Making the case: how to turn every donor into a capacity building champion

Picture this: Your nonprofit has found a breakthrough approach to achieve social outcomes. Your team is driven, and the communities you serve are counting on you more than ever. But behind this success, your organization is drained with outdated systems, exhausted staff, and limited infrastructure. Many leaders find themselves at crossroads: “Should we focus solely on the cause, or should we invest in building a stronger, more resilient organization?”

To us the answer is clear. One of the most powerful approaches to unlock an organization’s full potential is investment in capacity building. This investment strengthens an organization from the inside out. Investing in capacity must start the day you have a proven model on the ground.

It is not just about fixing issues. It’s about building systems and processes that allow you to grow, innovate and drive long-term change. Yet, despite its importance, capacity building often takes a back seat in donor conversations. It is often sidelined by the allure of program funding.

What NGOs need to do now, is flip the narrative and make a compelling case for capacity building funding. This must resonate with internal and external stakeholders, especially donors. The rest of this article shares some ways of doing this.

Conduct a thorough needs assessment

The first critical step is to assess your organization’s three-year strategy and goals. In the process, you must identify the internal capabilities and resources needed to accelerate the same. The capacities often include reviewing technology investments, fundraising functions, monitoring and evaluation (M&E) processes, among others.

A common pitfall is that organizations often evaluate their current capabilities and assume they can reach the next significant milestone with them. This leads to underestimating the level of investment needed to achieve that future ambition. As a result, many organizations risk stagnation when they should be driving forward.

Some ways to do a needs assessment include, doing an internal review using OD assessment tools like those from The Bridgespan Group to identify current and future gaps. The organization should also engage with the staff, board members, and stakeholders to gain insights, and uncover blind spots. Prioritizing the most critical needs aligned with your organization’s goals are important. If government partnership is the key, then focus on capacity building around outcomes measurement and partnerships. This targeted, evidencebased approach will strengthen your case to potential funders by demonstrating a clear path for capacity building.

Develop a concrete capacity building plan aligned with your strategy

Once you have prioritized your capacitybuilding needs, the next step is to develop a clear plan that aligns with your organization’s strategy. Start by asking: what exactly are you solving for? For instance, one of our partner NGOs working in child safety decided to scale its “train the trainers” model. The aim was to increase the number of trainers from 18,000 in FY21 to 35,000 by FY24. During their assessment, they realized they lacked a robust M&E framework to track the effectiveness of the training. Their solution? They invested in hiring for the M&E team and in upgrading their technology to design surveys, data collection methods, and dashboards. This allowed them to track the impact of their programs more effectively.

In your organization’s case, you’ll need to decide whether to invest in technology, hire in-house staff, or outsource to a vendor. It could also be upskilling existing staff to lead higher level responsibilities or a combination of these, depending on your gaps.

Once you have outlined your capacity building needs, it’s crucial to develop timelines and budgets. Leaders often hesitate to allocate resources to these areas, fearing that donors won’t fund them. However, a clear, transparent plan with defined resources and budgets demonstrates that your organization is prepared for growth. This makes it easier to secure donor buy-in.

Resources for CSOs’ capacity building journeys

Doing an internal review using OD assessment tools like those from The Bridge span Group to identify current and future gaps.

M&E Health Check helps partners assess the health of their M&E systems and identify cost-effective areas for improvement.

Create clear success metrics

Establishing clear success metrics is critical for ensuring accountability and for tracking the effectiveness of your capacity-building investments. To do this effectively, you need to apply the same level of discipline that you use to measure the success of your programs. It’s important to acknowledge that capacity building is a long-term process. It often takes 18 to 24 months to show tangible improvements. Patience and persistence are key. For example, one of our NGO partners focus on improving early childhood learning outcomes. They faced challenges when scaling their program beyond a few districts. They realized that while the founding team had technical expertise, they lacked the management skills to operationalize a strategic growth plan.

By investing in leadership development, they created clear success metrics at two levels. First, at the program level it involved increased student outreach and improved learning outcomes. At the leadership level it was building a senior leadership team, reducing the founders’ direct reports, and operationalizing a strategic plan for scaling.

By defining metrics at both the programmatic and leadership levels, they were able to track their progress. They could, thus, also showcase the tangible impact of their capacity-building investments to their donors.

Learn from failures

One of the most critical aspects of capacity building is embracing risk and learning from both successes and failures. There’s no perfect formula for organizational growth. Sometimes capacity-building efforts may not meet expectations.

However, the key is to stay committed to the learning process. You must adopt solutions that work best for your organization. It’s essential to leverage your donor network during these times—share your challenges openly, engage them in problem-solving, and co-create solutions.

By involving them in your journey, you gain both their emotional investment and practical support. This makes them as invested in your success as you are.

For instance, one of our partner NGOs faced a setback after hiring a senior resource to strengthen fundraising. The plan failed as donors preferred engaging with the CEO. The assumption that this hire would bring in new donor networks didn’t materialize.

Within six months, the NGO reached out to us. They candidly shared their challenges and proposed a pivot. This involved hiring a junior associate to support the CEO with donor research, proposals and engagement.

This openness led to a major turnaround. The budget doubled, ticket sizes increased, and new avenues such as retail and HNI donors opened. Most importantly, they covered the cost of the new hire through the funds raised.

Within a year, they became financially independent. They no longer needed additional support. Failure, when embraced and addressed openly, can be a powerful tool for growth and resilience.

Learn from your peers and the sector

To make a compelling case for capacity building investments, it’s essential that you understand what is happening in the sector. First, start with your peers to understand how they are prioritizing their focus areas, approaching their donors, making investment decisions, and the lessons they have learnt from their interventions. It is an invaluable network to bounce ideas with and learn from.

Second, look at what research studies are carried out in the sector. Open-source toolkits that are available and published case studies can help you steepen your learning curve.

For instance, a Bridgespan study shows that the average indirect cost for nonprofits is 22%, with a range of 5% to 51% depending on the organization type. By aligning your costs with these benchmarks, you can demonstrate that your capacity building investments are both necessary and in line with sectoral standards. This will help to build trust and credibility.

Another set of useful resource are the case studies that we have published in partnership with IDR on learnings and impact of capacity building investments in both urban and grassroot NGOs. You can check out the links here and here respectively.

Conclusion: all donors should become your champions

Lastly, and most critically, there are no donors exclusively dedicated to funding capacity building. This is why it’s essential to embed these costs into your organization’s budget.

You must make them a part of every donor conversation.

The goal is to convert every program funder into a champion for your organization’s growth. The journey will be challenging. There may be more rejections than acceptances. However, persistence and conviction are key.

As Nelson Mandela wisely said, “It always seems impossible until it’s done.” By staying the course and continuing to advocate for these critical investments, you will be able to bring your donors along. This would also inspire your peers to do the same.

Capacity building isn’t just about securing funds. It’s about building a foundation for long-term impact. By turning every donor into a capacity-building champion, you are not simply asking for support. You are forging a partnership that will enable your organization to thrive and deliver lasting change.