Funding Effectiveness: Lessons in Building Nonprofit Capacity

The grantmaking community has never reached consensus on how to best build the capacity and effectiveness of a grantee. Funding Effectiveness: Lessons in Building Nonprofit Capacity addresses this seemingly fundamental question with five essays from several of today's most highly respected experts in the field. With a broad range of perspectives, the contributors share their knowledge, experiences, and lessons learned about the relatively new area of funding organizational effectiveness.

In "Investing in Nonprofit Capacity," Barbara D. Kibbe states that it's possible to equate effectiveness with capacity, but the terms are not the same. (In fact, no accepted definition of either nonprofit organizational effectiveness or nonprofit capacity currently exists.) A seasoned practitioner with years of experience in the nonprofit sector, Kibbe makes the point that clarifying the difference between "nonprofit capacity" and "organizational effectiveness" is difficult, but important. Organizational effectiveness is dependent on sound management, effective leadership, and strong governance; nonprofit capacity focuses on skills, structure, and planning strategies that help a nonprofit to achieve its mission.

The other four essays in Funding Effectiveness provide valuable information for grantmakers. In "Flexible Frameworks for Organizational Effectiveness," Kathleen P. Enright, executive director of Grantmakers for Effective Organizations, offers insight and guidance on various approaches to achieving effectiveness. In "Setting Clear Goals with High Expectations," Janine E. Lee, a vice president with the Ewing Marion Kauffman Foundation, emphasizes the importance of building partnerships with nonprofits based on agreed-upon goals and expectations. In "Better Results Through Supportive Engagement," Alexa Cortes Culwell, CEO of the Charles and Helen Schwab Foundation, Lisa Sobrato Sonsini, board president of the Sobrato Family Foundation, and Sterling K. Speirn, president of the Peninsula Community Foundation, describe the challenges they overcame in developing their organizational capacity grants initiative. Here, "supportive engagement" refers to the creation of an environment where foundations and nonprofits can work together as peers and partners in a learning community. In "Cultivating a Culture of Measurement," Melinda T. Tuan, co-founder of the Roberts Enterprise Development Fund, recommends that more funds be awarded to nonprofits for measuring financial and social outcome results. Numerous sidebars accompany each essay with thought-provoking, reflective questions for funders.

Funding Effectiveness: Lessons in Building Nonprofit Capacity is written primarily for grantmakers that want to improve the effectiveness of grantees, but it can also be helpful for grantees that want to understand the grantmaking process from the funders' perspective. One of the main points of Funding Effectiveness is that grantmakers struggle to find substantial ways to enhance nonprofit capacity. As an initial step, funders must be committed to improving their own effectiveness to gain crediblity with grantees. Then, grantmakers and their grantees must work together to produce desired results. A commitment to building organizational effectiveness and nonprofit capacity goes both ways.

For citations to additional materials on this topic refer to the Literature of the Nonprofit Sector Online, using the subject heading "Capacity Building" in the keyword search field.

Janice Rosenberg
Senior Librarian
Foundation Center
Washington, District of Columbia