A Publication of WTVP

If we expect nonprofits to provide quality services, we have to help them build capacity.

I am proud to live in a community filled with remarkable nonprofit organizations that tackle complex issues like hunger, homelessness, illiteracy, disease and addiction. Every day, more than 2,000 nonprofit organizations provide services to the almost 400,000 residents of Peoria, Woodford, Tazewell, Stark and Marshall counties. These services are offered against seemingly insurmountable obstacles: limited funding, scarce volunteers, high staff turnover and endless community need. How do nonprofit organizations sustain their services—or even consider expanding services—in such a volatile environment?

That question prompted me to enroll in a doctoral program at Northern Illinois University. Although I have spent more than 20 years working and consulting in the nonprofit sector, I wanted a deeper understanding of nonprofit organization development. Five years of study has culminated in my dissertation focusing on how nonprofits build capacity. For the past year, I conducted extensive qualitative research to develop eight case studies of Peoria-area health and human service nonprofits. The case sites were randomly selected, ranging in budget from $100,000 to $25 million, and they are anonymous participants. I believe my findings are important to share because they shed light on how nonprofits struggle to build capacity and how our community can support their efforts.

While the organizations in my study vary in size, mission, age, service area, leadership style, governance structure and culture, all are committed to building their capacity, which may encompass improving existing programs, creating new programs or expanding into new geographical areas. Simply put, quantity and quality are at the heart of nonprofit capacity building: serve clients better, and serve more of them. In order to improve or expand services, nonprofits utilize capacity-building strategies such as training or recruiting human resources (both staff and board), adopting policies or procedures, investing in technology or capital improvements, planning, and collecting data.

Regardless of the nonprofit’s attributes or what type of capacity-building efforts it pursues, my research reveals that the key to capacity building is utilizing new information to transform how the agency functions. Capacity building seems obvious: figure out what is needed to improve the agency, and go get it. However, nonprofits have unique obstacles making the acquisition and exploitation of new knowledge very difficult.

Too Much Mission, Not Enough Engine
Nonprofits cost money to operate well beyond programming expenses. For example, a nonprofit hospice requires more than just doctors and nurses; it needs individuals to answer phones, market the organization, raise funds, pay bills, maintain the facility, order supplies and supervise staff. Patient care requires a staff of administrators to support the healthcare professionals and maintain the agency.

Nonprofits often experience a tension between investing in programs (the mission) and developing the administrative “engine” to support the mission. My research confirms that capacity building must occur in both the program and administration in order to enhance or expand the organization’s services. Every nonprofit needs an administrative “engine” that monitors the market, collects data for critical decision-making, manages human and financial resources and handles everyday business functions. My research demonstrates that the agency enhances and expands programs as a result of a strong administrative engine. Replacing administrative generalists with specialists can spark programmatic growth. However, nonprofits must monitor the size of their administrative engine to ensure it does not overshadow programs. A nonprofit is nothing without its mission, but the mission is nothing without administrative support. Investing in the administrative engine is investing in the mission.

Too Many Trees, But No Forest
Regardless of the nonprofit’s size or culture, the board and chief executive are responsible for providing quality services today while ensuring the agency is healthy well into the future. I call this dual responsibility “the trees and the forest.” The trees represent daily operations like staffing allocation, licensing, special-event logistics and program policies. The forest describes long-term efforts such as strategic planning, board recruitment and managing cash reserves.

The organization’s size greatly impacts how it simultaneously manages the trees and the forest. Some boards are too focused on the trees, while the forest is completely neglected. Nonprofits can enhance and build their services when the leadership balances daily operations with long-term sustainability. The best tactic is to establish roles and responsibilities for the chief executive and the board, utilize staff effectively, and constantly discuss long-term issues. This is especially true for the boards of smaller nonprofits, which have a tendency to assist in everyday operations—they still have to look to the future. Regardless of agency size, every board meeting should be filled with data and discussions centered on long-term sustainability. Therefore, in order to enhance or expand programs, a nonprofit has to simultaneously nurture the trees and the forest.

Building Peoria’s Nonprofit Capacity
What does this research mean for our community? First and foremost, we need to invest in the capacity-building efforts of our nonprofits. They desperately need to absorb and utilize new information in order to enhance and expand their services. Second, we must realize nonprofits require much more than program funding. Services do not exist without an administrative engine—investing in the engine does directly support the program. By giving non-designated contributions to nonprofits, they can hire administrative specialists, pay utilities and rent space. More importantly, we must invest in capacity-building efforts like strategic planning retreats, staff development training, and new equipment or technology. The majority of grants and government contracts do not cover administrative or capacity-building endeavors. Also, volunteer! Serve on a committee or board, and consider how else your company or your professional skills can be utilized to build a nonprofit’s capacity.

Finally, inspire community leaders to deliver more capacity-building opportunities here in Peoria. Investing in our nonprofit sector is investing in the very fiber of our community. I would venture that every single resident in the Peoria area has in some way benefited from the services of a nonprofit at least once in their lifetime. If we expect nonprofits to provide quality services, we have to help them build capacity. This is a worthwhile investment because our nonprofit organizations give us some of the greatest gifts imaginable—health, happiness, knowledge and dignity. Those dividends are truly remarkable. iBi

Eileen A. Setti is a partner at Ruby & Associates, which specializes in nonprofit management and development.