Capacity building is important for any organization, but especially for nonprofits. Learn how your organization can set themselves up for success when capacity building by using Objectives and Key Results (OKRs).
What is capacity building?
Capacity building is improving an organization’s ability to execute by investing in its people, structure, and processes. Let’s say you’re a nonprofit that provides education services to rural youth in developing countries. As the youth populations grow, how will you continue to deliver your services? Will it require a change to your core organizational infrastructure? The gap between where your organization is today and where it needs to be requires capacity-building.
Capacity building often requires planning for long-term success and sustainability. Common factors include expanding staff, funding, partnerships, knowledge, and strategies to deliver services far out into the future. For many organizations, this means allocating some resources for today’s requirements, while simultaneously growing to meet future needs. This is critical because it affects an organization’s ability to deliver on their goals, expand what they’re capable of, and continuously improve to keep growing and fulfill the mission.
Capacity affects all aspects of your organization’s infrastructure. This includes:
- Financial position
- Fundraising and marketing strategies
- Organizational structure
- Skills and abilities of team members and departments
- When you’re able to build in capacity, you’re able to maximize impact towards fulfilling your mission.
Why capacity building is important for nonprofit organizations
Capacity building is important for any organization, but nonprofits often have a tougher time prioritizing resources to strengthen the organization itself, rather than the programs that serve their recipients. This makes it even more important to plan for capacity building at a nonprofit. The health of the organization is critical to the continued success of the programs themselves.
“Nonprofits, like entrepreneurs, need to do more than anyone thinks is possible with less than anyone thinks is possible.” - John Doerr
We like to think of capacity building as a framework to achieve your best outcomes. Capacity determines what an organization can accomplish and enables an organization to do its job better. Most people work at nonprofits because they have a deep passion for the cause. They want to help and do good in the world. But all too often, this passion leads organizations to attempt to do everything that’s good. By over extending, you lose focus and effectiveness. That’s where capacity building comes into play: by reducing the temptation to use resources everywhere at once and instead build a more sustainable operation. Capacity building is about assessing where you are and making the necessary (and often hard) changes to get you where you want to be.
Examples of capacity building in nonprofits
Most of your organization’s goals require capacity building, especially in the long-term. And while the below may seem more business as usual in a for-profit company, when it comes to nonprofits, these areas typically don’t get the attention they need to build capacity for growth. Here are some examples of where to build capacity:
- Governance/Admin: Board, administration, and staff
- Expanding your organization’s mission, administration, network, resources, and programs
- Implementing policies, procedures, and practices to be more effective at accomplishing the mission
- Providing the skills and support staff needs to be more productive
- Resource development: Finances, communications, and budget
- Developing a sound financial strategy to achieve sustainable growth
- Effective communications for fundraising
- Community connections: Relationships, leadership and progress
- Building and maintaining stronger relationships with influential parts of the community
- Forming new partnerships with like-minded organizations/businesses to better define your expertise in advancing shared causes
- Increasing credibility and influence within the community and developing a reputation for making progress
- Programming and services: Program design, strategic activities, and practice learnings
- Designing the right programs to successfully deliver benefits to your constituents
- Building a suite of projects, grants, or support activities that demonstrate sufficient progress in advancing your mission or cause
- Developing a system to assess organizational learning and then using that learning to fortify approaches going forward
How to build capacity in your organization
The first step to growing capacity is to accurately assess where you are today.
- How many people do you currently serve? How many more people would you like to serve in the next 5-10 years?
- How many people work for your organization?
- Would more training or information access allow them to take on more? Ways to increase the capacity of your talent include:
- Developing diagnostic tools
- Leadership development
- Team building and development
- Implementing effective change management
- Engaging in diversity, equity, inclusion
- Do you need external support in order to have more impact? If so, collaborative planning, such as developing a network with partner organizations will be critical to your plans to build capacity.
- In 5 years, what additional infrastructure will your organization need to operate well?
It can feel like a luxury to describe future needs in detail, especially when you may be feeling stretched thin now. However, to create a stable, healthy organization it helps to describe what you’ll need in detail. How much more do we need to be able to launch our next big initiative? To reach more people with our programs? How quickly do we need to grow? What problems do we need to solve in order to increase our impact?
There’s another reason building capacity is important. The world is changing rapidly, and nonprofits have to be in a stronger position than ever to pivot when needed; capacity building devotes attention to organizational effectiveness, providing a sustainable edge. It helps identify gaps, quantify them, and drive good decisions to address them proactively.
Turning gaps into achievable goals is one way a framework called Objectives and Key Results (OKRs) can help.
How OKRs help nonprofits with capacity building
Building capacity requires a clear strategy to address long-term needs, or resilience to drastic changes. Once you’ve outlined your strategies, you also need to turn them into action.
Here’s an example. A global nonprofit is trying to build capacity to transform their impact. They’ve assessed a number of factors including governance, organizational decisions, and collaborations. They determine that they need to change how their organization functions today into something that will unlock more impact moving forward.
Currently, all of their major decisions come from their headquarters, and the execution is managed by their regional offices. The global team wants to shift more of the strategy work to the regional offices, because they believe those teams have greater access to what local communities need. In short, they need to build the capacity of regional offices to affect programs that will increase impact locally.
The executive team decides to create Objectives and Key Results (OKRs) to shift the focus of power from the headquarters to the regions:
There are a lot of factors that go into capacity building, but for nonprofits this can become a vital component (and necessity) in your ability to grow and drive more impact. By using OKRs to create a digestible plan for your organization to capacity build, you’ll be more equipped to drive success, both inside the organization and for the community you serve.