Integrating Capacity and Strategy

Improve your non-profit’s performance and its ability to deliver on their goals.

Whether you are a grantmaking professional, a private philanthropist, or a grant seeker who works at a nonprofit organization, the goal is to help you think about organizational capacity (OC) in a new and helpful way: as part of organizational (and grantmaking) strategy, not as an afterthought that somehow happens, more often than not, haphazardly. In addition to laying out a new way of conceptualizing OC, the handbook includes a set of simple, practical tools and reference materials to apply the idea of “strategic organizational capacity” to your own work assessing, investing in, and strengthening nonprofit capacity to make a positive difference in the world.

Some of the tools you will find in this handbook are designed for grantmakers, while others are meant to be used by people working as nonprofit staff members. The goal of all the tools in the handbook is ultimately to help improve organizational performance by strengthening the relationships between capacity and strategy, and between grantmaker and grantee. And research and experience show that stronger, better performing organizations have a much greater chance of achieving desired programmatic outcomes—whatever those may be.

Background and Problem

It was, in fact, my experience as a program officer at the William and Flora Hewlett Foundation that inspired me to develop this project, which I have done in close collaboration with Cristina Galíndez and Brook Manville, both talented independent philanthropy and nonprofit consultants.

During my last year at the Hewlett Foundation, I reflected back on my decade-long experience as a program officer and what I had learned from grantmaking successes and failures. I was struck by the fact that my own failed grants were overwhelmingly the result of organizational capacity problems—not strategy per se, not bad ideas, not insufficient funding or failed logic If you care about the performance of non-profit organizations and their ability to deliver on their goals over time, this handbook is for you. Introduction 11 models. And when I asked my grantmaking peers at Hewlett and at other major foundations I found the same thing with the majority of my colleagues’ failed grants: grant and grantee failure were overwhelmingly the result of organizational capacity failure.

This was a revelation because in my experience “grantee capacity” had taken a backseat to issues like strategy (of the grantee, of the portfolio, of the foundation program); monitoring and evaluation (M&E); legal compliance; or even grantmaker training and professional development. Yet the result of so many failed grants is that millions of dollars essentially go down the drain, and worse, that the philanthropic community isn’t reaching the environmental and social goals those failed grants aimed to achieve.

But most grantmakers and senior nonprofit leaders are hired for their substantive expertise and passion, not necessarily their experience assessing and addressing organizational capacity or effectiveness. The fact is, grantmakers don’t always have the capacity themselves to work with grantees on organizational issues. In addition, built-in tensions and power imbalances may make the capacity discussion between grantor and grantee uncomfortable, awkward, or even taboo. As a result, capacity issues are often back-burnered until there is a crisis and they can no longer be ignored, and by that point they are harder to address. Rarely are capacity issues integrated from the beginning of a relationship as part of the overall grant discussion. This handbook will help grantmakers and grantees think about organizational capacity as part of overall grantmaking strategy and investment, and as a necessary ingredient for achieving desired outcomes.

The tools in this handbook are not necessarily designed for the many talented organizational effectiveness (OE) gurus of the world, though we believe the handbook will be a positive contribution to the existing OE toolbox. They are friendly, fast, inexpensive, and targeted tools to help anybody—regardless of previous OE expertise—start the capacity conversation, download and organize valuable information that already exists, initiate basic capacity assessments and planning, and pinpoint key strategic capacity and effectiveness issues and trends within a nonprofit organization.