Closing the Capacity Gap: Making the Invisible Visible

The idea for the State of Capacity Building study first emerged in the early days of the pandemic. Student and community needs were intensifying across the nation, and nonprofits, school systems, and public sector agencies were straining to meet those needs. Staff were exhausted, systems were struggling to adapt, and the scale of need was beyond what many organizations had been set up to meet. We were experiencing a crisis of capacity across the mission-driven sector: at the very moment these organizations were needed most, their ability to respond was being stretched to its limits.

Despite this, organizational capacity itself remained largely invisible. As a sector, we were focused on the programs and services that organizations needed to deliver, while paying far less attention to the people, systems, and infrastructure needed to deliver them. It was clear to me that we needed a way to make organizational capacity more visible. Across the mission-driven sector, it's hard to think of an issue that is more cross-cutting. Organizational capacity touches every nonprofit organization, public sector entity, and funder. And yet, we lack a clear, shared picture of how it is recognized, resourced, and experienced across the sector. The absence of data has real consequences. It's hard to make the case for something that is hard to see, and even harder to sustain momentum when you can't show progress.

Fast forward six years, and I'm delighted to share the release of Closing the Capacity Gap, the inaugural report from our ongoing State of Capacity Building study. This edition focuses on organizations working in education and youth development. We draw on a national survey of 644 nonprofits, funders, and intermediaries, along with focus group conversations with nonprofit leaders and funders to answer questions like: What do nonprofits need? How are those needs being resourced today? What shapes whether support leads to meaningful results? And how does that path differ depending on where an organization starts? Taken together, the data offer a much clearer picture of what's happening across the capacity-building ecosystem and where some of the biggest opportunities for change lie.

Going into the study, I had assumed that one of our biggest challenges would be getting people on the same page about the importance of organizational capacity. But that's not what we found. There's remarkable agreement that organizational capacity matters and alignment on what it looks like. Yet, fewer than half of funders surveyed fund capacity building, and the median nonprofit invests just 1–2% of its budget in it. Part of the challenge is that nonprofits, funders, and intermediaries often work with different information, incentives, and constraints. Decisions made by one group influence what becomes possible for another, yet individual actors are often making those decisions with only a partial view of the system around them. For me, that's one of the biggest contributions of this report: bringing these perspectives together to illuminate how decisions and constraints across the ecosystem interact, and where there might be opportunities to do things differently.

Six years ago, I wanted to make organizational capacity more visible. Today, we have a clearer picture and an opportunity to use what we're learning to change how we support and strengthen the organizations our communities depend on. The timing couldn't be more important. Political, economic, and technological forces are reshaping the nonprofit landscape, making organizational capacity more consequential than ever. Organizations are being asked to adapt to rapidly changing circumstances, even as the capabilities they need are themselves changing. We need to move from agreeing that organizational capacity matters to actually integrating it into how we think about, fund, and pursue impact.

As Jim Shelton reminds us in his foreword, a report matters only if it changes what we do. I'm encouraged by the growing attention, evidence, and energy around organizational capacity. The gaps surfaced in this study aren't the result of any single actor or decision. Closing them will require us to see more of the system we're part of, connect what we're learning, and build on what's already working. My hope is that this growing momentum leads to real shifts in how organizational capacity is recognized, resourced, and strengthened.

I'm enormously grateful to everyone who contributed to this first report, and to the many people and organizations who helped make it possible. I hope you'll read it, engage with it, challenge our thinking, and join us in figuring out what comes next.