Who Decides Capacity? (Janet's Blog)

(08-24-10) There is a lot of talk these days about “capacity”… capacity building, capacity funding etc. At a meeting of funders in Seattle that included grantmakers from every sector, everyone was talking about building capacity for nonprofit organizations as part of their funding programs from human services to the arts. It certainly is at the core of effective organizational management. Does the organization have the capacity to implement the project? Is capacity strong in human resources, fund development, operating reserves, program management and technical expertise? These are questions asked by all funders.

I recently had an odd experience that raised an ethical question about who determines capacity. I got a call from a potential grantee of a federal education program. Their grant had been ranked amongst the top 50 out of nearly 2,000. They were seeking assistance to raise $750,000. The government program required them to raise this match within 30 days of their notification of being a finalist for the grant. I thought to myself, “this is nuts!” Here we have passionate nonprofit leaders on the brink of receiving huge sums of federal dollars without support, or, it seemed to me, capacity to raise the match. They were reaching out to me, which seemed reasonable enough since we are “Grantmakers for the Arts” and it was an arts program. Unfortunately for the potential grantee and for my ever-constant need to be of assistance, GIA does not make recommendations to its members about funding projects. It is wisely our policy to not get between our members and their grantees.

But, I was angry. Angry that a funder (the USDOE) would dangle this kind of money in front of an organization that they should have known did not have the professional skills, connections or capacity to raise that kind of money in a month. There was some talk of support for grantees from private funders who had indicated “interest” to the feds to match this project. However, these were not hard commitments and possibly weren’t applicable to my caller. The fact that the potential grantee is in a small city in a primarily rural state should have set off some alarms with grant panelists that maybe this group needed some extra help? Their project sounds solid. Their application was obviously highly ranked but this group’s capacity to raise the dollars to match their grant is extremely limited in comparison to a like organization in any of our major metropolitan cities.

Who decides capacity? Should the grantee know better than to apply for a grant they will have problems matching? That’s a bit like telling a child she can have a candy bar  but it will be bad for her. Does she take it anyway? Of course she does. Is it the responsibility of the granter to understand the capacity of the organization being funded? I absolutely think so. In this case where the match was so high, I know there was an attempt to help rural projects find a match. Unfortunately, this small city in a primarily rural state wasn’t rural enough for that program. I wish this group the very best and hope that the feds will help them out or cut them some slack.

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creativity is a part of capacity

There is such a failure to recognize that sometimes big ideas come out of rural places. But, even when they are recognized, bureaucracy often gets in the way of implementation when the organization might need a special boost in ways that wouldn't occur in metro areas.

As director of an arts non-profit in a rural area--I often feel as I read through grant applications and funder rules that the deck is stacked against us from the start.

Creativity is part of capacity--but just like artists that get no tax credit for the creative time they put into a piece of art that they choose to donate to a charity--our ability to get things done in unorthodox ways is often penalized rather than rewarded. As another administrator once told me, "I often feel penalized for our success."

One example in my world--non-profit has found creative, out-of-the-box way to implement job training programs into the running of a public institution, significantly lowering the cost of running the facility operations of a public building. How is the non-profit rewarded for this? City chooses to cut the management budget instead of recognizing what is happening and refuses to examine the idea although this may be model that could save $$ in all public institutions if embraced. Definitely an idea ahead of its time.

When taking the idea to other funders--funders express that while it is an innovative and potentially cost-saving idea (which also brings diverse and non-traditional workers to participate in the arts center), the rules for the cash matches are out of the league of the non-profit in the short time provided (much like your example), or the timelines and methods of submitting applications simply don't work.

Strategically funding and analyzing capacity is surely a difficult thing. Listening to people on the ground about what their needs are in setting up the applications and observing and recognizing some of the "rural genius" (a phrase coined by Janet Brown perhaps?) might just be a start. Incorporating the flexibility to work on a timeline that allows for an influx of $$ at the right strategic time could be the greatest gift of all.

Certainly conversations we

Certainly conversations we absolutely need to be engaged in at the table.

Capacity...

Your comments suggest a strategic role for foundations in creating a mechanism to respond to opportunities that come up AND for capacity building for development, including general operating support, beyond the project driven grantmaking most typical and most challenging for nonprofits... with an important mission.

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