Nonprofit Capacity Building: Where to Invest

by | Oct 19, 2023 | Nonprofit Capacity Building, Nonprofit Leadership Development


When a nonprofit sets out to build capacity, the options can seem limitless—and the need acute. Whether it’s programs, finance, or fundraising, every department in a nonprofit may be operating with a capacity gap.

With so many competing needs and limited resources, choosing the most impactful areas for investment feels high stakes. Which leads many nonprofit leaders to wonder where to even begin.

If you’re feeling the pressure of choosing the right areas to invest in, get clarity with Funding for Good’s October 2023 webinar, Increasing Operating Capacity: How to Grow.


Why Fundraising Capacity Is Fundamental

One of the top areas for nonprofit capacity building is fundraising. Most nonprofit organizations must raise their operating budgets year after year. And few have 100% of funds committed in advance. Unexpected funding shortfalls are common. They can mean reducing programming, freezing new hires, or even laying off current staff. The result? Missing goals and making a smaller impact.

But fundraising capacity isn’t just about paying the bills. Research on the nonprofit sector reveals that an organization’s fundraising capacity is a factor in long-term success.

  • For most nonprofits, the best predictor of success and growth is how much the organization spends on fundraising.
  • Organizations with sufficient financial resources are more likely to focus on strategic decisions.
  • In contrast, nonprofits with scarce financial resources will tend to comply with performance measurement demands from funders, but they tend to only meet the minimum performance standard.

Fundraising clearly forms the backbone of nonprofit success. But it’s not the only area nonprofits are investing in.


Where Else Are Organizations Growing Today?

In addition to fundraising, organizations are increasingly focused on finding ways to engage their audiences. That includes investment in data, technology, and marketing.

According to the research:

  • Most nonprofit organizations include some component of technology in their strategic plan.
  • In 2022, 93% of companies indicated that they plan to continue to increase investments in data and analytics.
  • To reach new and existing audiences, in 2021 nonprofits increased digital advertising budgets by an average of 19%.

Other traditional areas of capacity investment include governance, human resources, and operations.

Of course, each organization has its own needs and challenges. Understanding the options—and how they might meet your unique needs—is the first step in developing an effective and tailored capacity-building plan.


Ready to Build Grow Your Operating Capacity?

Join Funding for Good’s October 2023 webinar, Increasing Operating Capacity: How to Grow.