Foundations have taken on capacity-building activities for various reasons. For instance, at the David & Lucile Packard Foundation, which has had a major capacity building program since 1983, these activities reflect the donor’s commitment to applying business principles to nonprofits. The Boston Foundation’s efforts starting in 1987 grew out of the observation that many of the homeless and battered women’s shelters they were funding in Massachusetts were “crashing and burning” in their first five years of operation.
Intertwining themes of values and necessity tend to re-occur as the most common inspirations for capacity-building efforts; but the fact is that theory-driven, model-based capacity building with good evaluation behind it simply has the best chance for success.
Some additional reasons for capacity building, specific to foundations, include:
- Foundations, in their typical role of supporting nonprofits and communities through grant making and other mechanisms, have a vested interest in strengthening nonprofits. Paul C. Light in Sustaining Innovation demonstrates empirically what’s already well known intuitively – that strong, healthy nonprofits are more able to be innovative. “Give me food, and I eat for today. Teach me to fish and I will eat forever” is a maxim that applies to nonprofit innovation as well as to the overall operation of the nonprofit organization. Since much foundation grantmaking is oriented to funding innovative programs, capacity building can increase the number of “innovative ideas and applications”.
- Readiness of nonprofits for new funding is an important issue that can be easily addressed through capacity building assessments. It is difficult for nonprofits to resist applying for funding, even though they may be ill-equipped to engage in the changes the funded project will require. For instance, a nonprofit may be overwhelmed with change from turbulent life in the community, or even from other funded change initiatives they are already involved with. In the latter situation, “hyperinnovation” can result, to use a term from Madeline Landau at the University of California, Berkeley. Finite energies of nonprofits and community leaders can be dissipated if spread too thinly over too many initiatives.
- According to Porter and Kramer, “Affecting the overall performance and strength of grant recipients is important because foundation giving represents only about 3% of the nonprofit sector’s total income. By helping grantees to improve their own capabilities, foundations can affect the social productivity of more resources than just their slice of the whole.” In an ideal world, all philanthropic activity is intended to contribute in some way to nonprofit capacity building, of course, but some strategies have more “leverage value” in this arena than others.