leveraging grant funds to build capacity

many nonprofit organisations are tackling societal problems and make a real difference in the communities they serve … until the money runs out, and they can no longer afford to pay staff or support their volunteers. it breaks my heart.

smaller nonprofits in particular lack the financial resources to build a sustainable strategy and scaleable business model. grant funding is entirely project-focused with low (or non-existent) overhead recovery; this creates a nonprofit starvation cycle; forcing organisations to skimp on their people, governance and systems.

building organisational capacity to deliver an impactful strategy, backed by sustainable financing, digital technology, strong leadership and good governance, is tough. few funders are willing to pay for it … even though, in the long run, it more than pays for itself and delivers an even bigger and long lasting impact!

a nonprofit struggling to find enough money has two options:

• continue to struggle day-to-day for the foreseeable future, or
• make an investment today to dramatically increase funding and sustainability tomorrow. spending $10,000 on a financing plan, a compelling case for support, and a board engaged in fundraising can transform your organisation.

for nonprofits who do not have sufficient cash reserves to invest in capacity capital, trusts and foundations are uniquely positioned to help. but there is a big disconnect between what grant-makers fund and the needs of nonprofit organisations.

PHILANTHROPY: TOWARDS A BETTER PRACTICE MODEL (2018)

a really strategic approach to ensure the organisation invests in the right financial model is two-phase capacity capital funding:

• phase one is a capacity capital planning grant to analyse a nonprofit’s current money-raising activities and come up with a plan for transforming those into a sustainable financial model
• phase two is a capacity capital grant to make the one-off investment necessary (staffing, technology, systems) to improve the nonprofit’s financial model.

smart grant makers are, however, starting to understand the strategic value of capacity-building. this progressive approach creates new opportunities for grassroots social and environmental change. a few trailblazing funders are also investing ‘growth capital’ in established charities with the potential to scale.

lots of resources such as GrantConnect and FundingCentre are available to find grants for projects, but it’s harder to find specific grants for capacity-building. so I’m starting a list of trusts and foundations who do offer capacity capital. if you are aware of others please let me know.

• Equity Trustees
• Helen Macpherson Smith Trust

If you are a nonprofit organisation seeking a grant for capacity building, please get in touch to add yourself to the database below and we will do our best to find trusts and foundations who understand how powerful capacity capital can be.

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