strategies to achieve social impact

WWhhaatt iiss aa LLoonngg--TTeerrmm CCaappaacciittyy--BBuuiillddiinngg IInniittiiaattiivveeaanndd WWhhyy PPuurrssuueeOOnnee??»» ppaaggee 33

TThhee PPllaannnniinnggPPrroocceessss aanndd KKeeyyDDeecciissiioonnss»» ppaaggee 55

11.. SSeett GGooaallss»» ppaaggee 77

22.. EEssttaabblliisshh tthheeDDuurraattiioonn »» ppaaggee 88

33.. AAsscceerrttaaiinn YYoouurrRReessoouurrcceess »» ppaaggee 99

44.. CCllaarriiffyy YYoouurrRRoollee »» ppaaggee 1100

55.. DDeecciiddee iiff YYoouu WWiillll WWoorrkkAAlloonnee »» ppaaggee 1144

66.. DDeetteerrmmiinnee tthheeSSeelleeccttiioonnPPrroocceessss»» ppaaggee 1155

77.. CChhoooossee tthheeAAssssiissttaannccee TTyyppeess»» ppaaggee 1188

88.. DDeecciiddee HHooww ttooEEvvaalluuaattee»» ppaaggee 2233

99.. FFiigguurree OOuuttWWhhaatt WWiillllHHaappppeennAAfftteerrwwaarrddss »» ppaaggee 2244

TTuurrnniinngg YYoouurrPPllaann iinnttoo RReeaalliittyy»» ppaaggee 2277

Inside:

The cities and towns of Genesee County, Michigan, have strug-gled with unemployment, economic stagnation, and poverty sincethe General Motors plant in Flint closed in the 1990s. With non-profits lacking the resources to deal adequately with the mount-ing problems, funders stepped in with a significant infusion ofdollars to support ongoing projects. But it soon became evidentthat more was required.

In 2002, four funders -- C. S. Mott Foundation, Ruth MottFoundation, Community Foundation of Greater Flint, and UnitedWay of Genesee County -- teamed up to supplement programgrants with support to help nonprofit organizations adapt tochanging environments and increase their impact.

This paper is supported by a grant from

Deeper Capacity Building forGreater ImpactDesigning a Long-term Initiative toStrengthen a Set of Nonprofit Organizations

Paul M. Connolly

briefingpaper

tcc group

The resulting Flint Funders Collaborativegrew out of a shared concern about the qual-ity and focus of grant proposals and thecapacity of local nonprofit organizations toachieve their missions and meet criticalcommunity needs. Through this five-year,$1.8 million initiative, 14 nonprofits arereceiving grants and intensive training andconsulting assistance to enhance their orga-nizational effectiveness.

Although many of the challenges in the com-munity remain, this joint effort has enabledthe grantmakers to better understand localfunding priorities and needs. Also, a recentevaluation found that the participating orga-nizations believed they had strengthenedtheir organizational capacity and programquality as a result of the support. In particu-lar, one of the nonprofits that was previouslyin crisis created a formalized successionplan that resulted in a leadership transition.

"Now, the organization is operating on amuch stronger footing and poised forgrowth," observes Anne Glendon, the con-sultant who helped design the initiative.

Today, other funders are investing in theorganizational capacity of nonprofit groupsto enhance their program outcomes. Theytoo want to leverage their philanthropic dol-lars and believe that strong nonprofit organi-zations lead to strong programs and, ulti-mately, greater social impact. As Paul Lightexplains in Sustaining Nonprofit Perfor-mance: The Case for Capacity Building andthe Evidence to Support It, "no matter wherethe organization might be in time and place,

2 briefing paper

WWhhyy IInnvveesstt iinn CCaappaacciittyy BBuuiillddiinngg??

Like many other funders, The James Irvine Foundation has been experimenting over the past decadewith ways to support the organizational capacity building of our grantees. We believe in the inherentvalue of capacity building for grantees and our grantmaking demonstrates that strong and stableorganizations are a critical component of program impact, and, ultimately, advancing our mission.And although Irvine's belief in the importance of organizational capacity building is seen in our day-to-day work, we continually search for how to more effectively focus and structure capacity-buildingassistance for our grantees.

Long-term capacity-building (LTCB) initiatives represent one way in which Irvine has organized suchassistance. Through LTCB initiatives, a foundation directs support to a cohort of organizations overa defined time period to address specific capacity-building needs. By working across multiple orga-nizations and sites, the foundation achieves economies of scale and also provides additional bene-fits to participating grantees by linking them through meetings, peer exchange, and training oppor-tunities. LTCB initiatives, however, introduce greater complexity into the underlying grantmakingprocesses because of the need for a longer time horizon, multiple sites, issues of confidentiality, andmovement beyond project-based support that such efforts entail.

Irvine is pleased to have provided major funding to create and publish this paper by TCC Group toprovide tangible examples of design options, best practices, and common challenges of LTCB initia-tives. We hope that the paper will stimulate thinking about issues with this approach to capacitybuilding and inform your own decision-making in designing and managing any LTCB initiative.

Martha CampbellVice President for ProgramsThe James Irvine Foundation

Foreword

capacity building is a potentially high-yieldinvestment that can improve program suc-cess dramatically."1

Funders can support capacity buildingthrough a variety of means. (See Exhibit 1 onpage 4, "What is Nonprofit OrganizationalCapacity and How do You Build It?") Typicalstrategies include:

Changing the terms of program grants toemphasize organizational effectiveness;Awarding on a case-by-case basis grantsspecifically to enhance the managementand governance of individual nonprofits; Providing general operating support andcapital financing; andInvesting in management support organiz-ations and intermediaries that providemanagement assistance to nonprofitgroups on an ongoing basis.

While these strategies are frequently worth-while and effective, they can sometimes bescattershot and inadequate.

After a decade of increasing investment incapacity building by funders, more grant-makers want to make a greater impact bygoing deeper and pursuing a more intensivemethod -- a long-term capacity-building ini-tiative to enhance the management, gover-nance, and performance of a particular setof nonprofit organizations.

A focused initiative enables a funder to formlasting, trusting relationships with a selectgroup of nonprofits and take them to thenext level of organizational development andprogram effectiveness. This allows thegrantmaker to maximize its impact in a par-ticular area to which it is committed for thelong range. The initiative typically lasts forseveral years, entails grant support andmanagement assistance to the organiza-tions involved, and includes multiple ele-ments such as convening, peer exchange,training, coaching, and consulting. These ini-tiatives not only benefit each participatingorganization, but can also strengthen group

3

WWhhaatt iiss aa LLoonngg--TTeerrmm CCaappaacciittyy--BBuuiillddiinngg

IInniittiiaattiivvee aanndd WWhhyy PPuurrssuuee OOnnee??

4 briefing paper

Nonprofit organizational capacity encompasses a range of capabilities, knowledge, and resources that anonprofit organization needs to be effective in achieving its mission. Organizational capacity is multifac-eted and continually evolving. As Exhibit 1 shows, there are four types of capacity: adaptive, leadership,management, and technical.2

Leadership and adaptive capacities are the most critical. They usually drive an organization, and manage-ment and technical capacities follow. Adaptive capacity is the ability to monitor, assess, respond to, andstimulate internal and external changes. It enables an organization to be reflective, innovative, flexible, andresilient. A nonprofit can strengthen its adaptive capacity by conducting periodic needs assessments,organizational assessments, and program evaluations; engaging in knowledge management and planning;and pursuing collaborations and partnerships. Leadership capacity is the ability of all organizational lead-ers -- both senior executives and board members -- to inspire, prioritize, make decisions, and provide direc-tion in a concerted effort to achieve the organizational mission. Leadership capacity can be enhancedthrough board development, executive leadership development, and leadership transition planning.

Capacity building is any activity -- such as strategic planning, board development, operational improve-ments, and technology upgrades -- that strengthens the ability of a nonprofit to achieve greater perfor-mance and impact. Nonprofit groups build their capacity on their own all the time as part of their everydayleadership and management work. Sometimes, they partner with others who provide publications, conductresearch, offer training and peer exchange opportunities, or provide coaching and consulting services.

Exhibit 1: What is Nonprofit Organizational Capacity and How do You Build it?

Adaptive CapacityThe ability to monitor, assess, respond to, and

stimulate internal and external changes

• Organizational assessment• Program evaluation

• Needs assessment

• Knowledge management

• Planning• Collaborations and

partnerships

The ability to implement all of the key organizationalfunctions and deliver programs and services

• Service delivery

• Outreach and advocacy• Legal

• Evaluation

• Fundraising

• Earned income generation• Accounting• Facilities management• Technology

• Marketing and communications

• TechnologyThe ability to ensure the

effective and efficient use oforganizational resources

Leadership Capacity

Technical Capacity

Management Capacity

• Board development

development• Leadership transitions

• Executive leadership• Human resource development

• Financialmanagement

• Internal communicationsand management

The ability of all organizational leaders to inspire, prioritize, makedecisions, provide direction, and

innovate

5

relationships and contribute to cross-fertil-ization and learning within a community andfield as a whole.

As competition, scrutiny, demands foraccountability, and service needs mount,nonprofit organizations must continuallyadapt and strengthen their capacity to sur-vive and thrive. By providing concentratedcapacity-building support for the long haul,funders can enhance organizational perfor-mance for a set of nonprofits and help theirprograms to become more sustainable.

This paper explains how to design a long-term capacity-building initiative. It is basedmostly on TCC Group's extensive experienceworking with funders to plan, implement,and evaluate these kinds of programs. It iswritten for all sizes and types of funders --including private foundations, corporatecommunity involvement departments, andpublic agencies -- that want to pursue an ini-tiative.

For grantmakers who have little backgroundin capacity building, this paper spells out themain design elements of a long-term capac-ity building initiative. (If you are brand new tothe topic and want to learn about basic rea-sons to invest in capacity building and a fullrange of approaches, see "Building to Last:A Grantmaker's Guide to StrengtheningNonprofits," available online at www.tccgrp.com.)3 For those who have moreexperience, it can serve to confirm funda-mental approaches and highlight more spe-cific and nuanced issues. Management sup-port organizations that design or managethese capacity-building initiatives and par-ticipating nonprofit groups may also benefitfrom reading this paper.

At the outset, you need to develop your plan.Begin by assessing your funding organiza-tion's readiness and capabilities to pursue along-term capacity-building initiative. Whatis your organization's commitment to thiswork? How does it support your mission andpriorities and fit with your abilities? Whatresources, financial and otherwise, are youable and willing to devote to it? What valuesand assumptions will influence your deci-sions? You also need to take stock of non-profit and community needs and resources.You may already have a clear sense of theexternal situation, or you could need to dosome more formal research to better com-prehend the specific needs and identify whatothers are doing and where the gaps are.After you decide your organization is readyto move forward, you should articulate yourmajor intended outcomes and create adetailed plan to accomplish them throughyour initiative.

There are nine critical decisions that youmust make when designing an initiative:

1. Set goals for the initiative;2. Establish the duration of the initative;3. Ascertain the level of resources you willdevote to the initiative;

4. Clarify your role in the initiative;5. Decide if you will work alone or collaboratewith other funders;

6. Determine the selection process for partic-ipants;

7. Choose what type of assistance will beoffered to participants;

8. Decide how you will evaluate the initiative;and

9. Figure out what will happen to participantorganizations after the initiative.

(See Exhibit 2 on page 6 for a summary of thenine key decisions explained in this paperand the major choices to make.)

While you definitely need to start by clarify-ing your goals, all of the subsequent deci-

TThhee PPllaannnniinngg PPrroocceessss aanndd KKeeyy

DDeecciissiioonnss

WWhhoo CCaann BBeenneeffiitt FFrroomm RReeaaddiinngg

TThhiiss PPaappeerr??

6 briefing paper

Exhibit 2: Designing a Long-term Capacity-Building Initiative -- Summary of Key Decisions to Make and Options to Consider

UUssee tthhee lliisstt bbeellooww ttoo kkeeeepp ttrraacckk ooff tthhee ttaasskkss yyoouu nneeeedd ttoo ccoomm--pplleettee aanndd tthhee ddeecciissiioonnss yyoouu nneeeedd ttoo mmaakkee aass yyoouu ppllaann yyoouurrccaappaacciittyy--bbuuiillddiinngg iinniittiiaattiivvee..

11.. SSeett ggooaallss ffoorr tthhee iinniittiiaattiivvee..BBaassee yyoouurr iinniittiiaattiivvee ggooaallss oonn yyoouurr ffuunnddiinngg oorrggaanniizzaattiioonn''ssoovveerraallll mmiissssiioonn aanndd pprrooggrraamm tthheeoorryy ooff cchhaannggee..CCoonnssiiddeerr ootthheerr ttyyppeess ooff ggooaallss,, ssuucchh aass oonneess rreellaatteedd ttoo eexxiittssttrraatteeggiieess,, ppuubblliicc rreellaattiioonnss,, oorr ttaappppiinngg ccoorree ccoommppeetteenncciieess..

22.. EEssttaabblliisshh tthhee dduurraattiioonn ooff tthhee iinniittiiaattiivvee..DDeevvoottee aatt lleeaasstt tthhrreeee yyeeaarrss ttoo ssuuppppoorrtt aanndd sseeeeoorrggaanniizzaattiioonnaall cchhaannggee..IIff yyoouu ccaann mmaakkee aa lloonnggeerr ccoommmmiittmmeenntt,, ccoonnssiiddeerr hhaavviinnggmmoorree tthhaann oonnee ccyyccllee ooff ppaarrttiicciippaannttss wwhhoo aarree iinnvvoollvveedd oonn aassttaaggggeerreedd bbaassiiss..

33.. AAsscceerrttaaiinn tthhee lleevveell ooff rreessoouurrcceess yyoouu wwiillll ddeevvoottee ttoo tthhee iinniittiiaattiivvee..DDeetteerrmmiinnee tthhee kkeeyy ffaaccttoorrss tthhaatt wwiillll iinnfflluueennccee yyoouurr bbuuddggeett,,ssuucchh aass aavvaaiillaabbiilliittyy ooff ddoollllaarrss,, ddeessiirreedd iimmppaacctt,, dduurraattiioonn,,nnuummbbeerr ooff ppaarrttiicciippaannttss,, aanndd aammoouunntt ooff ssuuppppoorrtt ffoorr eeaacchhggrroouupp..AAccccoouunntt ffoorr ccaappaacciittyy bbuuiillddiinngg ((ddiirreecctt aanndd iinnddiirreecctt)),,ppllaannnniinngg,, mmaannaaggeemmeenntt,, aanndd eevvaalluuaattiioonn ccoossttss..

44.. CCllaarriiffyy yyoouurr rroollee iinn tthhee iinniittiiaattiivvee..PPllaann aanndd mmaannaaggee tthhee iinniittiiaattiivvee iinn--hhoouussee iiff yyoouurroorrggaanniizzaattiioonn hhaass eexxppeerrttiissee iinn oorrggaanniizzaattiioonnaall ddeevveellooppmmeenntt,,ccaann ddeeddiiccaattee ssuubbssttaannttiiaall ssttaaffff ttiimmee aanndd ccaann ddeevveelloopp ttrruussttiinnggrreellaattiioonnsshhiippss wwiitthh tthhee ppaarrttiicciippaannttss,, oorr……UUssee aann oouuttssiiddee iinntteerrmmeeddiiaarryy iiff yyoouu llaacckk kknnoowwlleeddggee aabboouuttccaappaacciittyy bbuuiillddiinngg,, aarree sshhoorrtt ooff ttiimmee,, oorr sseeeekk ggrreeaatteerroobbjjeeccttiivviittyy..

55.. DDeecciiddee iiff yyoouu wwiillll wwoorrkk aalloonnee oorr ccoollllaabboorraattee wwiitthh ootthheerr ffuunnddeerrss..WWoorrkk aalloonnee iiff yyoouu wwaanntt ttoo ttaaiilloorr yyoouurr iinniittiiaattiivvee ttoo ssuuppppoorrttyyoouurr oorrggaanniizzaattiioonn''ss ssppeecciiffiicc ggooaallss oorr aavvooiidd tthhee ppoossssiibblleeeexxttrraa eeffffoorrtt iinnvvoollvveedd iinn aa jjooiinntt eeffffoorrtt,, oorr……CCoollllaabboorraattee wwiitthh ootthheerr ffuunnddeerrss iiff tthheeyy sshhaarree yyoouurr oobbjjeeccttiivveessaanndd yyoouu ccaann ddeevvoottee tthhee ttiimmee nneeeeddeedd ffoorr tthhee ppaarrttnneerrsshhiipp..

66.. DDeetteerrmmiinnee tthhee sseelleeccttiioonn pprroocceessss ffoorr ppaarrttiicciippaannttss..DDeecciiddee oonn tthhee nnuummbbeerr aanndd mmiixx ooff ppaarrttiicciippaannttss..SSeelleecctt ppaarrttiicciippaannttss tthhrroouugghh aa cclloosseedd pprroocceessss iiff yyoouu wwaanntt ttoobbuuiilldd tthhee ccaappaacciittyy ooff aa sseett ooff nnoonnpprrooffiittss yyoouu aallrreeaaddyy kknnoowwwweellll,, oorr……

UUssee aann ooppeenn aanndd ccoommppeettiittiivvee pprroocceessss iiff yyoouu nneeeedd ttoo lleeaarrnnmmoorree aabboouutt tthhee aapppplliiccaannttss'' ttrraacckk rreeccoorrddss,, nneeeeddss,, oorr ppllaannss..TTaakkee iinnttoo aaccccoouunntt tthhee pprrooss aanndd ccoonnss ooff uussiinngg oorrggaanniizzaattiioonnaallaasssseessssmmeennttss dduurriinngg tthhee sseelleeccttiioonn pprroocceessss..DDeetteerrmmiinnee tthhee rreeaaddiinneessss ooff ppootteennttiiaall ppaarrttiicciippaannttss ttoo bbee iinntthhee iinniittiiaattiivvee aanndd rreecceeiivvee ccaappaacciittyy--bbuuiillddiinngg aassssiissttaannccee..EEmmpphhaassiizzee eexxppeeccttaattiioonnss ttoo ppaarrttiicciippaannttss aabboouutt ttiimmeeiinnvveessttmmeenntt,, mmeeeettiinngg aatttteennddaannccee,, aanndd ootthheerr oobblliiggaattiioonnss aatttthhee oouuttsseett..

77.. CChhoooossee wwhhaatt ttyyppee ooff aassssiissttaannccee wwiillll bbee ooffffeerreedd ttoo ppaarrttiicciippaannttss..CCoonnssiiddeerr aa ffuullll rraannggee ooff ttyyppeess ooff aassssiissttaannccee,, iinncclluuddiinngg ttoooollss,,lliissttsseerrvvss,, eedduuccaattiioonn aanndd ttrraaiinniinngg,, ppeeeerr eexxcchhaannggee,, ccoonnvveenniinngg,,ccooaacchhiinngg,, ccoonnssuullttiinngg,, aanndd ggrraannttss..DDeecciiddee wwhhaatt ccaappaacciittyy bbuuiillddiinngg iiss nneeeeddeedd tthhrroouugghh aannoorrggaanniizzaattiioonnaall aasssseessssmmeenntt pprroocceessss..HHeellpp ppaarrttiicciippaattiinngg oorrggaanniizzaattiioonnss ddeevveelloopp ccaappaacciittyy--bbuuiillddiinnggppllaannss..MMiixx aanndd mmaattcchh sseerrvviicceess bbaasseedd oonn nneeeedd..DDeetteerrmmiinnee wwhhaatt lliimmiittss yyoouu mmaayy ppuutt oonn wwhhoo pprroovviiddeessaassssiissttaannccee..MMaakkee ggrraannttss ttoo ssuuppppoorrtt tthhee ccaappaacciittyy--bbuuiillddiinngg aaccttiivviittiieess..AAllllooww ffoorr ppoossssiibbllee ddiiffffeerreenntt lleevveellss ooff ppaarrttiicciippaattiioonn,, ssuucchh aassoonnee ttiieerr tthhaatt ggeettss mmoorree iinntteennssiivvee ssuuppppoorrtt aanndd aannootthheerr tthhaattggeettss lleessss..

88.. DDeecciiddee hhooww yyoouu wwiillll eevvaalluuaattee tthhee iinniittiiaattiivvee..PPllaann tthhee eevvaalluuaattiioonn uuppffrroonntt..FFiigguurree oouutt wwhhoo wwiillll ccoonndduucctt tthhee eevvaalluuaattiioonn,, wwhheetthheerr iitt iiss aammaannaaggeemmeenntt aassssiissttaannccee pprroovviiddeerr,, ffoouunnddaattiioonn oorriinntteerrmmeeddiiaarryy ssttaaffff,, oorr aann eexxtteerrnnaall eevvaalluuaattoorr..MMeeaassuurree tthhee ddiiffffeerreenntt lleevveellss ooff ssuucccceessss,, ffrroomm sshhoorrtt--tteerrmm ttoolloonngg--tteerrmm oouuttccoommeess,, aass wweellll aass tthhee qquuaalliittyy ooff tthheessttrraatteeggiieess..UUssee bbootthh pprrooggrraamm eevvaalluuaattiioonn aanndd oorrggaanniizzaattiioonnaallaasssseessssmmeenntt wwhheenn eevvaalluuaattiinngg yyoouurr lloonngg--tteerrmm ccaappaacciittyy--bbuuiillddiinngg iinniittiiaattiivvee..LLeeaarrnn ffrroomm aanndd sshhaarree yyoouurr eevvaalluuaattiioonn ffiinnddiinnggss..

99.. FFiigguurree oouutt wwhhaatt wwiillll hhaappppeenn ttoo tthhee ppaarrttiicciippaattiinngg oorrggaanniizzaattiioonnss aafftteerr tthhee iinniittiiaattiivvee.. EEnnssuurree tthhaatt aaddvviissoorrss ttrraannssffeerr sskkiillllss aanndd pprroovviiddee ttoooollss..HHeellpp ppaarrttiicciippaattiinngg nnoonnpprrooffiittss aattttrraacctt ootthheerr ffuunnddiinngg ttoossuuppppoorrtt tthheeiirr ppoosstt--iinniittiiaattiivvee wwoorrkk..CCoonnssiiddeerr ooffffeerriinngg pprrooggrraamm ggrraannttss aanndd mmaaiinnttaaiinniinngg aalleeaarrnniinngg nneettwwoorrkk aafftteerr tthhee iinniittiiaattiivvee iiss oovveerr..

sions are inter-related and not necessarily insequential order. Once you begin to addresseach one, your choices will inform yourapproaches to the other ones in a dynamicand iterative manner. Just like a propertyowner who is planning to develop a newbuilding, you need to simultaneously takeinto account your objectives, schedule, bud-get, role and resources as you create a pre-liminary design and then refine it.

Determine who will be involved in the deci-sion-making process while you develop yourplan. You may want to form a planning com-mittee of key staff and consider hiring anoutside consultant to provide planning andfacilitation assistance as the process can bequite time-consuming. Consider gettinginput on the initiative design from the non-profits that may be involved. Encouragethoughtful dialogue and sort out your alter-natives. Narrow your options based on whathelps you best achieve your stated goals, iscongruent with your organization's missionand culture, addresses the most pressingneeds, and is feasible.

Below is specific advice on how to approacheach of these nine decisions and considervarious alternatives. Examples from differentinitiatives are used throughout the paper toillustrate choices and highlight insights.Major design elements of seven key casesare summed up in Exhibit 5, a table on pages12 and 13.4 Finally, some overarching key suc-cess factors for long-term capacity-buildinginitiatives are shown in Exhibit 12 on page 26.

Basing Initiative Goals on Your Overall ProgramTheory of ChangeBegin by stating and prioritizing your goalsclearly so that you can create an initiative tomeet them and measure your progress andsuccess. By answering the question "buildcapacity for what?," you can clarify youraims. The purpose of your long-term capaci-ty-building initiative depends on your fundingorganization's overall mission and theory of

change. As Exhibit 3 shows, a capacity-build-ing initiative should serve to improve theorganizational performance of a set ofgrantees so that they are better able toeffectively deliver programs and achievetheir missions.5 This enables your grantmak-ing organization to enhance its impact. If, asa funder, your program theory of change isvague, spend the time upfront to express itmore clearly -- involving key staff as well asboard members -- so that your capacity-building program can better support it.

Use a logic model to articulate inputs, strate-gies, short-term outcomes, long-term out-comes, and impact, as DeaconessFoundation did for for its Impact Partnership.Inputs are the resources the foundationemployed, such as funding, staff, expertise,and skills. Strategies are what happen duringthe initiative, such as organizational assess-ment, capacity-building planning and activi-ties like consulting and peer exchange tostrengthen the capacity of the eight child-serving nonprofits in the St. Louis region.Outputs are the direct results of the strate-gies, including increased knowledge, inter-est, and skill related to enhancing organiza-tional effectiveness. Outcomes are thechanges the activity will help create in theshort and long term. Impact is the end resultsrelated to how the participating organiza-tions achieve their mission and the healthstatus of disadvantaged children in the areais improved.

Some capacity-building initiatives are astructured component of a comprehensiveprogram initiative, while others have capaci-ty building as the main activity and goal. Acase in point: The James Irvine Foundation'sFamilies Improving Education Initiative pro-vides support to organizations in California'sCentral Valley to mobilize and engage fami-lies -- particularly those in low-income, eth-nic, and immigrant communities -- in educa-tional policymaking concerning their localschools. The initiative provides grant supportto an intermediary to provide a range of pro-gram supports and organizational capacity-building services to grantees. On the otherhand, the San Francisco Department ofPublic Health's LEAP initiative focused only

7

11.. SSeett GGooaallss ffoorr tthhee IInniittiiaattiivvee

on strengthening the management and gov-ernance of a cohort of AIDS service organi-zations that serve minorities in the SanFrancisco Bay Area and did not provide addi-tional program support.

Other ObjectivesYou may have other types of goals. Maybeyou want your initiative to act as part of anexit strategy to increase self-sufficiency forgrantees that will no longer receive programfunding in the next several years. Or youcould strive to strengthen a particular typeof nonprofit capacity, such as board develop-ment or earned income generation. Perhapsyou would like to create a signature programthat can help meet some of your organiza-tion's political and public relations objec-tives. Some corporate funders want to con-centrate their capacity-building work fornonprofits on the company's core competen-cy, such as financial planning or marketing,to achieve their goal of actively engagingemployees in the community.

Investing for the Long HaulThe length of your initiative will dependmostly on your goals and resources -- build-ing an entire emerging field can take longerthan strengthening a small set of maturenonprofits. Be prepared to devote enoughtime.

Organizational development takes a longtime since systems and people evolve gradu-ally. Three to four years is a good time frameto consider. In fact, the three NorthernCalifornia funders that supported theOrganizational Capacity Grants Initiative(OCGI) began by planning a schedule for twoyears and then extended it to three whenthey realized that it would take more time fororganizational change to take place in theset of agencies in which they were investing.

Staggering Cycles for ParticipationIf you want to work with a large set of poten-tial grantees but can not support them all atonce, you may want to have staggeredrounds of participation. You could begin witha "pilot" phase during which you work withan initial set of nonprofits that are mostready. If you choose to continue the initiative,you could then roll it out with one or moresuccessive "classes" of participants,improving upon the previous cycles as you goalong.

Consider how long sets of nonprofits will beinvolved in the initiative if you are planning tohave more than one cycle of participants.The James Irvine Foundation, for instance,committed early on to devote seven years toits Arts Regional Initiative and plans tolaunch a cohort of grantees in a newCalifornia region each year for the first threeor four years. Each cohort will then partici-pate for three years. In another example, thefunders of the Challenge Fund for Journ-alism, which provides matching grants toincrease individual donations to journalismorganizations, limited nonprofits to two non-consecutive years of participation in a one-year matching grant program. The waitingperiod between grants enabled grantees tosolidify their fundraising and organizationaladvancement and cultivate donors.

If you have greater resources and want to gobeyond a time-bound initiative, you can insti-tutionalize capacity-building supportthrough an ongoing effort. This is what thePew Charitable Trusts did when it estab-lished the Philadelphia Cultural Manage-ment Initiative (PCMI), which fosters organi-zational learning, effective management,and leadership development. Since its incep-tion, PCMI has provided more than $2 millionin funding and capacity-building support to75 arts, culture, and heritage organizations.

8 briefing paper

22.. EEssttaabblliisshh tthhee DDuurraattiioonn ooff tthhee

IInniittiiaattiivvee

You may know from the outset the amount ofmoney that can be devoted to an initiativeand begin by asking a question like "Whatcan we do well for $300,000?" Or you mayfirst assess needs and design the programbefore asking, "What will this cost?"

Key Factors that Influence a BudgetWhatever your budgeting approach, the totalcost of the initiative will be driven by theavailability of dollars, your desired impact,duration, number of participants, andamount of support for each group.

Expenses can also vary according to the kindof capacity-building assistance provided, thesize and type of organizations, and howexperienced the nonprofits are in receivingcapacity-building assistance.

The overall cost of a multi-year initiative canbe as little as under a few hundred thousandto more than several million dollars. Here aresome examples of total initiative costs:

$160,000 for the Sierra Health FoundationOrganization Assessment Program (two-year pilot)$1.85 million for the Challenge Fund forJournalism (two years) $7.65 million for the Deaconess ImpactPartnership (four years)

See Exhibit 5 on pages 12 and 13 for infor-mation about the factors that influencedthese price tags and more examples of ini-tiative expenses.

Accounting for Capacity-Building, Planning,Management, and Evaluation CostsThere are three main types of expendituresfor a funder: capacity building for participat-ing nonprofits, planning and managing theinitiative, and evaluation.

Capacity building for participating nonprofitsYou can provide funding directly toconsultants, trainers, and others tosupport the involved nonprofits. Theseexpenses depend on the availability andcost of capacity-building service providers.You can also award grants to nonprofits inthe initiative to cover their particularcapacity-building needs, as well asprograms, human resources, generaloperations, or endowment.

9

33.. AAsscceerrttaaiinn tthhee LLeevveell ooff RReessoouurrcceess

YYoouu WWiillll DDeevvoottee ttoo tthhee IInniittiiaattiivvee

Exhibit 3: The Capacity-Building Initiative's Relationship to Your Organization's Program Theory of Change

The Pfizer Foundation Southern HIV/AIDSPrevention Initiative, for example, providedprogram grants ranging in size from$20,000 to $55,000 to 22 nonprofit groups inthe South that provide innovativeHIV/AIDS prevention programs. Inaddition, the foundation paid a pre-qualified set of consultants to providecapacity-building support to thenonprofits, with costs ranging from $1,200to $29,000 per grantee. The James IrvineFoundation provided three to four-yeargrants of $200,000 to $400,000 to 12 artsorganizations in the initial cycle of its ArtsRegional Initiative to cover capacity-building, program, and general operatingcosts.

Planning and managingIn addition to using staff at your ownfunding organization, you may want to useoutside assistance to help plan, manage,and implement the initiative. (See thesection below on "Clarify Your Role in theInitiative" for more advice about gettingexternal help). These expenses as apercentage of total initiative costs canrange from less than 5% to more than 35%,depending on the extent of assistance.

EvaluationBe sure to also include any costs related toevaluating the initiative. This can rangefrom under 5% to more than 10% of thetotal initiative costs. DeaconessFoundation, for example, spent $250,000(3%) to assess its Impact Partnershipprogram.

Also keep in mind other non-monetary costs,such as the time of staff and volunteers atyour funding organization. Your employeeswill definitely need to devote time to overseethe initiative. You may want to enlist the sup-port of volunteers as well. A corporate fun-der, for example, hopes to enable employeesto provide pro bono capacity-building supportto participants in its initiative. Finally, con-sider making in-kind donations, as Pfizer didwhen it donated refurbished computers toorganizations that were a part of theFoundation's Southern HIV/AIDS PreventionInitiative.

Your job as a capacity-building initiative fun-der goes beyond just cutting the check. Youalso need to play a part in the design andimplementation of the initiative. The functioncan range from being hands-on to hands-off,depending on the amount of time you have todevote to the work, your financial resourcesfor hiring outside help, and the type of exper-tise you have or may need to tap from others.

10 briefing paper

Exhibit 4: Weighing the Pros and Cons of Using an Intermediary

PPrroovviiddee aaddddiittiioonnaall hhuummaann rreessoouurrcceess aannddssaavvee ttiimmee aanndd mmoonneeyy..An intermediary can help funders with leanstaffs to supply the human resources tomanage a labor-intensive initiative, handleirregular workloads, and avoid adding andeliminating staff when the initiative beginsand ends. It can also relieve a funder oftime-consuming administrative burdens andhelp lower staff costs.

TTaapp eexxppeerrttiissee aanndd ccrreeddiibbiilliittyy.. An intermediary can offer greater expertiserelated to capacity building or a particularprogram area that a funder has or wishesto have. Also, it can bring other specializedcapabilities, legitimacy, and networkscritical to the initiative's success.

OObbttaaiinn nneeuuttrraalliittyy.. An intermediary can be a neutral "third party"that acts as a buffer between the grantmakerand grantee. If the funder does not have avery open or trusting relationship with the setof participants, the intermediary can examinegrantees more closely, understand their needsbetter, and provide more appropriate capacity-building support. It may also be better ablethan a grantmaker to "level the playing field"and create partnerships with nonprofits,particularly smaller ones.

IInnccrreeaassee mmaannaaggeemmeenntt oovveerrssiigghhttrreessppoonnssiibbiilliittyy aanndd cceerrttaaiinn ccoossttss.. Although the funder's administrative andtransactional burdens decrease, themanagement responsibility increases. Also,the intermediary's overhead costs may behigh.

MMiissss ooppppoorrttuunniittyy ttoo ssttrreennggtthheenn ffuunnddeerr ccaappaacciittyyaanndd ddeevveelloopp rreellaattiioonnsshhiippss wwiitthh ggrraanntteeeess..Using an intermediary may mean that a funderdoes not have the opportunity to build internalcapacity-building expertise or learn aboutgrantees' experiences. In particular, since thefunder is more removed from interactions withgrantees, it may not hear about granteeproblems, especially those related to theintermediary. Incentives for the intermediaryto demonstrate success may coincide with asimilar interest in grantees to hidedifficulties. In addition, grantees may resentthe intermediary for breaking a directrelationship between them and the foundation.

CCrreeaattee ccoonnffuussiioonn aabboouutt rroolleess aannddaaccccoouunnttaabbiilliittyy.. The intermediary can become a funder's"public face" and roles or lines ofaccountability can be misperceived bygrantees unless they are negotiated,established, and clearly communicatedupfront.

PPrrooss CCoonnss

44.. CCllaarriiffyy YYoouurr RRoollee iinn tthhee IInniittiiaattiivvee

Another key factor is how close or distantyou, as a funder, want to be from the capaci-ty-building work with the participating non-profits. While some grantmakers prefer adirectly engaged role, others want the bufferof a neutral intermediary to work with partic-ipants on sensitive organizational develop-ment matters.

Managing the Initiative In-house If your grantmaking organization has exper-tise in organizational development and candedicate substantial staff time, you couldplan and supervise the initiative yourself. Ifyou choose this engaged approach, aim todevelop mutually respectful relationshipswith the involved nonprofits and avoid beingheavy-handed. The Hartford Foundation forPublic Giving has an experienced capacity-building staff that worked closely with pro-gram staff to devise and manage a multi-year initiative to improve the managementand governance of key multi-service agen-cies in Greater Hartford, Connecticut.Although it used outside consultants to helpconduct organizational assessments, pro-vide management assistance, and evaluatethe program, the Foundation staff activelypartnered with the participating organiza-tions.

Some funders go so far as to provide directmanagement assistance to grantees. Due tothe power imbalance between a funder andnonprofit, this can be potentially difficult andrequires a significant amount of openness,trust, and reciprocity between the funderand nonprofit.

Using an Outside IntermediaryIf you are short of time, lack in-house compe-tencies in organizational development andmanagement, seek greater objectivity, orotherwise want more of a hands-off role, youcan delegate the design and management toan intermediary.6An intermediary can coordinate all aspectsof the initiative, provide "case management"services to grantees, monitor and maintainquality control, and communicate about theinitiative to internal and external audiences.

There are pros and cons associated withusing an intermediary, as shown in Exhibit 4.The potential benefits include providingadditional human resources, saving time andmoney, tapping expertise and credibility, andobtaining neutrality. The possible drawbacksare increasing management oversightresponsibility, avoiding strengthening fundercapacity and developing and creating confu-sion about roles and responsibilities.7

The James Irvine Foundation decided to useMDRC, a nonprofit social policy researchorganization, as an intermediary to manageand evaluate the Student SupportPartnership Integrating Resources andEducation (SSPIRE) Initiative. This three-year, $3.5 million initiative, which began in2005, provides grant support and capacity-building assistance to nine community col-leges in California to integrate instructionalreforms with student-support services, withthe goal of improving academic achievementand degree completion among 16 to 24-yearold low-income and minority students.

“Irvine views MDRC as an ideal partner tomanage the SSPIRE Initiative and providetechnical assistance to selected communitycolleges," Marty Campbell, Vice Presidentfor Programs at the Irvine Foundation, com-

11

Arts Regional Initiative James Irvine Foundation

Building Excellence,Sustainability, and Trust(BEST)

Flint Funders Collaborative: C.S. MottFoundation, Community Foundationof Greater Fint, Ruth Mott Foundation,United Way of Genesee County

Challenge Fund forJournalism

Ford Foundation, KnghtFoundation, and Ethics inExcellence Journalism Foundation

Deaconess ImpactPartnership

Deaconess Foundation

Multi-service AgencyInitiative

Hartford Foundation for PublicGiving

Organizational AssessmentProgram

Sierra Health Foundation

Southern HIV/AIDSPrevention Initiative

The Pfizer Foundation

Funder(s)

Exhibit 5: Seven Long-term Capacity-Building Initiatives, At a GlanceTotal Initiative Cost,

in millions (Capacity-building

portion)

To improve the financial sustainability, manage-ment, governance, and growth capacity of mid-sized leading arts organizations outside of largemetropolitan areas in order to enhance these orga-nizations' artistic leadership

To increase the sustainability of nonprofitgrantees in the Flint, Michigan area and todevelop a pool of skilled consultants to helpthem

To increase the long-term sustainability ofjournalism organizations through revenuediversification, specifically individual dona-tions

To increase the sustainability of a set of vitalchild-serving nonprofits in the St. Louisregion

To help key human service agencies inGreater Hartford improve their opeations insix core organizational areas, to producebetter client and community outcomes

To support mid-sized health service organi-zations in the greater Sacramento region toassess their capacity-building needs anddevelop a capacity building action plan

To stabilize multi-cultural communities inthe urban and rural areas in nine states inthe South and to build the capacity of thenonprofit sector, especially small- to mid-sized organizations, providing HIV/AIDSprevention services in the South

7(2006 start)

5(2003 start)

5(2004 start)

3-5(2004 start)

6(2001 start)

2(for pilot,2002 start)

3(2004 start)

3-4

3

2

4

6

0.5

3

Goal(s)

InitiativeCommitment(in Years)

ParticipantInvolvement(in Years)Initiative

12

Exhibit 5: Seven Long-term Capacity-Building Initiatives, At a GlanceTotal Initiative Cost,

in millions (Capacity-building

portion)

Range of Per Particiant Capacity-BuildingInvestment

Core, Program, and Capacity-building FundingConveningTrainingCoachingPeer ExchangeConsultingTools

Capacity-building FundingConveningTrainingCoachingPeer ExchangeConsultingToolsResearch

Capacity-building FundingConveningTrainingCoachingConsultingTools

Capacity-building FundingConveningTrainingCoachingPeer ExchangeConsultingTools

Core and Capacity-buildingFundingConveningTrainingConsulting

Organizational AssessmentFundingConveningTrainingConsultingTools

Capacity-building FundingConveningTrainingCoachingConsultingTools

28 invited, based on budget size and other qualifications

26 applied12 proposals

12 selected (46%)

24 invited and completedassessment

20 applied and selected (83.3%)

16-24 invited, based on funder nominationof former grantees16-20 applied

15-16 selected (79%-100%)(for years 2 and 3)

200 attended community meetings51 invited to complete intial application21 selected for extensive application

8 selected (16%)

15 invited15 completed organizational assessments

12 selected (80%)

20 applied10 selected (50%)

440 letters of interest, based on HIV prevention work in 9 Southern states

64 Invited63 submitted competitive proposal

24 selected (38%) (but convenings and computers to all 63 applicants)

$4.54($4.05)

(for first 4 yearcycle)

$3.74($2.37)

$1.85($1.26)

(for year 2 & 3)

$7.65($7.4)

(for years 1-4)

$4.4(for first 3-year

cycle)

$.16(2-year pilot)

$3($0.6)

(for years 1-3)

$200,000 - $400,000

$50,000 - $100,000

$7,500 - $100,000

$50,000 - $400,000

$100,000 - $300,000

$10,000

$1,200 - $29,000(indirect)

12

20

8

12

10

24

15-16

How Participants Are Selected (percentage represents number ofselected out of applicants)

Number of Organizationsin Cohort Assistance Provided

mented. "MDRC has a long history of provid-ing technical assistance and implementationsupport for programs, deep technical exper-tise in field-testing program innovationsbefore they are widely adopted, and an abili-ty to leverage this work with Irvine with whatit is learning through its national programsthat also focus on community colleges:Opening Doors, and Achieving the Dream." Likewise, John Funabiki, former DeputyDirector for Media, Arts, and Culture at theFord Foundation, and his initiative fundingpartners decided to use TCC Group as anoutside intermediary to help plan theChallenge Fund for Journalism and handlethe day-to-day operations and grantee inter-actions. "Most of the grantees neededadvice, training, and monitoring in order torestructure their fundraising strategies tomeet their goals," he observed. "It was clearto us that we would need an intermediarythat had the appropriate expertise and tech-nical capacity to work with the grantees.Ultimately, we decided that a private con-sulting firm could perform this function." Inthis case, the firm has the primary relation-ship with the participants and re-grantsmonies to the grantees on behalf of the fun-ders.

If you decide to work with an outside inter-mediary, you need to manage the relation-ship well. Begin by clearly articulating yourreasons for using one. Consider severalprospects and choose the one with the mostappropriate knowledge and skills and withwhom the chemistry is best. Once you makeyour selection, create a formal, writtenagreement that defines a clear scope of ser-vices and mutual expectations. Spell outyour respective roles carefully and clearlyexplain to grantees who has the authorityand will be the primary contact. Throughoutthe initiative, manage the intermediary wellby keeping the lines of communication openand providing continual feedback on perfor-mance.

The funder, intermediary, and nonprofit orga-nizations participating in the initiative fre-quently become engaged in a triangular rela-tionship. The funder must strike the right bal-ance of confidentiality and openness appro-

priate to each of the three sides in the part-nership, respecting boundaries while encour-aging communication. Information is power,and it must be distributed appropriately tokeep this delicate relationship functioningwell.

The nonprofit and the intermediary need totrust each other, exchange informationfreely, and establish clear expectationsabout confidentiality. To improve its manage-ment and governance, a nonprofit often must"air its dirty laundry" to the intermediary.This leaves the nonprofit exposed. The inter-mediary must respect the vulnerability inaccounting to the funder. In most cases, thenonprofits' activities can be reported in arestricted or summary form, providing rele-vant material about organizational needs,capacity-building services, and outcomes,without revealing privileged information.

Whomever is involved in the initiative, createdeliberate opportunities for you and the oth-ers to learn as the initiative evolves. The FlintFunders Collaborative Building Excellence,Sustainability, Trust (BEST) initiative wasdesigned as a learning laboratory to helpboth participating agencies and foundationsbetter understand organizational capacitybuilding. The grantmakers, nonprofit execu-tives, and involved consultants met regularlyduring each initiative to reflect on theirprogress.

You may choose to pursue a long-termcapacity-building initiative on your own inorder to tailor it to support your organiza-tion's specific goals or avoid the possibleextra effort involved with a joint effort. If youare working alone, at a minimum find outwhat types of capacity-building funding andsupport the nonprofits in your initiative arereceiving from other grantmakers andsources so you can all coordinate yourefforts.

Keep in mind howthe nonprofits youselect will interactin a learning community.

14 briefing paper

55.. DDeecciiddee iiff YYoouu WWiillll WWoorrkk AAlloonnee oorr

CCoollllaabboorraattee WWiitthh OOtthheerr FFuunnddeerrss

Consider collaborating with other funderswho may share your objectives, such as tobuild a particular field or community. Thereare various models for a funder collaborationto consider. One grantmaker may provide theprogram grants, while the other supports thecapacity-building work. Or, you can workwith other funders to form a joint pool, as aset of environmental grantmakers recentlydid. In 2005, the Chesapeake Bay Trust beganhelping to organize a group of funders(including The Campbell Foundation, TheRauch Foundation, and The Morris andGwendolyn Cafritz Endowment) to create apooled fund to strengthen nonprofits thatwork to protect and restore the ChesapeakeBay and its watershed. The three-year col-laborative aims to provide programmatic andorganizational capacity-building support tostrengthen and link nonprofits.

The process for choosing organizations toparticipate in a long-term capacity-buildinginitiative depends mostly on what your grant-making organization ultimately wants toaccomplish. As shown on the right side ofthe logic model in Exhibit 3, as a funder, youneed to first be clear about why you want tostrengthen the performance of a particularset of nonprofits. This will inform yourapproach to the selection process. For exam-ple, if you want to build the field of substanceabuse nationally, you may want to choosethose groups in the field that demonstratedbest practices in programs and focus onenhancing their organizational effective-ness.

The Number and Mix of ParticipantsYou first need to determine how manygroups you want to participate in the initia-tive. Some funders choose to concentratesupport for a small set of nonprofits, such asDeaconess Foundation, which has only ninenonprofit partners in its initiative. On theother hand, some grantmakers elect to workwith a larger number, such as the Pfizer

15

66.. DDeetteerrmmiinnee tthhee SSeelleeccttiioonn PPrroocceessss

ffoorr PPaarrttiicciippaannttss

Foundation, which had 22 participants thatreceived intensive support and 39 more thatgot other help.

Keep in mind how the nonprofits you selectwill interact in a learning community. Youmay want to choose groups that are similaror different from one another in certainways, so that they can better learn fromeach other. Since Deaconess Foundationparticipants don't compete with each otherdirectly in the program and fundraising are-nas, they feel comfortable sharing with eachother during peer exchanges.

Inviting Participants Through a Closed ProcessHow open or closed do you want the selec-tion process to be? Do you want to increasethe organizational effectiveness of an exist-ing cadre of nonprofits that you already knowwell and to which you currently award pro-gram grants? Then you may want to invite allor some of the grantees in your portfolio andchoose to provide capacity-building supportthrough an organized initiative. Frequently,funders that are aiming to benefit a specificgeographic area invite a set of well-knownanchor organizations in the community. Thefoundations that supported the Organiz-ational Capacity Grants Initiative, forinstance, invited 16 leading human socialservice agencies in San Mateo County toapply to be part of the initiative and accept-ed all of them.

Using an Open and Competitive SelectionProcessOn the other hand, you may want to use amore open and competitive process if youneed to learn more about the grantseekers'track record, needs, or plans. In this case,you could have an initial brief applicationprocess through which a large number ofnonprofits state their capacity-buildingneeds and why they would like to participatein the initiative. Then, you could invite a sub-set of these groups to submit a more com-prehensive proposal before making a selec-tion.

This is the process that the James IrvineFoundation followed for its Arts RegionalInitiative. The Foundation wished to provide

targeted capacity-building support to mid-sized arts organizations in three non-metro-politan regions in California. A RAND studyhad recently revealed that mid-sized artsgroups were more financially vulnerable thansmaller ones that did not yet have fixed oper-ating costs and were more flexible and largerones that were better able to attract founda-tion and government funding. And Irvineknew that arts groups outside of the majormetropolitan areas had limited access tothese sorts of funding streams. So, the foun-dation identified arts groups in its first targetregion with annual operating budgetsbetween $500,000 and $5 million, asked 28nonprofits to submit an application, and thenchose the top 12 (based on the criteria of artsleadership, community connectedness,readiness to build capacity, and financialsustainability) to submit a more comprehen-sive proposal with detailed capacity-buildingplans and budgets. The Foundation decidedto award grants to all 12.

The Pros and Cons of Using OrganizationalAssessments During the Selection ProcessSome funders invite applicants to undergoan organizational assessment process anddevelop a capacity-building plan beforechoosing which groups to participate in theinitiative. In 2001, the Hartford Foundationfor Public Giving asked 15 mid-sized multi-service agencies around Hartford,Connecticut -- such as Hispanic HealthCouncil and the local Urban League andYWCA -- to apply to a capacity-building ini-tiative. Outside consultants conducted in-depth organizational assessments for theparticipants and worked with them to devel-op plans for enhancing their organizationalcapacity. The Foundation then chose 12applicants who demonstrated that they hadsolid plans and were ready to receive assis-tance. For the first three years of the initia-tive, these groups received up to $100,000per year for implementation, peer learningsessions, and technical assistance.

However, if you do not have a long-termtrusting relationship with the applicant orga-nizations, it may be best to avoid conductingan in-depth organizational assessment aspart of the screening process. Groups may

16 briefing paper

Leaders must be self-

reflective and willing

to change their

organization to some

degree when joining

an initiative, just as an

individual in

counseling needs to

want to change for the

therapy to be effective.

not answer questions honestly if they believe thatrevealing organizational shortcomings may pre-vent them from being chosen. In this case, youcan employ a formal organizational assessmentafter groups have been chosen, as a way to helpthem take stock, determine their organizationaldevelopment needs, and refine their capacity-building plans. (See Section 7 on page 18 for moreinformation on how to use organizational assess-ments following the selection process.)

The Question of Readiness As you review candidates, it is important toassess not only their needs, but also their readi-ness to partake in a long-term initiative. Exhibit 6shows a checklist of critical factors that indicatereadiness and likelihood to gain the most fromparticipating.8 Keep in mind that degree of readi-ness will depend on the lifecycle stage of the non-profit organization. A prospective participantdoes not have to check off every box to qualify,but think twice before selecting an organizationwith mostly blanks. If you are uncertain, considermaking a lower level of investment and serviceprovision to the nonprofit and help it become bet-ter prepared to receive more support later on.

An organization requires a practical ability withsufficient stability and resources to participateand make the most of the initiative. It may not beprepared if it has high staff turnover, lacks strongprograms and basic systems and processes,exhibits a dysfunctional organizational culture, istoo busy with other priorities, or faces a pendingchange in the external environment that willgreatly influence its future direction. Staff andboard leaders also need to be able to devote ade-quate time and attention to the capacity-buildingwork. If this is uncertain, a funder can try to timethe support so that the organization can absorb itwell.

Furthermore, organizations that have some previ-ous positive experience in capacity building andworking with consultants, coaches, or trainerswill probably be more likely to gain. Those whoresist outside help or have had prior negativeexperiences with consultants may have trouble.

An organization should also have a clear plan tostrengthen its capacity and manage change. Butthat is probably not enough. It also needs enough

17

PPrraaccttiiccaall aabbiilliittyy ttoo ppaarrttiicciippaattee aanndd bbeenneeffiitt::

Board and staff leaders understand change management processes, are

focused on capacity building for program success and have a track record

of success.

Key board and staff members have sufficient time available to devote to

capacity-building work.

Senior staff has recently been stable and has not turned over quickly.

Organization has a strong set of core programs or services.

Organization has established basic organizational systems and processes,

such as data-driven decision making, human resource mangement, fund

development, and technology.

Organization is not in the midst of a crisis.

Organization demonstrates mutual respect and cooperation among staff and

board.

Organization has some previous experience in capacity-building and working

with external advisors.

The organization's leadership has a clear sense of the organization's needs

and future priorities, a plan to strengthen its capacity, and an explicit

strategy for change management.

Organization has adequate financial and human resources to implement and

sustain some of the capacity-building strategies it identifies.

The organization can offer something from which other initiative participants

can benefit, including guidance, tools, and information.

MMoottiivvaattiioonn aanndd wwiilllliinnggnneessss ttoo ppaarrttiicciippaattee aanndd bbeenneeffiitt::

Key board and staff members exhibit a desire to self-reflect, learn, and

develop.

Key board and staff members are motivated to change.

Board and staff leaders have a shared commitment to enhance the

organization's effectiveness.

Organization has had some previous positive experience with organizational

change.

Exhibit 6: Checklist to Determine Readiness of a Nonprofit Organization to Participate in a Long-term Capacity-Building Initiative

18 briefing paper

potential resources to execute some of thestrategies it identifies during the initiative toenhance its management or governance.

Strong leadership is critical. Weak leaderswill have more difficulty taking advantage ofthe initiative. If you do select an organizationwith leadership difficulties, be sure toaddress this core capacity first throughcoaching or consulting.

Furthermore, a nonprofit should be able to"bring something to the table" from whichother participants in a cohort can benefit.For example, a staff leader who is too greenmay not be able to contribute much to alearning community.

Prospective organizations need more thanjust these practical abilities to benefit. Theyalso need to be motivated to participate.Leaders must be self-reflective and willing tochange their organization to some degreewhen joining an initiative, just as an individ-ual in counseling needs to want to change forthe therapy to be effective.

Board and staff leaders should share a com-mitment to organizational change. Usually,there is a driving force -- such as the need tomanage growth, make a leadership transi-tion, reverse stagnation, or respond to exter-nal funding or marker shifts -- that makechange imperative, not just useful.Nonprofits that have been pushed unwilling-ly by a grantmaker to take part in a long-termcapacity-building initiative typically and uphaving negative experiences.

Emphasizing Expectations at the OutsetParticipating in an initiative can be not onlybeneficial for a nonprofit, but also burden-some. During the selection process, clearlystate expectations to potential participantsabout the time investment and other obliga-tions, such as an organizational assess-ments or meeting attendance. You may evengo so far as to have an organization sign acontract that states that they will meet cer-tain requirements. If it can not make thesecommitments, then you could resolve to notlet the nonprofit join. Additionally, if a groupdoes not meet these expectations during the

course of the initiative, then you may decideto end its engagement in the initiative.

Offer a range of kinds of assistance to non-profits that are part of your capacity-buildinginitiative. A menu of possible offerings isshown in Exhibit 7 on page 19.

The assistance you choose to provide willdepend mostly on your goals and availablefinancial resources. Tools and publicationsare the least expensive options. Conveningand training tend to cost less than one-on-one coaching and consulting. Consideradding peer exchange to the mix as it has abig bang-for-the-buck. Blended solutionsthat reinforce each other tend to be mosteffective. For example, you may offer a train-ing workshop and publication on strategicplanning to 20 organizations, provide ongoingExecutive Director coaching to six of thegroups, and underwrite the consulting costsfor intensive strategic planning for two non-profits.

Who Decides What Capacity Building isNeeded?The menu of options you present should alsobe influenced by the organizational develop-ment needs of the participating organiza-tions. Focus your efforts on strengtheningleadership and adaptive capacities, sincethose are the most critical. Who decideswhat capacity building is needed is critical.Although a thoughtful funder or capacitybuilder can play an important role in helpingguide a group to determine its needs, ulti-mately the organization needs to decide itsorganizational development priorities. Aneffective organizational assessment processwill help an organization recognize thatsome issues, such as fundraising problems,may be symptoms of deeper underlying orga-nizational difficulties, like ineffective pro-grams or weak leadership.

77.. CChhoooossee WWhhaatt TTyyppee ooff AAssssiissttaannccee

WWiillll bbee OOffffeerreedd ttoo OOrrggaanniizzaattiioonnss

19

TToooollss aanndd RReessoouurrcceess:: You can provide tools -- such as board self-assessmentinstruments, personnel policy manual templates, finan-cial management software, or computers -- to partici-pating organizations. You may also want to give thempublications related to nonprofit management andgovernance. In addition, you could refer them to otherresources that can help them address organizationalchallenges and opportunities, such as consultants,useful web sites, and other nonprofits that have facedsimilar challenges.

LLiissttsseerrvvss:: A listserv enables a group of nonprofits to share anddiscuss information through a single e-mail address.An e-group provides a website for groups to sharecalendars, pictures, documents, membership lists, andlinks. You can create a listserv or e-group for the orga-nizations in your initiative using a major Internet ser-vice provider, such as Yahoo, MSN, or Google. They aremost effective when they are initiated after a group ofpeople have already met in person and someone isresponsible for maintaining and moderating the listand facilitating online conversation.

EEdduuccaattiioonn aanndd TTrraaiinniinngg:: Training and educational opportunities facilitate indi-vidual employees, trustees, and volunteers to developskills to help them do a better job managing, oversee-ing, and supporting their organization. Offerings canrange from brief, one-shot seminars, to regularlyscheduled online training webcasts, to year-long, uni-versity-based courses on such topics as strategic plan-ning, board development, or program evaluation.Whatever the setting, adults learn best when there isa clear agenda with specific goals and when there isan opportunity to apply new skills and concepts toreal-life work situations. It is critical that key changeagents receive the training and are accountable forimplementing what they learned.

PPeeeerr EExxcchhaannggee:: Peer exchanges -- including round tables, case-studygroups, and learning circles -- are based on thepremise that participants can be both teachers andlearners. To be most successful, peer exchanges need

a skilled facilitator, a safe environment in which aconsistent array of participants can express and modi-fy their beliefs, a clear set of learning objectives, and abalance of structure and flexibility. Peer exchanges canlessen participant isolation, increase confidence, andheighten awareness of diverse views and alternativesituations.

CCoonnvveenniinngg:: You could multiply the power of your initiative by con-vening the involved nonprofits regularly. Conferencescan be used to develop a learning community throughcustomized trainings and clinics, peer exchange, andinformal networking. These forums can also facilitatediscussions about issues in the field or community, aswell as joint actions related to funding, policy advoca-cy, and programs.

CCooaacchhiinngg:: You may offer one-on-one coaching to nonprofit exec-utives. In this relationship, the coach offers new ideasand perspectives, asks challenging questions, andhelps the client to process information and adaptbehavior.

CCoonnssuullttiinngg:: Consulting is a broad term that describes a wide arrayof relationships between a nonprofit client and a pro-fessional advisor, whether an independent consultant,nonprofit management support organization, or pri-vate consulting firm. Consulting roles vary dependingon the consultant's style and background, the needsof the client, and the type of project. In some cases, aconsultant acts as a directive expert, conveying infor-mation and prescribing solutions related to programs,organizational development, or specialized areas suchas accounting or fundraising. In other situations, aconsultant serves as a facilitator, guiding a processand helping the client to reflect on options and makedecisions.

GGrraannttss:: As part of the initiative, you can provide grants tosupport specific capacity-building efforts, programs,general operations, or endowment, as explained moreon page 21.

Exhibit 7: A Menu of Types of Assistance

As noted in Section 6 on the selectionprocess, an organizational assessment canhelp determine what sort of help is mostneeded. You can employ an organizationalself-assessment using a standard instru-ment.9 Or, you can support an outside con-sultant to perform a more in-depth qualita-tive organizational assessment by conduct-ing confidential interviews with key stake-holders and producing a written report forthe nonprofit.

Consider the case of the Flint FundersCollaborative, which built in a first phase foreach of the 14 participating organizations toassess their organizations over four monthsusing grants from $8,000 to $20,000. Assistedby outside consultants, each agency tookstock of such areas as financial manage-ment, fund development, and staff and boardleadership. Based on these assessments, thegroups devised plans to build their capacityand were collectively awarded $880,000 overtwo years for implementation.

As another example, the Sierra HealthFoundation runs a program that focuses onenabling health-related nonprofit groups toassess their organizations and developcapacity building action plans. Participatingorganizations are awarded $10,000 to havean outside consultant conduct an organiza-tional assessment and help board and staffleaders to set capacity-building goals andstrategies together. The foundation hasfound that the plans have been so solid thatmost participating organizations have beenable to attract other financial support forimplementation.

Helping Participants Develop Capacity-BuildingPlansEach participating organization should cre-ate a plan to address its capacity-buildingneeds. Both board and staff leaders shouldcontribute to this effort. The plan should beprioritized and not try to tackle too manyproblems at once. You can let the groupdefine this plan on its own, or you or an inter-mediary can work with the group to developthe plan, act as a sounding board, and ensurethat it is sound.

If you follow this course, it is critical that thefunder or intermediary does not force a pre-scription that the nonprofit does not support,since without buy-in it is unlikely to be imple-mented. After you approve the plan, be flexi-ble about letting the group modify it as theinitiative unfolds if this will increase the like-lihood of strengthening the organization.

Mixing and Matching Services Based on NeedConsider tailoring services, based on need,as shown in Exhibit 8. For the Pfizer SouthernHIV/AIDS Prevention Initiative, TCC Groupconducted quantitative and qualitative orga-nizational assessments for all of the partici-pating organizations and found that boarddevelopment, executive coaching, and web-site development services were high priori-ties and subsequently offered assistance tomeet these needs.

Focus mostly on building the crucial leader-ship and adaptive capacities. Rememberthat certain methods of assistance are bet-ter suited for building particular types ofcapacity. Consulting and coaching, forinstance, are the most effective ways tostrengthen leadership capacity, while train-ing and tools are best for increasing techni-cal capacity.

20 briefing paper

Exhibit 8: Mixing and Matching Services

ParticipatingOrganizations Consulting Coaching

PeerExchange Training Convening

Mesa GrandeMulti-serviceCenter

� � �

Big Brothers-Big Sisters

� � � �

YWCA � � � �

YouthForce � � �

Bear in mind which assistance will be doneindependently and which collectively. Be sureto have enough joint elements so that thecohort of organizations can learn from eachother through peer exchanges, trainings, andconvenings. You should cluster sub-sets oforganizations based on their need for inter-organizational learning and other commonal-ities, such as program model, size, or stage ofdevelopment. Exhibit 9 below shows how theset of 22 Pfizer grantees were grouped andprovided customized services according totheir lifecycle stage.10

Putting Limits on Who Provides AssistanceWill you provide coaching or consulting helpthrough the initiative? If so, figure out whatconstraints you may put on who provides theassistance. On one hand, you can simply letthe groups select their own professional advi-sors and provide financial support to pay forthem, as the Irvine Foundation did for theArts Regional Initiative and the HartfordFoundation for Public Giving did for its Multi-service Agency Capacity Building Initiative.

On the other hand, you can pre-screen con-sultants and, acting as a broker, offer a col-lection of possible helpers from which theparticipants can select ones with which towork, as the Pfizer Foundation did for theSouthern HIV/AIDS Prevention initiative. Inthis case, some groups may not know of high-quality providers and will appreciate the sug-

gestions and advice on how to be good con-sumers of consulting services. Be sure tooffer a range of choices, so that you are notimposing just one or two providers onto thegroups. Enable them to consider a variety ofoptions to ensure they get the right fit interms of chemistry, reputation, and technicalexpertise. If the quality of management assis-tance providers is mixed in your field or area,you could add a component to your initiativeto strengthen the capacity builders.

Making Grants to Support Capacity-BuildingActivitiesYou will need to award grants to participat-ing nonprofits as part of the initiative, unlessyou are providing all the capacity-buildingservices and paying the providers directly. Ifyou let the groups select their own outsidehelpers, then you probably want to providefunding to support the implementation oftheir capacity-building plans.

Consider providing grant support to cover notonly consulting expenses, but also to hirestaff and implement organizational develop-ment strategies. Additionally, you could pro-vide program grants to participating organi-zations, like the Pfizer Foundation did for itsSouthern HIV/AIDS Prevention Initiative,when it awarded multi-year grants of up to$55,000 annually, to complement its capacity-building supports. Even more, you could pro-vide unrestricted general operating support

21

Exhibit 9: Southern HIV/AIDS Prevention Initiative Grantee Portfolio by Organizational Lifecycle Stage

grants, in addition to other types of funding,as another way to try to enable the organiza-tions to strengthen themselves.

Offer matching grants if you are trying toprovide incentives to generate certain typesof revenues, much like the Challenge Fundfor Journalism. After the Internet bubbleburst and the attacks of September 11thoccurred, most nonprofit organizations inthe journalism field experienced a sharpdrop in corporate and foundation revenuesand became financially unstable. JohnFunabiki realized that many of the journalismgrantees in his portfolio at The FordFoundation had limited capacity to generaterevenues in this tough operating environ-ment. So, he came up with an idea to helpthem broaden their base of financial supportand build the organizational infrastructureneeded to continue their programs well intothe future.

The Challenge Fund for Journalism -- a multi-year initiative that provides matching grants,professional development opportunities, andorganizational development coaching ser-

vices to a cadre of journalism nonprofits --was launched in 2003. The Knight Foundationand Ethics and Excellence in JournalismFoundation joined forces with Ford to sup-port the effort. In 2006, a cohort of 16 partici-pating organizations successfully raised$1.24 million to match $674,000 in grantawards. According to Eric Newton, Directorof Knight's Journalism Initiatives, "manyhave made significant organizationaladvancements."

Different Levels of ParticipationFinally, you can design an initiative thatentails different levels of participation if youwant a large group of nonprofits to beinvolved but are not sure if certain groupsdeserve or are ready for intensive support.As Exhibit 10 shows, you could have one tierof participants that receive more intensivesupport (including grants, consulting, andcoaching) and another tier that gets lessintensive support (such as peer exchange,training, and convening).

You may also want to plan your initiative sothat groups could begin in the first tier and

Plan the evaluationat the outset so thatit can be a formativeprocess that periodically influences programdesign revisions.

22 briefing paper

Exhibit 10: A Sample Model for Tiered Levels of Participation

23

then advance to the second tier after a yearor two in the initiative. Groups that seem lessprepared to take advantage of advancedcapacity-building services could initially getless demanding support and then qualify formore once they had proven themselves.

The Pfizer Foundation used a two-tieredstructure in its capacity-building initiative.The Foundation invited HIV prevention orga-nizations in nine southern states to submit aletter of interest and over 440 organizationsapplied. Sixty-four of the applicants with themost innovative programs were then select-ed to submit a proposal. Of these, 24 werechosen to receive programmatic grants andthen offered organizational assessments,one-on-one consulting and coaching, andpeer exchange. The remaining finalists wereinvited to participate in an annual trainingconference and receive computer donationsfrom Pfizer Inc.

Many compelling reasons exist to evaluateyour initiative. Systematic evaluation helpsyour funding organization measure the useof resources and results and be moreaccountable. Evaluation findings can informhow you refine the initiative as it progresses.Evaluation also generates new knowledgeand determines what works, for whom, andin what circumstances. It can help the par-ticipating nonprofits learn from their efforts,individually and as a group. Plan the evalua-tion at the outset so that it can be a forma-tive process that periodically influences pro-gram design revisions. If you conduct a sum-mative evaluation at the end of the initiative,it is too late to make mid-course correctionsalong the way.

Who Will Conduct the Evaluation?Depending on the specific circumstances,evaluations of capacity-building activitiescan be conducted by the nonprofit organiza-tion itself, a management assistanceprovider, foundation or intermediary staff, or

an external evaluator. The decision aboutwho conducts an evaluation should be basedon available skills and resources, the abilityto be objective, and how the findings will beused. Often, an outside evaluator is used toensure that the evaluation is unbiased andits design, methodology, data collection, andanalysis are sound and valid.

An external evaluator is able to functionmore autonomously, avoid politics, dig deep-er, and share information with a nonprofitmore candidly than might be possible orappropriate for a funder or capacity builder.Nonprofit organizations may find externalevaluations threatening as staff and trusteesmay fear revealing information about sensi-tive organizational issues. At the outset, it isimportant for all parties -- evaluator, capaci-

88.. DDeecciiddee HHooww YYoouu WWiillll EEvvaalluuaattee

tthhee IInniittiiaattiivvee

ty builder, nonprofit, and funder -- to explicit-ly agree about what information can beshared and with whom.

Measuring the Different Levels of SuccessHow success is specifically measured willdepend on the nature of the particular orga-nizational development work that is beingcarried out in the initiative. Evaluation canusually be conducted on many levels fromusage to short-term outcomes, to long-termimpact. At a basic level, one can simplycount number, duration, and satisfaction --how many individuals and groups used theinitiative capacity-building services for whatduration and their level of satisfaction.

Moving deeper, one can assess the quality ofthe capacity-building strategies through par-ticipant ratings, comparison with research-based practices, and expert observation.Beyond this, one can attempt to determinewhat participants learned, how they appliedthe knowledge, and how they changed theirbehavior. Ultimately, one can strive to deter-mine the long-term impact of capacity build-ing on the organization and its clients, com-munity, or field. It becomes increasingly diffi-cult, however, to assess impact as one goesfrom the organizational to the communitylevel.

A logic model can help bring order to theselevels and questions and articulate theunderlying assumptions of your capacity-building initiative, as explained in Section 1,"Set Goals for the Initiative," on pages 7-8. Itcan serve as the evaluation framework fromwhich all evaluation questions, data collec-tion tools, methodologies, and data analysisare derived. It also provides a frame of refer-ence for testing assumptions and having adialogue about ways to make improvements.This approach begins by spelling out the ini-tiative's inputs, strategies, outputs, and out-comes. Using the logic model as a frame-work, the questions that need to beaddressed in the evaluation should be care-fully crafted, remembering that good ques-tions lead to good answers. Then, indicatorsof success for each question can be stated,and sources of the necessary data can beidentified.

Focus on whether the organization achievedoutcomes most directly related to the goalsestablished in the capacity-building plan.Also, have realistic expectations -- if all youare funding is a workshop, do not expect out-comes more than increased knowledge andawareness. Furthermore, do not limit theevaluation to what can be counted or is easyto collect. Keep in mind that anecdotal evi-dence and unintended consequences can bemeaningful too.

Combining Program Evaluation andOrganizational AssessmentA combination of program evaluation andorganizational assessment is critical forevaluating a capacity-building initiative.Organizational assessments can be repeat-ed periodically to measure capacitychanges. It also is important to conduct high-quality, ongoing program evaluations togather data about how organizational capac-ity improvements may contribute to pro-grammatic impacts on clients and communi-ties. As shown in Exhibit 11, the participatingnonprofits in the Flint Funders Collaborativeinitiative believed that they increased theirleadership, adaptive, and managementcapacity, as well as program quality. Half ofthe executives reported gains in their abilityto make organizational decisions and solveproblems as a result of being in the initiative.

Learning From and Sharing Your FindingsUse cross-grantee findings from your evalu-ation to better understand the common andunique strengths and weaknesses, as well assuccesses and failures. Utilize findings toevaluate capacity-building resources, strate-gies, and activities -- not just outcomes.Finally, share evaluation findings broadly.There is a dearth of information about whatworks, and especially what an effective orga-nization looks like within a particular field.11

Many changes at participating nonprofitsresulting from your work will outlive the ini-tiative, such as a new donor tracking system,

24 briefing paper

99.. FFiigguurree OOuutt WWhhaatt WWiillll HHaappppeenn ttootthhee PPaarrttiicciippaattiinngg OOrrggaanniizzaattiioonnssAAfftteerr tthhee IInniittiiaattiivvee

evaluation processes, or a revised organiza-tional structure. To maximize the extent ofpositive change after the initiative is fin-ished, be deliberate about your exit strategyat the start of the initiative and be open tochanging it as the initiative evolves. You canenable participating organizations to institu-tionalize capacity building and sustainaspects of the work after the initiative iscompleted. Prevent the nonprofits frombecoming dependent on outside help byensuring that advisors transfer skills andprovide tools -- such as organizationalassessment and program evaluation instru-ments, manuals, templates, and systems --for further use.

Money also matters. Avoid making a grant solarge that it exceeds a tipping point at whichthe organization, even after developing itscapacity, may find it difficult to absorb orreplace the bulk of it when the initiative fund-ing dries up. Afterwards, you may offer con-tinued grant support just for programs. Youcan also help participating nonprofitsattract other funding. This is what happenedto Our Piece of the Pie (OPP), a youth ser-vice provider that was involved in theHartford Foundation for Public Giving'sMulti-service Agency Capacity BuildingInitiative. After taking advantage of an orga-

nizational assessment and strategic plan-ning process through the initiative, OPP wasable to enhance its organizational effective-ness and attract the attention of the EdnaMcConnell Clark Foundation, a national fun-der that screens for programmatic and orga-nizational effectiveness, and receive signifi-cant additional support.

The Pfizer Foundation aimed from beginningof its Southern HIV/AIDS PreventionInitiative to create a network of strongerHIV/AIDS service organizations working inthe South that would outlast the duration ofthe initiative. The Foundation has created aweb portal to help keep the network aliveafter the initiative ends. As one of thegrantees comments, "long after PfizerFoundation's funding relationship has con-cluded, the skills and expertise culled fromthese capacity-building efforts will continueto make us a trusted and well-respectedorganization."

It will probably take at least several monthsto make all the decisions about the design ofyour initiative. As you think about your choic-es, consider the overarching key successfactors for long-term capacity-building ini-tiatives summed up in Exhibit 12.

25

Exhibit 11: Organizational Change in Flint Funders Collaborative Grantees

26 briefing paper

GGrroouunndd yyoouurr ccaappaacciittyy--bbuuiillddiinngg iinniittiiaattiivvee iinn yyoouurr ffuunnddiinnggoorrggaanniizzaattiioonn''ss mmiissssiioonn aanndd pprrooggrraamm tthheeoorryy ooff cchhaannggee..Do not plan the initiative in a vacuum, in a "ready, fire,aim" mode. Instead, be clear at the outset how thecapacity-building initiative will support your fundingorganization's goals and know the answer to the ques-tion: "build capacity for what?" Usually, your responsewill be to help the participating nonprofits achieve betterprogram outcomes. By basing the initiative on a clearprogram theory of change, you will be able to articulateyour intentions and evaluate your progress better.

BBee rreeaalliissttiicc aabboouutt wwhhaatt yyoouu ssttrriivvee ttoo aacchhiieevvee..Match your expectations to your level of investment.Regardless of the resources you devote to the initiative,do not expect the capacity building to be transformativefor all of the participating organizations. Organizationsevolve slowly and it can take many years to see signifi-cant changes. Frequently, the process follows a "twosteps forward, one step back" pace. Expect challenges toarise that will slow the rate of progress, such as turnoveramong the board and senior staff or external factors likean economic recession or regulatory changes.

UUssee yyoouurr ppoowweerr wwiisseellyy..There is a natural imbalance of power between fundersand nonprofits. When pursuing a capacity-building initia-tive, use your power carefully and avoid being overlymeddlesome and giving advice about how a nonprofitshould manage or govern itself. Build trusting relation-ships with participating nonprofits and consider using anobjective third party intermediary or consultant to relatemore directly with them.

BBuuiilldd oonn nnoonnpprrooffiittss'' ssttrreennggtthhss..A long-term capacity-building initiative should concen-trate on capitalizing upon assets, not just on correctingweaknesses. Meet nonprofits where they are and buildon what is present and possible. Use organizationalassessments throughout the initiative to diagnosegroups, identify capacity-building priorities, and evaluateprogress over time.

SSeett pprriioorriittiieess ffoorr wwhhaatt ttyyppee ooff oorrggaanniizzaattiioonnaall ccaappaacciittyyyyoouu iinntteenndd ttoo bbuuiilldd..Invest mostly to increase leadership and adaptive capaci-ty since they drive organizational development. A non-profit that has strong management and technical capaci-ty but is weak in terms of leadership and adaptivecapacity can be doing things well, but they may be thewrong things. Also, do not let involved nonprofits takeon too many issues at once. Make the capacity buildingthat matters most for programs and mission attainmentthe highest priority.

FFooccuuss oonn eennaabblliinngg ppeeooppllee ttoo lleeaarrnn aanndd cchhaannggee..Organizations are collections of people, so organizationalcapacity building is about influencing a set of individualsand accelerating their learning. The people involved mat-ter a lot. Keep in mind that most people naturally resistchange, so you want to design an initiative that helpsovercome that barrier and creates a culture that valueslearning and transformation. Staff and board membersneed to be ready, willing, and able to change and benefitfrom the capacity-building support. Staff leaders areespecially critical. If the leaders are incompetent or dis-engaged or, even worse, an executive director leavesmidway during an initiative, all bets are off.

TTrryy ttoo mmaakkee tthhee ssuumm ooff tthhee ssttrraatteeggiieess aanndd sseerrvviicceessggrreeaatteerr tthhaann tthhee iinnddiivviidduuaall ppaarrttss..Together, your set of capacity-building strategies in aninitiative creates an organic, multi-dimensional process.As you go along, creatively leverage everything and takeadvantage of unexpected circumstances.

LLeeaarrnn aabboouutt wwhhiicchh ssttrraatteeggiieess aarree wwoorrkkiinngg bbeesstt aannddiinnvveesstt mmoorree iinn tthhoossee ssttrraatteeggiieess..Along the way, use evaluation to measure the quality ofcapacity-building assistance and what is - and is not -effective. Based on what you find, alter your strategies tofocus more on what is working. The key to learningwhich strategies work best is to not limit your evaluationefforts to counting units of capacity-building activities.Rather, dig deeply into measuring the quality of thecapacity building and how certain experiences seemmore or less likely to facilitate some type of individual,organizational, community, or field level impact.

Exhibit 12: Key Success Factors for a Long-Term Capacity-Building Initiative

27

Once you set your strategies and commitresources, you are ready to launch your ini-tiative. Now the hard work begins: imple-mentation. Develop more specific actionplans, carry out all of the work, and monitor,evaluate, and refine your efforts as you goalong.

It is likely that the implementation of your ini-tiative will not be easy. By their very nature,long-term capacity-building initiatives arecomplex, time-consuming, and prolonged

endeavors. But they are usually worth all ofthe hard work.

By making this deep investment, you canleverage your philanthropic dollars andenable a set of nonprofits to better help theirconstituents and communities for a longtime to come.

Published April 2007.

Paul Connolly is Senior Vice President at TCCGroup and leads the firm’s PhilanthropicPractice.

Endnotes:

1. Light, Paul C. Sustaining Nonprofit Performance: The Case for Capacity Building and the Evidence to Support It. Brookings

Institution Press. 2004. p. 174.

2. This model was initially presented in a June 2003 report by TCC Group, Building the Capacity of Capacity Builders, which was

prepared with support from the David and Lucile Packard Foundation. TCC Group based this model on a synthesis of the per-

spectives of many researchers and leaders in the nonprofit and governance field who have put forth definitions of nonprofit orga-

nizational effectiveness.

3. Also refer to Strengthening Nonprofit Performance: A Funder's Guide to Capacity Building by Paul Connolly and Carol Lukas

(Fieldstone Alliance, 2002.) Parts of this paper, especially related to the planning process and types of capacity-building services,

were adapted from this book.

4. These cases were selected because TCC Group was involved with the initiatives in some way and therefore we possessed

knowledge about them. They also were chosen to show variations of the different design elements.

5. This diagram was developed by Peter York, Director of Evaluation at TCC Group.

6. According to Peter L. Szanton in "Toward More Effective Use of Intermediaries" (Practice Matters, Foundation Center,

September 2003), "an intermediary funds a grantee or grantees directly; performs a function so important to a funder that, absent

an intermediary, the funder would have to perform it itself; or relates to a grantee, grantees, or a field of interest in any other way

that makes it a potential significant advisor as to further grantmaking."

7. Many thanks to Martha Campbell of the James Irvine Foundation for her input on the development of this exhibit.

8. Special thanks to Peter York of TCC Group and Linda Wood and Paula Morris of the Evelyn & Walter Haas, Jr. Fund for their

input on these factors.

9. Some of the more popular ones are distributed by Venture Philanthropy Partners, the Leader-to-Leader Institute, and Maryland

Association of Nonprofits. TCC Group's Core Capacity Assessment Tool is a 146-question online survey that is taken by at least

the staff leader, program director, and board chair and can be interpreted by a consultant. See Funders' Guide to Organizational

Assessment: Tools, Processes, and Their Use in Capacity Building (Fieldstone Alliance, 2006), edited by Lori Bartczak, for more

information about organizational assessment tools.

10. This model is from Navigating the Organizational Lifecycle: A Capacity-Building Guide for Nonprofit Leaders (BoardSource,

2005) by Paul Connolly. Aspects of this model are adapted from the models described in Susan Kenny Steven's essay, "Growing

Up Nonprofit," and Nonprofit Lifecycles: Stage-Based Wisdom for Nonprofit Capacity (2001), as well as Karl Mathiasen and the

Management Assistance Group's writing on this topic.

11. For more information on evaluating capacity-building activities, see "Evaluating Capacity-Building Efforts for Nonprofit

Organizations" by Paul Connolly and Peter York in OD Practitioner, Vol. 34, No. 4. 2002.

TCC greatly appreciates the wis-dom shared by our clients thatare cited in this paper, includingThe James Irvine Foundation, theFlint Funders Collaborative, theFord Foundation, the KnightFoundation, the Ethics andExcellence in JournalismFoundation, DeaconessFoundation, the PfizerFoundation, Chesapeake BayTrust, Sierra Health Foundation,and the Hartford Foundation forPublic Giving.

Special thanks also to Peter Yorkand Mike Allison, who made majorcontributions to this publication.Peter, who is Director ofEvaluation at TCC Group, devel-oped many of the ideas presentedin this paper. Mike, who is anindependent consultant and wasformerly the Director ofConsulting and Research for 15years at CompassPoint, offeredmany insights.

Other colleagues at TCC Groupprovided valuable input, includingRichard Mittenthal, Tom Knowlton,Sally Munemitsu, Susan Misra,and Alexandrea Ravenelle.

Finally, TCC Group is very grate-ful to The James IrvineFoundation, which provided gen-erous support to create and dis-tribute this paper. MarthaCampbell, Vice President forPrograms at the Foundation, wasespecially helpful in providingguidance on the structure of thepaper and editing it.

TTuurrnniinngg YYoouurr PPllaann iinnttoo RReeaalliittyy

For more than 27 years, TCC has provided strategic planning, program development, evaluationand management consulting services to nonprofit organizations, foundations, corporate commu-nity involvement programs and government agencies. In this time, the firm has developedsubstantive knowledge and expertise in fields as diverse as community and economic develop-ment, human services, children and family issues, education, health care, the environment, andthe arts.

From offices in New York, Philadelphia, and Chicago, the firm works with clients nationally and,increasingly, globally. Our services include strategic planning, organizational assessment anddevelopment, feasibility studies, long-term capacity building, program evaluation and develop-ment, governance planning, restructuring and repositioning, as well as grant program design,evaluation, and facilitation. We have extensive experience working with funders to plan, design,manage and evaluate long-term capacity-building initiatives.

Our approach is governed by the need to establish a clear and engaging consulting process thatoffers structure and predictability as well as flexibility to meet unforeseen needs. Working inmultidisciplinary teams, we tailor each new assignment to meet the individual needs and circum-stances of the client. We develop a scope of work that responds to the particular challenges,timetable and budget for the assignment.

Sometimes clients engage us for short-term research, problem solving, or facilitation projects.Other times we provide comprehensive planning and evaluation assistance over a longer periodor conduct other activities, over one or more years. Increasingly, TCC helps clients manage andimplement their work and provide advice on an ongoing basis. We bring to each new assignmentthe perspective of our expertise, broad experience and the enthusiastic commitment to get thejob done right.

New York50 East 42nd Street19th FloorNew York, NY 10017phone: 212.949.0990fax: 212.949.1672

PhiladelphiaOne Penn CenterSuite 410Philadelphia, PA 19103phone: 215.568.0399fax: 215.568.2619

Chicago875 North Michigan Ave.31st FloorChicago, IL 60611phone: 312.794.7780fax: 312.794.7781

Websitehttp://www.tccgrp.com

Emailinfo@tccgrp.com

CCoonnttaacctt TTCCCC GGrroouupp

The James Irvine Foundation is a private, nonprofit grantmaking foundation dedicated toexpanding opportunity for the people of California to participate in a vibrant, inclusive, and suc-cessful society. The Foundation’s grantmaking is organized around three program areas: Arts,Youth, and California Perspectives, which focuses on increasing public understanding of criti-cal issues facing the state. Since 1937 the Foundation has provided more than $900 million ingrants to over 3,000 nonprofit organizations throughout California. With current assets of morethan $1.7 billion, the Foundation expects to make grants of $75 million in 2007 for the people ofCalifornia.

For more information about The James Irvine Foundation, please visit our website atwww.irvine.org or call 415.777.2244.

28 briefing paper

strategies to achieve social impact

tcc group