by Byron L. Tweeten
Chair and Chief Executive Officer
As language changes we find ourselves talking more and more about capacity building within organizations. These discussions are taking place at senior management levels regarding the ability to provide expanded services, quality, and the needed resources to underwrite change and mission fulfillment.
There are numerous definitions and usages for the phrase "capacity building" within the literature. As used by Catholic Relief Services (www.catholicrelief.org), capacity building refers to:
...an on-going process by which individuals, groups, organizations and societies enhance their ability to identify and meet development challenges in a sustainable way...
Based on their own experiences, the California Wellness Foundation (www.tcwf.org) offers the following definition:
Capacity building is the development of an organization's core skills and capabilities, such as leadership management, finance and fundraising, programs and evaluation, in order to build the organization's effectiveness and sustainability.
Based on our own client experiences, Growth Design has developed the following working definition of capacity building:
The assessment, design and implementation of best business practices to build internal and external capacity for organizational growth, change and development.
Growth Design believes that the integration of best business practices with resource solutions and organizational development thinking, designing and planning represents the most effective strategy to achieve expanded mission and program goals for organizations seeking to grow.
Why is Capacity Building on the Agenda?
The external environment within which not-for-profit organizations operate is ever changing in both predictable and unpredictable ways. This dynamic and changing environment brings challenges as well as significant opportunities for growth and development to not-for-profit organizations. In addressing these challenges and opportunities, organizations often find that they are not properly aligned in terms of systems, human and financial resources and structure especially if significant internal changes (leadership, budgets, programs) have been recently made within the organization.
Capacity building is best thought of as both a process as well as a solution for organizations seeking to grow. Without capacity-building thinking and focus within leadership, organizations will continue to find themselves struggling in their current environment. Without an organization-wide capacity building strategy and process, they will also find themselves getting further behind their competitors, being stressed by overloads and misalignment and having little potential to realize even modest visions for the future.
Often organizations find themselves with significant internal capacity issues that prevent them from moving forward. Business operation processes and financial systems are not capable of supporting the future direction of the organization. Staffing and related behaviors and rewards do not match the needed program deliveries to current constituents or new customers. Outdated capitalization methods (i.e., traditional campaigns, loan financing, and/or internal quasi-endowment options) are not delivering enough resources.
Organizations with good listening ability and intelligence related to competitors, markets and new paradigms begin to ask the question "Should we be doing our business practices differently, better, not at all, or are we missing new concepts and practices that are not even on our agenda?
What is the Process for Capacity Building?
Capacity-building thinking and planning typically integrates with strategic planning. Mission, vision, values and strategies set the direction and pace for tactical planning related to strategic plan implementation. Another integral part of strategic planning is the development of financial projecting models for the organization to establish a set of assumptions and parameters related to projected revenues, expenses and margins over the length of the plan.
The question of capacity enters the picture when various parts of the organization and its business practices and processes fall short of delivering required resources (human, financial and applied knowledge) related to strategic plan implementation. Those organizations that are unable to act on their strategic plans often find their staffing and associated organizational structures are inadequate; business systems and processes do not align with desired outcomes, and resource development practices are not capable of providing strategic initiative capitalization.
The process for capacity building begins with discovery followed by assessment, design and resourcing for implementation. The following are recent Growth Design client examples around some different starting points for organizational capacity building.
Leveraging Capacity to Penetrate a New Market
An international ecumenical micro-lending organization based in Geneva, Switzerland asked Growth Design to assist them in building a comprehensive resource development plan that would position them in the North American market for securing new revenues. These new revenues would support several key global strategic initiatives in targeted regions and countries. While the organization had developed business systems and processes capable of coordinating its micro-lending activities on a global basis, it had not focused on building capacity to develop financial resources beyond traditional institutional grants and direct subsidies.
Based on its assessment, Growth Design proposed that the organization initially consider developing a limited resource development capacity to establish and coordinate regional collaborations in North America that would, in turn, deliver needed financial and human resources for its strategic objectives. In this case, the organization's existing business systems and processes could be leveraged in support of initial resource development goals. In the long-term, however, the organization would need to build an internal resource development function both in Geneva and within its global, nation-based committee structure.
Collective Capacity Building to Penetrate a National Market
The coming intergenerational transfer of wealth in this country has presented colleges and universities with an opportunity to capture a significant portion of those resources for endowment building. However, a major challenge for many advancement officers and their respective development offices is not having sufficient internal capacity (human and financial) to develop and implement the kinds of resource development strategies they need to go after this wealth. This can be especially true for smaller colleges and universities that often find themselves with significant budget constraints in relation to their development offices.
Growth Design is currently working with a small group of colleges and universities representing a major religious denomination to explore the development of a larger collaborative solution to the capacity issue. The colleges and universities involved in these discussions have acknowledged the need to develop best practices Ñ shared learnings to build and leverage their current individual resource development capacities. The collaborative is also interested in seeking potential partnerships with major financial services organizations for funds management and development strategies.
Centralized Capacity with Collaboration for Decentralized Delivery
Major health care systems have been undergoing a dramatic transformation in relation to resource development capacity thinking and building. Growth Design is currently working with a large health care system to assess the capacity of both the central corporate management organization and the satellite organizations that comprise the system (hospitals and clinics). In the case of the health care system, significant capacity exists across the system although it is not uniformly distributed. There is an identified need based on the assessment findings to develop collaborative strategies among the central management operations and the different hospitals and clinics in order to coordinate system-wide resource development activities while leveraging existing capacity in the various operating units.
Areas for Assessment
Growth Design has identified several critical areas in the comprehensive assessment of resource development capacity in not-for-profit organizations. These include a determination of :
- Market capacity (users or donors/market tree development)
- People capacity (internal staff and human resources)
- System capacity (business systems/information technologies)
- Asset capacity (facilities/financial)
- Program capacity (planned giving/estate planning/annual giving)
- Communication capacity (formats/channels/messages)
- Listening capacity (in relation to market)
- Leadership capacity (board/administration/major donors)
- Learning capacity (ability to develop and apply knowledge)
- Channel capacity (multiple delivery channels)
Taken together, an understanding of these defined capacity areas allows organizations to develop a better understanding of their current strengths while targeting those areas where capacity needs to be resourced and built.
What Key Questions Are Asked to Get Started?
There are several kinds of self-assessment questions that the leadership of an organization can ask to test their own current resource development capacities. Some of the questions Growth Design would suggest asking include:
- Does our capacity match our strategic plan expectations?
If no, or we don't know:
- What steps would we take to determine our capacity?
- What steps would we take to build our capacity?
The need to integrate resource development capacity thinking within an organization's strategic planning and business practices is often an unrecognized or underestimated aspect of a thorough and comprehensive strategic planning process. Without the capacity or infrastructure to support resource development strategies and tactics, an organization will not be able to achieve its growth goals around mission and programs.
We often find organizations that assume they have a capacity problem because of an inability to achieve their resource goals and targets with any consistency or impact. Also, just as often, we have found that some of these organizations in fact have significant capacity that is either ineffectively distributed or poorly managed and organized. A capacity assessment can often serve to identify unrecognized strengths within an organization in relation to its other existing systems and business processes that, when taken together, can serve as a foundation for capacity enhancement in the short-term with a minimum investment of additional budget resources.
We have devoted this newsletter to a discussion of capacity building for growth among not-for-profit and other mission-based organizations. Based on over twenty years of experience in resource development, we believe that the question of organizational capacity for growth must be central to any discussion of strategic planning and the implementation of strategic initiative. An understanding of the interdependent relationship among strategic planning processes, best business practices and systems and capacity building is an important first-step in developing a successful integrated resource development strategy for sustained growth.
As an exercise, we would encourage key leaders from the board and senior management of mission-driven organizations to review their own planning processes and determine where capacity thinking and building currently fits in.
Our belief is that this capacity-building focus within an organization greatly enhances the potential for long-term resource development success and organizational growth.