New Article: Building Nonprofit Capacity, Hand in Hand

Posted by Stanford Social Innovation Review on June 6, 2023

The COVID-19 pandemic thrust the needs of nonprofits into view, forcing funders and grantees alike to rethink how they work together, both to tackle unexpected challenges and lay the groundwork for future needs. In the United States, amid calls for more-equitable grantmaking and increasing awareness of economic disparities, many funders continue to grapple with the “best” way to be a responsive partner to grantees.

There’s no question that there’s power in philanthropy providing organizations with general operating support and unrestricted funding. Both are important components of trust-based philanthropy, a grantmaking approach that emphasizes humility and collaboration across a range of dimensions. But nonprofits are also turning to funders for support beyond grantmaking dollars—such as networking, coaching, and advisory guidance—to build organizational capacities that can help them achieve long-term success.

In the name of equity, some foundations have taken a “no strings attached” approach to capacity building, believing that nonprofit skill and competency assessments are misinformed or overly informed by funder preferences. Others are going further and asking whether the philanthropic sector should redefine the ways it supports grantees through capacity building or cancel it altogether, citing a lack of funder reciprocity and the reinforcement of harmful power dynamics in practice.

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