There is nothing I like better than hearing from readers. This week a reader asked, “what is the best way for nonprofits to raise funds for capacity building?”
The National Council of Nonprofits defines nonprofit capacity building as an investment in the effectiveness and future sustainability of a nonprofit.
Examples of capacity building expenses include tangible needs such as facilities and equipment as well as management and governance support such as strategic planning; staff development, Board training; improving fundraising techniques; conducting organizational assessments; investing in technology; and succession planning. These investments are critical to ensuring the organization’s health and longevity.
During my fundraising career, I have witnessed an evolution from donors and funders who do not place a high value on capacity building and only believe in funding programs to those who recognize that sustaining high quality programs requires an investment in the capacity to be a high performing organization.
In NonprofitPro, Nate Nasralla, CFRE, writes, “If you are in the philanthropy business, you are in the capacity building business.“ Nate is the former senior program director of impact and sustainability at Network For Good. He says, and I agree, “As grant makers, we’re depending on nonprofit leaders that can sustain and scale their impact without applying for more grant dollars. Nonprofit capacity and sustainability are not separate or stand-alone strategies. They are critical components of all grants and to ensuring our philanthropy creates long-term, lasting impact.”
The best analogy for supporting capacity building is like putting gas in a car. Donors are typically asked to buy the gas which supports programs and services. However, if the organization never changes the oil or replaces the tires, no matter how much gas goes in, eventually the car will not run. Capacity building is the difference between a one-year nonprofit that’s done the same thing 25 times and a 25-year nonprofit organization that has grown and matured into a stable, healthy organization.
The need for capacity building support occurs throughout the lifecycle of a nonprofit. It occurs early in the life of the nonprofit when it is ready to move from an all-volunteer effort to one that is staff led. It continues to occur when an organization is poised for its next stage of growth.
Finding funding to support capacity building can be challenging since the need for programmatic funding is always a priority. To identify sources of funding for capacity building initiatives, start by looking inside the organization. Loyal donors, current and emeritus Board members, and existing funding partners, who are already invested in the organization’s success are more likely to consider a request to strengthen the organization from within.
Some private and corporate foundations are also including capacity building as part of their funding focus. At various times, the Community Foundation of North Florida has accepted requests for capacity building grants through the Ethel and Edwin Ramsey Fund. By doing so, they assist people in need and help their fund holders have a greater impact with their charitable investments.
Currently, the Foundation is accepting applications for long-term grants funded by the John S. and James L. Knight Foundation to help nonprofits support their new operating model resulting from COVID-19. Applications are due Oct. 9. Learn more at cfnf.org.
I have spoken with donors and philanthropists who recognize the importance of helping their favorite charities work “on” the business as well as working “in” the business. As such, they make gifts to help the nonprofit scale its services, expand its footprint, improve financial stability, and other projects. Kudos to nonprofit leaders who ask for these gifts and donors who generously give them.
Another way to build capacity building funds is to ask donors to give a little bit more. Donors giving $25 could be asked to give $30 or $40 to support programs and infrastructure needs at the same time. These additional gifts could be matched by a funder or a group of donors to encourage people to give more while also leveraging the support of major donors.
I hope the need and importance of investing in the capacity of nonprofit organizations will be recognized as a necessary and worthy investment. I encourage board and staff leaders to recognize the need to see these funds and donors and funders to invest in the long-term health of the organizations advancing the missions care about most.
Notes on Nonprofits is produced by Alyce Lee Stansbury, CFRE, President of Stansbury Consulting and Kelly Otte, MPA, who is on sabbatical. Send your questions and feedback to email@example.com
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