Ken Goldstein, MPPA

Ken Goldstein has been working in nonprofits and local government agencies from Santa Cruz, to Sacramento, and back to Silicon Valley, since 1989. He's been staff, volunteer, board member, executive director, and, since 2003, a consultant to local nonprofit organizations. For more on Ken's background, click here. If you are interested in retaining Ken's services, you may contact him at ken at

Tuesday, May 23, 2006

Capacity Building Versus Achieving Mission

Jonathan Peizer has a new posting on his "Philantherapy Blog" addressing the systemic flaw in traditional nonprofit capacity support.

In part, JP writes (the bold is my emphasis):
"There is a distinct difference in the way capacity is supported in the for-profit and non-profit sectors. Nonprofit capacity support is often dictated by an external donor base and not internal organizational need as it is in most other sectors. Nonprofits are used by donors as intermediary vehicles to meet Donor mission objectives. ... This creates a unique situation for the nonprofit sector, making it the only sector that does not have control of its own institutional capacity investments. ... Consider the success, or lack thereof, of a business that could not invest in itself because the funds it generated were restricted."
JP contends that the primary villain behind this conundrum is mission-based grants. The very structure of our sector is that foundations determine their mission, then achieve that mission by operating through their grantees with similar missions. For a foundation to use its limited available funds to support more capacity building grants would mean less money for achieving their mission.

JP argues in favor of foundation support for capacity building organizations. (His focus is on technology, so he mentions NPower and the Erider's Network, but the argument also goes for financial, management, and fundraising capacity building organizations). By supporting a neutral third party NGO, foundations could achieve some economies of scale over funding the same solution over and over at each individual nonprofit. They would build best practices once, and have that intermediary distribute it, if you will, to the mission-based nonprofits.

I tend to agree with most of his thesis. For several years I worked for CompassPoint Nonprofit Services, which is a large Bay Area nonprofit management support organization (MSO) and we applied for grants using much the same logic (I still occasionally teach workshops for CompassPoint). The problem we faced, and which JP also notes, is that it's difficult for a large MSO to properly serve the smallest of grass-roots organizations on an individual basis.

That's where small, independent consultants, such as myself, are able to fill in the holes by working with the smallest of nonprofits that are overlooked by the MSOs and capacity building grants. The trouble is that what little funding for capacity building that does exist goes to the MSOs that are themselves nonprofits, not to self-employed consultants. Again, that's just the nature of the system.

I'm not certain what the solution is for all of this, I just found JP's posting to be thought provoking and important, and wanted to share it with more readers.

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