Research Report Building Capacity in Nonprofit Organizations
Carol J. De Vita, Cory Fleming
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Penelope McPhee, Vice President and Chief Program Officer
John Bare, Director of Evaluation
The John S. and James L. Knight Foundation

Capacity building is a popular term these days—too popular and expansive a term, in fact, to mean much to individuals making specific decisions about programs and grant strategies. As a result, everyone—from practitioners to foundation CEOs—is calling for increased attention to the capacity-building needs of nonprofit organizations. So far, however, the rhetoric is ahead of the work. In this report, we try to advance that work in two ways. First, we define capacity building as the ability of nonprofit organizations to fulfill their missions in an effective manner. We already know that many nonprofit organizations are small and possess limited resources, particularly when measured against the challenges and critical issues that they address. The push to link indicators of capacity to overall performance is critical to strengthening the sector.

Second, we examine capacity building as it relates to the overall quality of life in the communities nonprofit organizations serve. For nearly a century, nonprofit organizations have fulfilled a variety of functions that help build and maintain civil society. They offer resources to residents of local communities, including social services, advocacy, cultural opportunities, monitoring of government and business practices, and much more (Boris 1999). They enable individuals to take an active role in their communities and contribute to the overall well-being of these communities. Nonprofit organizations also provide the basis and infrastructure for forming social networks that support strong communities. Civil society requires more than linking individuals to institutions; it requires building relationships among people. In these ways, nonprofit organizations add value to community life. While the nonprofit realm should not be mistaken for all of civil society, "most of the country's vast charitable endeavor is very much a part of civil society" (O'Connell 1999).

There is a growing consensus among scholars and practitioners that creating and maintaining active citizen involvement through associations and groups of all kinds is an important feature of strong communities. Robert Putnam's study (1993) of regional governments in Italy popularized the concept of civil society. He found that the strong tradition of civic engagement among a myriad of social and cultural groups was a key factor in producing strong government and economic success. Putnam argues that differences in community networks and norms can make a difference in a community's ability to thrive. Seen in this context, building the capacity of nonprofit organizations can be viewed as an important strategy for building civil society in local areas.

The John S. and James L. Knight Foundation, through its Knight Community Partners Program, aims to improve the quality of life in 26 U.S. communities where the Knight brothers owned newspapers. Given this interest, the Foundation views the development of strategies for improving nonprofit capacity as a critical element in enhancing the quality of life in its communities. When the Foundation decided to explore the connection between the capacity of nonprofit organizations and the well-being of its communities, it approached two institutions with strong track records of serving the nonprofit sector: The Center on Nonprofits and Philanthropy (CNP) at the Urban Institute, which was established to explore the role and impact of nonprofit organizations in democratic societies; and The Human Interaction Research Institute (HIRI), a Los Angeles-based center for research and intervention on innovation and change in non-profit organizations and the funders supporting them.

Knight Foundation, CNP, and HIRI joined together to examine the issue of building capacity in nonprofit organizations as it relates to strengthening the quality of life for communities. Investigators presented two papers at a daylong seminar on June 20, 2000, at the Urban Institute. Nonprofit practitioners, technical assistance providers, foundation representatives, and researchers provided feedback to ensure the information would serve the sector. The group discussed in-depth issues related to capacity building for nonprofit organizations, identified gaps in knowledge, and debated how knowledge could best be turned into practice.

The two papers presented at the June meeting offer new and creative insights into the challenge of building capacity in nonprofit organizations. Carol De Vita, Cory Fleming, and Eric Twombly, researchers at the Urban Institute, develop a conceptual model for capacity building that is based on a review of literature regarding civil society, sustainable development, and organizational management. They use the theory from these three bodies of literature to demonstrate how nonprofit capacity is inter-twined with community capacity. The resulting model offers a new perspective on how nonprofits and funders alike might consider efforts to build capacity in nonprofit organizations and the sector as a whole.

Thomas E. Backer, president of HIRI, presents an environmental scan of the type of programs foundations have established to build nonprofit capacity. This paper explores existing capacity-building programs and the traits that make each effective and successful. It goes on to discuss some of the barriers and challenges facing effective programs and recommends several field-building activities to promote improved programs. Knight Foundation, for example, supports community-wide efforts to build capacity for effective marketing in nonprofit arts organizations in nine communities across the country. In Charlotte, North Carolina, this funding facilitated creation of the Marketing Services Organization, which since 1995 has supported the marketing work of both larger and smaller arts organizations throughout the community.

The report aims to advance the ongoing conversation about capacity building, intending to push toward the intersection where research informs practice. This transfer must occur for the work to benefit the field. The final section of this report discusses how each stakeholder—nonprofit practice, foundation, and research—might work to turn knowledge into action. Each of these groups has responsibilities for strengthening the health, not only of individual nonprofit organizations, but of the local nonprofit sector and the overall community as well. By examining capacity building from a new perspective and agreeing to work collaboratively, each group can reinforce the other's efforts. In the end, they will know more about what works, what does not work, and why.

Research Areas Nonprofits and philanthropy
Policy Centers Center on Nonprofits and Philanthropy