programs.
They also understand that nonprofits do not necessarily have the available resources to establish programs for their own development or even for tackling administrative issues. Sometimes the organizations do not identify the challenges until a crisis has occurred. The advantage of a funder’s commitment to capacity building is in the nonprofit not having to make a choice between funding a program for clients versus a program to strengthen its own functioning.
It is the wise funder who understands the importance of capacity building. When a foundation is willing to invest in the agency’s functioning then it is making an important statement to its own board as well as the board of the funded agency. At times when the funder cannot afford to provide the resources for all of the needed capacity building services it can present the idea of a challenge grant to the board of directors of the nonprofit.
A funder can say to the board of the agency we will provide you with 50% or 75% of the funding for the capacity building services you need. You will receive these funds if you are able to raise the balance from new donors. We do not want you cutting services to receive our funds. In this case the funder is asking the board of directors to demonstrate its commitment to the building the capacity of their nonprofit organization.
Capacity building is not a luxury and funders, foundations and grant making organizations can play a vital role in strengthening the recipient organizations ability to implement its programs and provide its services. More nonprofits should request funds for this purpose from funders and more funders should seek to provide resources for capacity building to nonprofit organizations that receive their support.
Stephen G. Donshik, D.S.W., is a lecturer at Hebrew University’s International Nonprofit Management and Leadership Program and has a consulting firm focused on strengthening non-profit organizations and their leadership for tomorrow. Stephen is a regular contributor to eJewish Philanthropy.