What’s Unique about Funder Capacity?

Foundation effectiveness, as CEP’s own Phil Buchanan has helpfully summarized, is about four things: clear goals, coherent strategies, disciplined implementation, and relevant performance indicators. As the field has sought how to achieve greater effectiveness, “one of these things is not like the other,” to quote the old Sesame Street song. Goals, strategies, and indicators have all been touted as paths to greater effectiveness. But implementation has not received nearly as much attention. I would venture that this is because understanding and achieving disciplined implementation of strategies requires looking at an often-neglected element of foundation performance, namely, funder capacity – the skills, abilities, and knowledge of foundation staffs.

This is perhaps not surprising, because as TCC Group observes in our new briefing paper, “Capacity Building 3.0,” capacity building has traditionally been focused on the capacity of nonprofit organizations, leaving funders, companies, government, intermediaries, and other key actors out of the capacity equation. This is a mistake. Today’s environment calls for an ecosystem approach that understands all actors to have their own capacity needs, not just nonprofits. Capacity Building 3.0 also affirms that tailored forms of capacity building are required for different actors in the ecosystem, including funders.

So, given its importance for foundation effectiveness and the relative lack of attention to it, what is distinctive about funder capacity? What particular skills, abilities, knowledge, and relationships do funders need to be efficient and effective in pursuit of their missions?

One way to answer these questions is to look at how one would assess funder capacity any differently than nonprofit capacity. TCC Group has been exploring this answer as we have looked at how to adapt our Core Capacity Assessment Tool (CCAT), designed for nonprofits (more than 3,500 of whom have taken it), to be used with funders. Here’s what we’ve learned so far:

  • Funder capacity is about more than grantmaking. The easy answer to the question of what’s unique about funder capacity as compared to nonprofit capacity is that it includes grantmaking. Add a few questions on grantmaking to the CCAT, and boom, you’re done, an assessment of funder capacity. If only it were that easy. It turns out that funders actually play a lot of roles that don’t always get a lot of attention: they’re researchers, conveners, information sharers, evaluators, communicators, advocates, civic leaders – the list goes on. Nonprofits do all these things, but foundations do them as funders – with a certain reputation, set of expectations, and abilities that are less about direct implementation and more about skillful marshaling of resources. Those kinds of capacities need to be named.
  • It’s about how you leverage the information at your disposal. Any framing of capacity is at least partly aspirational. There are some bars that most people reach, and there are some bars that only a few reach – but most have the potential to get there. It’s like that with the use of information by funders. They all gather tremendous amounts of information about grantees, their financials, their boards, the issues they work on, the fields in which they participate, the communities in which they work, etc. But what happens with that information is another matter. If you’re lucky, it gets read more than once. If you’re really lucky, it gets used internally. If you hit the lottery, it gets shared externally. Effective funders are able to marshal the information at their disposal and use it to get better at their craft. That’s a distinctive capacity, and worth capturing as part of what makes funder capacity unique.
  • It’s about a very particular kind of leadership. One such element is the types of leadership that funders can effectively exert. They’re influencers – they help shape agendas, convene players, smooth over disagreements, build momentum for change, celebrate wins, and build community. This requires both internal leader influence and external leader influence – funders need to mobilize resources internally to get things done, and externally to build networks, coalitions, campaigns, movements, etc.
  • It’s about how you relate to the outside world. For all of their perceived secrecy, many funders are actually quite externally-oriented at an individual level. Their impact comes from other people (the grantees they fund), so they have to be skilled at identifying those people and organizations and cultivating successful funding relationships. The fact that funders aren’t always good at formally communicating in the ways that professionals recognize as good practice (that is, they don’t have a high profile or strong brand) doesn’t mean that they’re not constantly pounding the pavement, learning about grantees and the communities in which they work. So everyone in a foundation needs a basic level of ability to interact with the public in a way that reflects positively on the organization and embodies its mission. That’s a distinctive skill, and for a funder, a particular kind of capacity.

These are a few initial observations about funder capacity from our experience working with funders and building out an assessment tool. We’re in the midst of piloting the Funder Core Capacity Assessment Tool (FCCAT), and welcome funders who are interested in participating; click here for more information.

We welcome a broader conversation in the field about funder capacity. How are you thinking about internal capacity within your own foundation? What are distinctive funder capacities, and how do you build them?

Chris Cardona, PhD, is Director of Philanthropy at TCC Group. You can follow him on Twitter @ChrisCardona.

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