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Capacity Building and Organizational Effectiveness

Capacity building is defined as the "process of developing and strengthening the skills, instincts, abilities, processes and resources that organizations and communities need to survive, adapt, and thrive in the fast-changing world." - Ann Philbin

Capacity building, capacity itself, and organizational effectiveness are all related, but they are not the same. 

Capacity refers to an organization’s ability to achieve its mission effectively and to sustain itself over the long term. Capacity also refers to the skills and capabilities of individuals.

Capacity building refers to activities that improve an organization’s ability to achieve its mission or a person’s ability to define and realize his/her goals or to do his/her job more effectively. For organizations, capacity building may relate to almost any aspect of its work: improved governance, leadership, mission and strategy, administration (including human resources, financial management, and legal matters), program development and implementation, fundraising and income generation, diversity, partnerships and collaboration, evaluation, advocacy and policy change, marketing, positioning, planning, etc. For individuals, capacity building may relate to leadership development, advocacy skills, training/speaking abilities, technical skills, organizing skills, and other areas of personal and professional development.

There is a large range of capacity building approaches--a continuum--that includes peer-to-peer learning, facilitated organizational development, training and academic study, research, publishing and grantmaking.

Capacity building also takes place across organizations, within communities, in whole geographic areas, within the nonprofit sector, and across the sectors. It involves individuals and groups of individuals, organizations, groups of organizations within the same field or sector, and organizations and actors from different fields and sectors.

Capacity building agents come in many shapes and sizes. Those that first come to mind are management consultants (either independents or for-profit firms) who provide expertise, coaching, training and referrals. There also are nonprofit consulting organizations--referred to as management support organizations (MSOs) that provide consulting, training, resources, research, referrals and other services for nonprofits. Grantmakers--foundations and government organizations--often get involved in capacity building either through their grants or sometimes by offering training, consulting and resources themselves. Researchers play an important role in capacity building--identifying issues and trends, and building knowledge for nonprofits and other capacity builders to use. Universities and other academic centers provide formal training and certification opportunities for individuals. They also conduct research and often have resource centers (online and on-site) for nonprofit organizations. Intermediaries and umbrella organizations with multiple grantees or chapters usually conduct their own capacity-building activities that respond to specific organizational priorities and needs. There are attorneys and accountants who specialize in nonprofits, as well as technology firms and other service providers who often play capacity-building roles. And there are national and international organizations--membership organizations, coalitions, think tanks, research institutions and others--that are part of the nonprofit infrastructure of the sector and seek to make systemic improvements across the nonprofit sector.

A distinction is sometimes made between capacity building and technical assistance. Often nonprofits hire outside specialists to perform tasks or functions in areas in which they lack capacity. Those services provided do not necessarily leave behind additional organizational capacity, although they do increase the ability of an organization to achieve its mission.

Organizational effectiveness relates to the capacity of an organization to sustain the people, strategies, learning, infrastructure and resources it needs to continue to achieve its mission. It is a long-term outcome that some capacity building strategies may affect, while others may not (and this is acceptable in the continuum of management support service strategies needed to build capacity). There are many definitions and characterizations of effectiveness, taking into consideration elements such as organizational structure, culture, leadership, governance, strategy, human resources, etc. The various frameworks for measuring organizational effectiveness can be helpful in defining indicators for the success of capacity-building initiatives. 

- Alliance for Nonprofit Management

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