Which Nonprofits Are Most Ready for Capacity Building?

By Alice Hill, Senior Consultant, TCC Group

(This post originally appeared on PhilanTopic, the Philanthropy News Digest blog, on June 20, 2012 and is reprinted with permission.)

With funds limited, foundations must constantly assess how their money is best spent—and support for organizational capacity-building support is no exception. How can a funder determine which nonprofit is most likely to benefit from this sort of investment? After all, change is something many talk about, but few actually accomplish. It turns out that, at least in the nonprofit world, desire to change trumps many other factors that are used to gauge “readiness.”

A recent study of an initiative to strengthen nonprofit journalism organizations found that mindset matters most. It is not just a willingness to change, but an embrace of the often-messy work of transformation that is the most important indicator of capacity-building success.

The Challenge Fund for Journalism, which I managed, was an innovative funder collaborative that provided matching grants and capacity-building support to fifty-three nonprofit media organizations. Launched in 2004, the initiative brought together and pooled funding from the Ford, Knight, McCormick and Ethics and Excellence in Journalism foundations and enlisted the management consulting firm TCC Group to provide one-on-one coaching and other resources to participants to guide them on a journey of change.

Collectively, CFJ helped the organizations leverage $3.6 million in grants into almost $9.5 million in matches. Eighty-five percent of the grantees reported that they experienced some positive organizational change, and 90 percent stated that they were able to maintain the progress they had made in diversifying revenues.

My colleagues at TCC and I decided to dig deeper to understand which factors were most important to success. We examined nine criteria that were used to determine readiness at the beginning of the initiative, such as turnover in leadership and management, financial stability and prior experience with organizational development efforts. Based on experience, we had a sense of what we would find, and our hunch was confirmed. Only one factor significantly correlated with positive outcomes: leaders’ motivation to change. The initiative achieved the greatest impact with nonprofit media groups that were ready for transformation at the outset of our engagement with them.

What did this motivation look like? Those groups that flourished most had at least one leader who embraced adaptation and was able to give voice to the need to overhaul business models. He or she was able to turn this recognition into a bold vision for the organization’s future. Just as critical, these leaders had the ability to inspire this mindset in others and mobilize teams of supporters. In other words, a leader who could do what so many have found elusive: take the idea of change and turn it into action.

One group I coached, the Wisconsin Center for Investigative Journalism, was one of these success stories. The center’s leaders were highly motivated to confront difficult questions, listen to new ideas and engage in the complicated work of shifting their practices. They devised innovative approaches to both fundraising and earned income. They articulated a compelling vision and worked at better involving their board, building their networks and engaging in planning. Executive Director Andy Hall notes that “the greatest value of the initiative was that it enabled the center to try out new strategies for growth. Ultimately, we wound up changing our business model.”

So, how can funders screen for something as hard to pin down as motivation? At TCC Group, we start with listening. During an in-depth conversation, one can begin to detect whether a nonprofit leader wants a check—or “seal of approval” from a foundation—as opposed to being genuinely interested in improving organizational effectiveness. For example, does he or she resist the results of an organizational assessment or challenge the validity of the tool or process? Does a leader invite senior staff and board members to join the conversation? Does a leader demonstrate at the outset a basic understanding of how the organization could grow and improve?

In our experience, having a competitive process to select grantees, even if it involves a few relatively simple steps, goes a long way toward weeding out groups and leaders who lack motivation. It’s helpful to conduct an organizational assessment upfront, talk about the findings with key leaders and agree on what needs to be addressed. In this way, funders can be more intentional about looking for the mindset that will put an organization on the path to success.


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