5 Barriers to Nonprofit Capacity Building
estimated read time: 7 minutes
Capacity building is how nonprofits can build thriving and sustainable organizations. But, with limited resources and competing priorities, you may find yourself stuck before you even start.
If you’ve questioned if this approach is worth the time, money and resources it will take to do it right, you are not alone. That’s why we’ve broken down 5 of the biggest barriers getting in the way and how to reframe your thinking in order to help you jump in, regardless of where you’re starting from.
Barrier #1: “We can’t afford to spend more money on overhead.”
Successful for-profit and nonprofit organizations need to have the appropriate infrastructure in place to support their efforts, whether it be financial, technological, or operational. While most agree with capacity building in theory, people can get stuck on trying to justify the cost and have a hard time actually allocating the resources needed to make progress. However, underfunding overhead can create a vicious cycle, making it difficult to sustain the organization and carry out its mission.
Using overhead as a way to measure a nonprofit’s effectiveness is not a sustainable strategy as organizations need to invest in the people, resources and systems to get the meaningful work they do done. Coined by Stanford Social Innovation Review as the “starvation cycle”, the persistent underfunding of overhead starves nonprofits of their ability to operate, much less succeed. As a result, nonprofits fall into the trap of what the Nonprofit Overhead Cost Study calls the “low pay, make do, and do without culture”. But, when nonprofits cut everything, they can’t properly serve their communities, retain the most qualified staff or solve complex issues. People too often forget that nonprofits are businesses, and if support and infrastructure are compromised or starved of resources, success will be limited.
As a nonprofit professional, you of course know this all too well. Keep advocating for what you need to improve and enhance your organization’s impact. Build relationships with supporters interested in helping you do that, and be transparent about where your dollars are going and where investment is most needed going forward.
Barrier #2: “We don’t have funding for capacity building. With limited resources and very little unrestricted funding, we can’t spend time in areas that aren’t directly funded.”
While we’ve all experienced the shift from unrestricted funding, it is possible to work your org’s effectiveness and sustainability goals into funding conversations and requests. Set proper expectations and accurately communicate what is needed to carry out your work–this is appropriate and necessary when asking for money from funders and donors. If they really want to invest in your mission, they should invest in all parts of it. So yes, submit your grant request to fund a new program, but the human resources, technology and other costs of running that program should also be included.
As Amy Fess states in this recent article from the Stanford Social Innovation Review, “To grow an organization’s impact and expand its reach, nonprofits need “profits” so they can invest in their own work, improve their infrastructure, and take calculated risks. You will never grow your organization if you cannot make investments in it. Breaking even is never enough.”
Barrier #3: “Our organization is too complex. It’s too much work to bring outsiders of our org up to speed enough to help us with our challenges.”
It’s true that it takes a lot of time and energy to articulate the ins and outs of our pain points to people who don’t live it every day. And when time is already limited, the effort it can take to bring a consultant up to speed can make us question, is it even worth it? Will the work they end up doing for us be worth the time I have to invest to make them understand what’s really going on here?
The answer is yes, but it’s also, it depends.
It depends on a number of things, which include ensuring you are selecting providers that are right for your organization. Our region has many organizations and consultants who are committed to supporting the nonprofit sector. Each one has their own expertise, processes and style, so it’s not always about hiring the person your board chair knows personally, or the agency one of your partners just hired. They have to feel right to you and have what it takes to untangle the messiness of your org’s inner workings to help get to solutions that will work.
Impact HQ has a list of providers from across the region in the areas of strategic planning, fundraising, DEI, communications and more. All you have to do is create a free account and you can search the service directory whenever you need to. And, while Causewave has services that might be right for you, we also frequently make referrals to other providers and freelancers, and would be happy to make recommendations based on what you’re looking for.
Barrier 4: “Capacity building always means large scale improvements or multi-year commitments. We don’t have the bandwidth for that.”
Capacity building doesn’t have to mean long-term or large scale. While, yes, it is a strategy to set your organization up for success in the future, it is a constant improvement plan that adds up to long-term results over time. Making small tweaks can sometimes be more meaningful than big changes because the results are something you and your team can feel right away. Smaller examples that demonstrate capacity has been built could be a training that leads to staff modifying the way they deliver therapy and coaching to youth; utilizing information from a webinar that immediately changes how your organization recruits and screens job candidates; or putting one new thing from your fundraising plan into practice that brings in more money in your year-end appeal.
A large initiative always feels daunting at first, but by breaking it down into smaller, manageable chunks, you can make and measure progress along the way. Let’s face it - making changes to your organization can oftentimes be like that nagging house project you’ve been meaning to get to. But the need for repair isn’t going to go away, but instead is likely to get messier and more complex the longer you put it off. And, it certainly won't fix itself or go away on its own.
Capacity building efforts should make your job easier, not harder, so start small, start from where you are, and start today.
Barrier #5: “We are results-oriented and capacity building isn’t.”
As competition grows for funding, staff, attention, you name it, we know reporting on impact and effectiveness is more important for nonprofits than ever. Finding an effective way to measure the success of your efforts is key, but not always easy. Your enlisted partners or consultants should help you think through this, as each practitioner has different methods for measuring the impact of their work. With that said, here are a few things to consider.
Start by documenting where your organization is today on the particular topic or area you’re focused on (e.g., DEI, training for staff, fund development), and state in 3-5 points where you would like to be at the end of the engagement/project, in 6 months, 12 months, etc. (e.g, participants evaluate programs more favorably re: cultural competence, staff strongly agree they have the skills and resources they need to run their program, the organization has defined fund development targets for the next 12 months).
Identify a small number of key milestones or lead indicators to help understand if you’re on track to achieve your goals. Remember, sometimes there is a quality over quantity aspect of nonprofit work that is important to track vs. hard numbers.
Document learnings, failures and wins along the way, to be used in funding reports, communication to stakeholders, and reports to staff and board members.
Determine how and when you plan to update stakeholders throughout the process, including but not only at completion.
While it’s important to demonstrate where and how capacity has been built, it’s also just as critical to share what didn’t work, what you would do differently next time, or what you learned that can benefit future efforts. Because capacity building is a continuous improvement strategy, no single engagement or effort is going to solve all our problems. BUT, should we be able to demonstrate progress in some way? Yes. Should we be able to talk about what we’re able to do today that we couldn’t do yesterday as a result of our investment in this work? Absolutely.
We know these barriers (and many others)–plus the fact that the landscape is ever-changing–can cause you to feel stuck with no starting point. You're not alone. But if you can reframe your thinking, break down larger efforts into manageable pieces, and determine who can help you achieve your capacity building goals, you should be ready and able to jump in, regardless of where you're starting from. You've got this.
Need more guidance on your capacity building efforts? Want to talk about another topic?
Start here: email info@causewave.org to schedule a free conversation with one of our expert team members. As a nonprofit that is all about nonprofits, we’re always here to help you navigate the capacity building ecosystem and connect you to the resources you need to meet your mission.
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