Capacity Building Toolkit for Nonprofits: Essential Steps

As a seasoned nonprofit professional, you know that long-term growth is a good thing—the challenge is how to achieve it.

Capacity building is vital to the long-term success of nonprofit organizations, which is why the team at Instrumentl has developed a customizable, comprehensive nonprofit capacity building toolkit to help you find solutions to the most pressing challenges your organization faces.

With the practical resources and support in this guide—from webinars to courses to in-depth self-assessment tools—you’ll be well prepared to jump-start your nonprofit’s growth and ensure its future success!

Let’s get started!

Let’s start with a quick refresher of what we mean by capacity building:
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The National Council of Nonprofits defines capacity building as “an investment in the effectiveness and future sustainability of a nonprofit.”

Capacity building improves service delivery and operational efficacy through developing internal mechanisms, staff competencies, and organizational infrastructure that will ensure the organization continues to achieve success for years to come.

So, why is capacity building so vital?

According to a study from Cause Effective, surveyed nonprofits who have invested in capacity building reported a:

• 25% gain in fundraising, governance, and/or special events capacity
• 50% increase in board member fundraising involvement
• 48% increase in giving by their board members

By investing in your nonprofit’s ability to perform more effectively across multiple areas—from governance, fundraising, evaluation, communications, and finance—you can increase revenue, improve programmatic outcomes, and expand your organization’s reach.

Regardless of your nonprofit’s size or sector, you can use the resources within this capacity building toolkit to optimize processes, develop staff competencies, improve outcomes, and learn how to increase efficiency across your organization.

We’ll specifically refer you to resources for:

• Assessing your organization and gauging growth;
• Strengthening leadership and governance;
• Making improvements to financial systems and planning;
• Improving program design and evaluating outcomes;
• Engaging people at every level of the organization from volunteers to staff;
• Upgrading external marketing and communications to reach a wider population; and
• Mitigating risk and ensuring operational sustainability.

With this toolkit you will be ready to take your nonprofit to the next level.

Let’s dive in!

Sustainably growing your nonprofit requires careful planning and assessment at every stage.

Before you begin building capacity you want to identify your strengths and—most importantly—your areas for improvement. This can be achieved by using self-assessment tools!

Organizational Self-Assessment

An organizational self-assessment can help you gather data to identify areas of the operation that need work and areas that are strong and can be used to your nonprofit’s advantage.

The best self-assessment tools show you where you are and point you in the direction you need to go!

Resources for Self Assessment:

• You can kick-off the self-assessment process by reviewing the Ford Foundation’s Organizational Mapping Tool. This is an open-source tool designed to help nonprofits identify strengths, anticipate challenges, and make plans for improvement.

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• The Management Library’s Nonprofit Organization Indicators is a great resource for starting your self-assessment journey and determining the current status of your organization and where and how you can improve in the future.

Conducting a SWOT Analysis

A SWOT Analysis is a matrix designed to help you identify internal and external factors that could potentially impede or facilitate your nonprofit’s growth.

Utilizing this technique, you will identify the following:

• Strengths: Internal factors that set your nonprofit apart from similar organizations in your sector and give you an advantage.
• Weaknesses: Internal factors that require improvement or are keeping your nonprofit from achieving success.
• Opportunities: External factors that could help your organization grow, improve services, enhance processes, or reach more individuals.
• Threats: External factors that could present a challenge to your organization or pose a risk to your operations.

Resources for SWOT analysis:

• Instrumentl has prepared an effective SWOT analysis template to help you identify challenges and bolster existing strengths. 
• Develop your own SWOT analysis tool with Creatly’s SWOT analysis maker.

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A nonprofit organization is only as strong as its leaders.

Investing in skill building and development for your Board of Directors, managers, and Executive Director will set a foundation for a strong system of governance even as roles change over time.

Board Development

Determining if an individual will be a good fit for the board and successful in the role requires extensive planning prior to their identification and recruitment in addition to training when they have been initiated.

Instrumentl has developed a helpful guide for determining the roles of each member of your Board of Directors and how to prepare them for their responsibilities, including:

• Strategic planning,
• Writing and guiding policies,
• Monitoring finances and approving budgets,
• Providing compliance and oversight, and
• Developing and upholding the organization’s bylaws.

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Other resources for board development:

• Board Self-Assessment Tool: From the Maine Association of Nonprofits, self-assessment to maximize board effectiveness;
• Financial Literacy for Nonprofit Board Members: from Board Source, fiduciary responsibilities of a nonprofit Board of Directors;
• Tip sheet for Candid Conversation on Board Governance: learn how to navigate challenging conversations and foster authentic relationships with your Board of Directors.

Leadership Development

Leadership development can support various skill sets, including:

• Financial management,
• Diversity, equity, and inclusion,
• Fundraising,
• Grantseeking and grant management,
• Relationship building and management, and
• Ethical leadership, among other competencies.

Resources for Leadership Development:

• Nonprofit Leadership Development: courses from the Center for Creative Leadership designed to improve nonprofit staff competencies;
• New Ideas for Nonprofit Leaders from Harvard University: develop your nonprofit staff’s capacity to think outside the box and innovate;
• Effective Nonprofit Leadership Team Meetings Webinar from The Bridgespan Group: learn how to lead a team meeting;
• The Midwest Center for Nonprofit Leadership’s Fundraising Leadership Series for more intensive leadership development;
• Certificate in Nonprofit Management from George Washington University.

Succession Planning

With the right tools, guidance, and processes in place you can be prepared to facilitate a smooth leadership transition regardless of timeline or circumstance.

Resources for succession planning:

• How to Plan and Execute an Emergency Transition by Julia Burns for Blue Avocado: learn how to prepare your organization for an urgent leadership transition;
• Mission Driven Executive Transition Toolkit from the Maine Association of Nonprofits: learn best practices for transitioning to a new Executive Director at a mission-drive organization;
• Transition Planning Timeline from BoardSource: design an effective transition timeline for organizational leadership and Executive Directors;‍
• ETI: Departure Defined Transition Toolkit for Board Members and Nonprofit Staff from the Executive Transition Initiative and the Greater Milwaukee Foundation: comprehensive toolkit for an effective and seamless transition of board members and key organizational staff.

Without the capacity for financial development, your nonprofit organization will not have the tools or processes needed to sustain its revenue and manage expenses.

Budgeting and Financial Planning

Budgeting and financial planning are essential to a nonprofit’s success. However, smaller and newer nonprofits often lack the resources or expertise of larger, well-connected organizations.

Don’t let fiscal challenges intimidate you! Instrumentl has developed an extensive template for developing financial statements to best track, manage, and communicate your organizational finances.

Other resources for budgeting and financial planning:

• Financial Management for Nonprofits from the Wallace Foundation: comprehensive overview of nonprofit financial management basics designed for all levels of learning;
• Understanding Nonprofit Finances: A Comprehensive Guide to Financial Management: Designed by LinkedIn, a high-level overview and guide to financial management at nonprofits;
• Webinars and Workshops: The Nonprofit Finance Fund: webinars and workshops covering in-depth topics including debt management, cash flow planning, budget narratives, managing risks and opportunities, and more.

Fundraising and Grant Writing

You no doubt already know that fundraising and grant writing are major pain points for nonprofits. It is a classic Catch 22—nonprofits require funding to grow their organizations, but few have the funding to invest in robust fundraising initiatives or programs.

Luckily, Instrumentl has you covered when it comes to all of your grant writing or fundraising needs!

Using smart-matching algorithms, Instrumentl is the one-stop grant seeking and management tool designed to help you identify the very best-fit grant opportunities that will result in a high return on investment for your organization.

Additionally, Instrumentl has developed a library of free training and capacity building resources focused on grant writing and fundraising that you can access at any time.

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Get started by checking out our article, How to Find Grants to Fund Training and Capacity Building from Instrumentl’s blog—a collection of articles and how-to guides authored by nonprofit experts and experienced grant writers.

Programming is the heart of a nonprofit’s work. With the right tools, you can evaluate your existing programs to ensure their efficacy and design new programs and projects to fulfill your organization’s mission.

Designing Effective Programs

Designing a new program or adapting existing programs requires thoughtful and intentional planning and evaluation, ensuring that the program is delivering favorable outcomes that contribute to the fulfillment of your organization’s mission.

There are a number of approaches to program design that are effective, including:

• Human-centered design,
• Theory of change, and
• Collective Impact, among others.

Here are some program design resources:

• How to Develop a Theory of Change from The Annie E. Casey Foundation: learn what a theory of change is and how to communicate your organization’s theory of change to funders;
• Centering Equity in Collective Impact from the Stanford Social Innovation Review: learn about collective impact and how to engage in program design that is equitable;
• Human-centered Design: Putting People First in Solving Problems from the Aspen Community Foundation: learn about centering participants and their needs in your nonprofit program design;
• Program Design: A Literature Review of Best Practices by Katherine Main for the United Way of Calgary: dig into more in-depth, academic theories and practices on effective nonprofit program design;
• The Elements of Strong Nonprofit Program Design from Grant Writing Made Easy: learn key elements that contribute to an overall strong nonprofit program.

Measuring Outcomes

It is vital to measure outcomes that help you track program effectiveness and show progress to internal and external partners.

Instrumentl has prepared several guides to help you get started on developing measurable outcomes, evaluating programs, and measuring for impact:

• Impact Measurement: A Comprehensive Guide for Nonprofits
• What are Nonprofit Program Evaluation Methods
• How to Use Logic Models to Show Outcomes from Correlations w/ Steve Boland

Other resources for measuring outcomes and evaluation:

• Evaluation and Measurement Outcomes from the National Council on Nonprofits: learn how to develop strong outcomes and effectively evaluate nonprofit programs;
• Understanding Outputs and Outcomes by Mindy Hightower King, Ph.D for the Foellinger Foundation: learn the difference between outcomes and outputs and how to use them in evaluation;
• Measuring Outcomes from the Madison Community Foundation: a high level overview of project outcomes and how to measure them for the greatest impact

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Ensuring nonprofit staff, volunteers, and other key people are connected with your nonprofit’s mission and are well supported is an essential component of building a strong, sustainable organization.

Staff Engagement

Effectively engaging staff will help you retain and recruit top talent.

You can begin to create a staff engagement plan that works best for your organization by using information from the following resources:

• 4 Tips for Increasing Employee Engagement in Nonprofit Organizations by Leo Pedraza for LinkedIn for Nonprofits: a quick tip sheet for improving employee engagement;
• Mastering Employee Engagement: Best Practices + 13 Ideas from Nonprofit Source: become familiar with industry best practices for staff engagement and how to apply them to your nonprofit;
• Engagement Toolkit for Managers and Leaders from Engagement @ Harvard; a comprehensive toolkit designed for leaders looking to engage their employees;

Building a Volunteer Base

Volunteers are the core of great nonprofits and are powerful advocates for your mission.

Building a volunteer base can be tricky at first. Identifying who your key audiences are and how to recruit them requires intentional outreach and planning.

You can design an approach for volunteer engagement by following the tips and strategies laid out in the following resources:

• Strategic Volunteer Engagement: A Guide for Nonprofit and Public Sector Leaders by Dr. Sarah Jane Rehnborg for the RGK Center for Philanthropy & Community Service
• Activating the Power of Strategic Volunteer Engagement for a Better World from the Initiative for Volunteer Engagement; a comprehensive guide on how to engage volunteers
• Webinars: Initiative for Strategic Volunteer Engagement‍
• Webinar: Volunteer Recruitment: Current Trends, Challenges, + Solutions! 

Investing in effective marketing and communications strategies will help your nonprofit amplify its message and connect with new audiences and potential supporters over a shared mission.

Crafting Your Nonprofit's Brand

Creating a recognizable brand for your nonprofit will help you connect with the community, reach donors, and advocate for your mission more effectively.

With almost 2 million nonprofits operating in the U.S., standing out is imperative. The following resources can set you on track to design and develop a one-of-a-kind brand that works for your organization:

• The Ultimate Guide to Nonprofit Branding in 2024 from Instrumentl;
• Nonprofit Branding: Our Complete Guide and Best Examples from Loop: Design for Social Good;
• Webinar: Branding Shifts for Nonprofits Three strategies to be seen and heard through online noise
• Webinar: Branding and Social Media for Nonprofits

Developing a Social Media Presence

With so many viable strategies for social media management and engagement, it can be intimidating to get started.

Review the following resources to develop a winning approach to social media management for your nonprofit:

• Nonprofit Social Media Strategy: How to Make an Impact from LinkedIn
• 4 Social Media Fundraising Examples for Successful Campaigns from Instrumentl ‍
• How to Run Social Media for a Nonprofit in 2024 from Instrumentl

Partnerships are one of the key cornerstones of strong nonprofit organizations.

Developing a robust network of partnerships with local organizations, other nonprofits, public entities, and sector experts will help enhance your work and increase your impact.

The following are helpful resources for building relationships and enabling effective collaboration with external partners:

• Webinar: Increasing Strength and Impact Through Corporate-Nonprofit Partnerships from Loyola University
• Nonprofit Community Partnerships: A Success Guide for 2024 from Instrumentl
• Webinar: Partnership Pays! 5 Ways Partnering Builds More Grant Success, Faster by Maryn Boess for Instrumentl‍
• Place-based Partnerships Toolkit from Nonprofit Finance Fund

As important as it is to equip your nonprofit with the resources and tools it needs to grow over the short term, it is just as vital to prepare your organization for potential challenges and plan for long-term sustainability.

Planning for Sustainability

Planning for your nonprofit’s sustainability can take many forms, such as:

• Investing in capacity building
• Building diversified funding streams
• Strengthening relationships with donors
• Developing strong financial controls and processes

There are several resources and tools available to nonprofits to help plan for sustainability, including:

• Ensuring Long-term Sustainability for Your Nonprofit by Lena Einstein for Board Effect; an informative blog post and how-to guide for nonprofit sustainability
• The Ultimate Guide to Diversifying Your Funding Streams from Nonprofit Hub
• Step by Step Guide to Attaining Nonprofit Sustainability from enSync Corporation

Mitigating Risks

Increasing nonprofit sustainability also means mitigating risk and preparing for any internal or external challenges that may arise.

Mitigating risk requires thorough planning and the implementation of systems and processes designed to respond to urgent challenges and unforeseen issues. The following resources can help your nonprofit mitigate risk and prepare for anything that may come your way:

• Webinar: Economic Risk: Fortify Your Mission to Withstand Tough Times from Nonprofit Risk Management Center
• Webinar: Deescalation Techniques in the Workplace from Nonprofit Risk Management Center
• A Nonprofit’s Guide to Risk Management from Nonprofit Hub
• Everything You Need to Know About Nonprofit Risk Management from Instrumentl

This nonprofit capacity building toolkit is an incredibly valuable resource for your organization, but it doesn’t end here!

There are so many ways to help your nonprofit organization build capacity. In addition to webinars, courses, guides, and articles, nonprofit professionals can take a more in-depth approach to their development. There are a variety of certifications, degrees, and leadership training programs that can take your expertise to the next level.

Some excellent avenues for further capacity building include:

• Certified Fundraising Executive (CFRE): industry certificate on nonprofit fundraising from grants to individual donors to major gifts
• Grant Professional Certification (GPC): industry certificate for grant writing professionals
• Certification in Nonprofit Management: professional certificate in nonprofit management‍
• Certificate in Nonprofit Finance: professional finance certificate with a nonprofit focus

There is no question—nonprofit capacity building is essential. Investing time and energy in capacity building will help give you and your organization the resources, tools, and competencies required to effectively advance your mission and achieve sustainable growth.

In addition to this toolkit, Instrumentl has a library of hundreds of articles, blogs, guides, how-tos, and webinars designed to build nonprofit capacity and strengthen organizations. Visit Instrumentl today and learn how we can help your organization grow and succeed.