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Capacity Building – Buzzword or Byword?

By Tom Watson on May 2, 2007No Comment

Capacity Building – Buzzword or Byword?
By: Lilya Wagner, Ed.D., CFRE, 5/2/07

Capacity building seemed to be the “buzzword” of the early 21st century.  Books and book chapters were written about this concept, workshops were requested and conducted, articles were published, and foundations were openly urged to do more for nonprofit capacity building.

Now, as we move toward the end of the decade, has the concept come and gone?  Perhaps many will scratch their heads and say, “What was all that about?!”

The truth is, capacity building as a concept is neither new nor complicated.  Nonprofit organizations have always had to be concerned, to some degree or another, about their capacity to carry out their work and do it welland also to improve their capacity.  For those who thought the capacity building phase or craze meant something new, a definition may be in order.  Capacity building is an organization’s ability to carry out its mission, using best practices, having financial and personnel resources to do so, and meeting the needs of clients.  Mike Hudson, in Managing at the Leading Edge, provided this succinct definition: “Building organization capacity is about systematically investing in developing an organization’s internal systems (for example, its people, processes, and infrastructure) and its external relationships (for example, with funders, partners, and volunteers) so that it can better realize its mission and achieve greater impact” (Hudson, 2005, p. 1).  Another authority on this topic, the Amherst Wilder Foundation, defines capacity building as “the process of strengthening an organization in order to improve its performance and impact” (Amherst Wilder Fdtn, 2002, p. 7).  

Capacity building has been around for as long as nonprofits have had an identity as a sector, balancing government and business in the scheme of United States civil society.  But the renewed attention came for a reason.  Nonprofits have tended to concentrate on delivery of programs and services, a state of being that was no doubt reinforced by some donors, mainly foundations, who focused their attention on the efficiency (keeping costs low) of their grantees and tended to fund programs, especially new ones for which they sometimes provided seed money.  But this trend or expectation leaned toward some negative side effects.  How can excellent programs be developed and delivered without appropriate organizational capacity to do so?   As one of the authors of a seminal book on capacity building stated,  “Nonprofits have been doing more with less for so long that many now border on doing everything with nothing” (Light, 2004, p. 14).  He also stated that the result of emphasis on programs has caused the public to have expectations of delivery without the attendant funding related to costs of capacity building, and the unfortunate outcome is increasing criticism of nonprofits as organizations that lack managerial and financial substance. 

The lack of capacity building and the emphasis of program and service delivery caught up with the nonprofit worldat least in the thinking of many leaders and practitioners if not in reality.  Beginning late in the last century, there came a shift, even if slight, from expanding effective programs to building effective organizations that develop, house and improve the programs.  Consequently, there is increased attention on not only what nonprofits do, but also how they do it, because stronger nonprofit organizations lead to greater program impact.  

Building an organization’s capacity means deliberate efforts are undertaken to enhance an organization’s ability to achieve its mission.   Capacity building is a significant part of the overall management of a nonprofit, one which overlaps with and is congruent with all other management functions, from programs to human resources, from fundraising to public relations.

Mike Hudson (2005) considers the elements of internal capacity to include the mission; the board; the staff, volunteers and other personnel; management skills; physical infrastructure; technology; and evaluation  (2005, p. 9).  The external key elements are relationships; identification of relevant high-value services; orchestration of creative campaigns for social change; and creativity in funding and income generation (Hudson, 2005, p. 9-10).  

In “Capacity Building: A Primer,” the lead article in a volume devoted to nonprofit capacity building, the authors acknowledge that it may take many forms, sometimes depending on the type and size of the organization, but several steps or stages are always present:

1. Validate the mission
2. Reconsider the vision
3. Reaffirm the values        
4. Develop resources
5. Set strategies
6. Ensure productivity

They also acknowledge that organizations wishing to engage in capacity building will find many possible ways to achieving a high-performance organization and a single solution is not mandatory nor feasible.  The success of capacity building is dependent on first understanding that change is needed, and identifying the desired outcome.  Money, time and human resources must be invested, with appropriate guidance for the efforts.  Building capacity may include a wide range of approaches, such as peer-to-peer learning, training, research, assistance from consultants, academic study, and experiential learning.  It means taking a careful look at an organization’s ability to achieve its mission, to do its job more effectively.  As explained by a volume produced by Venture Philanthropy Partners, the Capacity Framework defines nonprofit capacity in a pyramid of seven essential elements: three higher-level elements aspirations, strategy, and organizational skills three foundational elements systems and infrastructure, human resources, and organizational structure and a cultural element which serves to connect all the others (Venture Philanthropy Partners, Effective Capacity Building in Nonprofit Organizations, August 2001).

There is no mystery in capacity building, as is sometimes implied.  Capacity building isn’t something that dawned recently.  It has always involved an organization’s ability to balance programs against management; to be as effective as possible in fundraising, customer relations, financial management, and governance as in delivery of services to its clients; and to achieve positive change.  What’s new is the renewed emphasis in the recent decade by funders and critics who understand that good programs need good organizations, and therefore good capacity somehow must be developed and maintained.

Capacity building is far more than a buzzword.  Regardless of terminology, the capacity of an organization to carry out its mission and all activities based on its mission has been a critical element that delineates between organizations just getting by or perhaps even fading away, and those that are the backbone of the nonprofit sector. 


Connolly, Paul and Carol Lukas.  Strengthening Nonprofit Performance:  A Funder’s Guide to Capacity Building.  Saint Paul, MN:  Amherst H. Wilder Foundation and with the Grantmakers for Effective Organizations, 2002.

Hudson, Mike.  Managing at the Leading Edge.  San Francisco:  Jossey-Bass, A Wiley Imprint, 2005.

Kinsey, David J., and J. Russell Raker III, “Capacity Building:  A Primer,”  in Capacity Building for Nonprofits, New Directions for Philanthropic Fundraising, No. 40, Summer 2003.

Light, Paul.  Sustaining Nonprofit Performance:  The Case for Capacity Building and the Evidence to Support it.  Washington, DC:  Brookings Institute Press, 2004.

McKinsey & Company, Effective Capacity Building in Nonprofit Organizations, Prepared for Venture Philanthropy Partners, 2001. 

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