There is an old story about a man who loses his keys in the dark but searches for them under the streetlight because that is where he can see. Across the social sector, we often do something similar. We pay attention to what is easiest to name, fund, measure, or report. But some of the most important ingredients for impact — strong teams, sound operations, adaptive leadership, effective technology, healthy governance, and resilient infrastructure — are harder to see.
What is visible gets prioritized and funded. What is harder to see is too often overlooked.
This dynamic has consequences. Nonprofits attempt to deliver ambitious outcomes without consistent investment in the people, systems, and organizational capabilities required to sustain that work, often at the expense of their resilience, adaptability, and long-term strength. That fragility is especially consequential now, as organizations face economic uncertainty, political strain, and rapid technological change.
Stronger organizations lead to better, more sustained outcomes. This is widely understood across the sector. So why is capacity building still so inconsistently defined, funded, and supported?
Part of the challenge is definitional. “Capacity building” means different things to different stakeholders. Funders may emphasize planning and evaluation – investments that support accountability and future funding decisions. Nonprofit leaders, meanwhile, experience capacity more holistically: HR, finance, governance, technology, and the infrastructure required to deliver on its mission.
Another challenge is the lack of shared data. The field does not yet have a clear, collective picture of where capacity needs are greatest, how those needs are changing, who is able to access support, what kinds of support are most useful, and where gaps remain. Funders may learn within their own portfolios. Nonprofits may understand their own needs deeply. But those insights too often remain fragmented, limiting the sector’s ability to learn and improve over time.
At Catalyst Exchange, we are working to build that shared understanding. This fall, we will release our inaugural State of Capacity Building report – designed as a common reference point for nonprofits and funders alike. Starting with education and youth development organizations, the report will examine need, access, delivery, and service experience, with the goal of generating data that compounds year over year. Over time, we hope this can help the field see misalignments more clearly, make better investment decisions, and strengthen both practice and policy.
But no single report can drive change on its own. Advancing capacity-building practice requires honest reflection, better data, peer learning, and shared accountability. Funders and nonprofit leaders need better ways to learn together: to compare what each group is seeing, surface misalignments, and build a clearer understanding of what effective capacity-building support should look like.
If we are serious about strengthening outcomes, we also have to get serious about strengthening organizations. That means looking beyond the streetlight — toward clearer definitions, better data, greater transparency, and deeper field-wide learning. Only then can capacity building become not just something we value in theory, but something we support with greater discipline, equity, and effectiveness.
Catalyst Exchange has launched a first-of-its-kind study to better understand how capacity building is funded, accessed, and experienced by education and youth development organizations.
We are inviting funders and nonprofit leaders to complete a short (20-minute) survey by May 15. Findings will be published in Fall 2026.
Your participation will shape a more accurate, data-informed picture of capacity building grounded in both funder and nonprofit perspectives.
Take the survey and share it with your network!