Capacity-building grant programs are intended to boost a nonprofit’s effectiveness, and with 77 percent of staffed grantmakers funding such efforts,* many in philanthropy must believe that investments produce positive outcomes for grantees. Until now, however, research in this area has been limited, making it difficult to assess the impact of this support beyond a typical grant period.
A recent study, based on one of the largest and most comprehensive examinations of foundation capacity-building grants ever conducted, offers new insight as to whether capacity-building grants actually stimulate financial growth for nonprofits.
In As You Sow, So Shall You Reap?, just published in the academic journal Nonprofit Management & Leadership, authors Lewis Faulk (American University) and Mandi J. Stewart (North Carolina State University) evaluate 15 years of data from 260 organizations that received Meyer Foundation capacity-building grants and conclude that these investments produce positive, long-term financial results for the nonprofits receiving them—no matter what type of capacity-building the grants supported.
To reach their conclusions, the authors examined financial data for three years following a grant decision of the more than 400 nonprofit organizations that submitted grant proposals for both capacity-building and more general requests. They used the financial data to determine: if receipt of a capacity-building grant is positively associated with future financial growth; if receipt of a financially-focused capacity-building grant is positively associated with future financial growth; and, if the financial outcomes of nonprofits receiving targeted financial capacity-building grants would differ from nonprofits receiving non-financially-targeted capacity grants.
This study goes beyond previous limited research on capacity-building initiatives by assessing targeted capacity efforts rather than solely focusing on general capacity efforts; evaluating their effectiveness over a longer term outside of a grant’s reporting period; and using independent, objective measures rather than grantee self-reporting often employed to analyze outcomes.
In the video below, Vice President for Programs and Communications Rick Moyers and Program Officer Maegan Scott share their insights on the findings of the study.
Click here to access the full report, As You Sow, So Shall You Reap? Evaluating Whether Targeted Capacity Building Improves Nonprofit Financial Growth by Lewis Faulk and Mandi J. Stewart.
*Grantmakers for Effective Organizations. 2014. Is Grantmaking Getting Smarter? Washington, DC.