Over the past few years, foundations of all types have embraced “capacity building” for their grantees as a core part of their strategy for generating social impact. Their strategies include providing a range of supports for their grantee partners from add-ons to existing program grants to larger scale organizational strengthening programs. What these foundations all have in common is a belief in something we call a “capacity dividend”: the notion that investments in their grantee partners’ capacity offers “returns” in the form of greater efficiency, effectiveness, and ultimately greater social impact.
But how does this understanding of the power of ‘capacity building’ change for foundations that have an outsized influence in their community? Does being the primary funder in a particular domain or location come with special responsibilities? Should this dynamic change a foundation’s investment strategy?
The Accelerator team is working with the Paso del Norte Health Foundation of El Paso, Texas to develop options for them to expand the already robust capacity building they offer the nonprofit community in their region to include support for staff at all levels. Their hope is that by reaching deeper into the nonprofits they support, the services those organizations offer will have a greater impact in the community and will be less vulnerable to the disruption that can occur when leaders transition. What’s remarkable about PdNHF’s approach, however, is that with each iteration of their capacity building program they have sought to provide value for the broader nonprofit community– extending their reach beyond merely their own grantees to be major players in cultivating a robust community of dynamic nonprofits in their region.
PdNHF operates in a challenging context: El Paso once struggled with “brain drain” as young people left the region seeking different and better paying jobs. In 2015, the U.S. Census Bureau reported that the city of El Paso had the highest rate of domestic migration in the United States. This trend appears to now be slowing, but has been a challenge for leaders of all types of organizations – perhaps especially for nonprofit organizations, a group typically reliant on people with deep connections to their community. Furthermore, the region lacks much of the nonprofit support infrastructure that exist in other cities. There was once a vibrant Nonprofit Enterprise Center that provided training and other resources to nonprofits in the region, but it faced some struggles of its own and is now gone. There used to be a consulting group made up of some of El Paso’s most dynamic nonprofit leaders, but that group has been dormant for some time as each of its members took on new leadership roles in the nonprofit community. Add to that dynamic that PdNHF is one of a handful of large-scale donors in the region and the challenge facing the Foundation becomes clear.
Fortunately for the region, PdNHF recognizes these challenges and has demonstrated its commitment to playing a major part in providing nonprofit leaders and their teams the support and resources they need to best serve their communities. As they do this, we’re working closely with PdNHF to define the impact the foundation and their partners hope to achieve and tailoring the capacity building program to help them achieve those goals. With their capacity building support, they aim to help grantees become more adaptable, design and implement stronger, evidence-informed programs, and develop and maintain strong internal structures and culture.
We believe PdNHF can best support their grantee partners and the development of the broader non-profit sector by implementing a program that is underpinned by two primary considerations. The first is to prioritize catalytic investments in the organizations whose missions and activities most closely align to PdNHF’s goals. PdNHF’s goal is to lead, fund, promote and leverage opportunities to assure that all people in its service region achieve good health. This is an important goal, and urgent in a region with, for example, a diabetes rate 27 percent higher than the national average. Thus, the value of investing in the strength of organizations with a high degree of alignment with PdNHF’s strategy to improve regional health is clear.
At the same time, however, PdNHF recognizes the challenges the nonprofit community as a whole is facing, and that strong nonprofits of all types are critical for the overall well-being of folks in their region. So together with PdNHF, we’ve co-designed strategies for simultaneously supporting these organizations and strengthening the region’s nonprofit support infrastructure. To do this while not becoming distracted from their primary mission is the trick, though, so we’ve developed strategies designed to create efficiencies and leverage the support going to their core organizations. When a consultant is flown in to work intensively with a PdNHF grantee on developing evidence-informed programming, that same consultant may also offer a workshop on Lean Data during their time in El Paso that is open to all nonprofits, and a separate, private training for local consultants so that they can continue to offer support on an ongoing basis.
Much has been made about major foundations that are dedicating increasing resources to capacity building. Ford Foundation, for instance, recently launched the BUILD program, which will provide approximately $200 million a year for organizational strengthening efforts, in addition to including at least 20 percent overhead funding in every project they fund. Packard Foundation has invested over $150 million in almost 3,000 organizational effectiveness grants to their grantee partners. While those foundations certainly deserve the applause they are receiving, we are hopeful that they are part of a bigger trend that includes everyone from large international grant makers to smaller place-based foundations, like PdNHF. We’ve taken great inspiration from our work with the folks at PdNHF, and hope others do too.