Redesigning Capacity Building: How Philanthropy Must Support Leaders of Color

Over the years, in our roles as staff at Community Wealth Partners, we’ve spoken and worked with hundreds of Black, Indigenous, and other BIPOC nonprofit leaders. They’ve consistently told us that current capacity-building approaches often miss the mark—or worse, contribute to inequities in the sector.

But they’ve also shown us what it looks like—and what impact is possible—when they get the capacity-building support they need. Below, we share their insights, alongside direct quotes from focus groups and interviews we’ve facilitated on behalf of funders who want to support BIPOC-led organizations.

National data reinforce the urgent need to shift capacity-building practice. A 2022 Nonprofit Finance Fund survey shows that compared to BIPOC-led nonprofits, white-led nonprofits received more unrestricted funds (15 percent more), more federal funding (14 percent), and more corporate funding (13 percent more). Meanwhile, more BIPOC leaders bring lived experience representative of the communities they serve than white leaders (39 percent more). Although funders are increasingly trying to support these nonprofits and deepen their own focus on racial equity, a Center for Effective Philanthropy survey shows that one third of interviewed nonprofit leaders said funder actions on racial equity didn’t match their rhetoric.

It’s time to act. It’s time to adopt capacity-building approaches that leaders of color say will actually help. Below are three basic principles to guide these efforts.

Principle 1: There’s no one right way for nonprofits to be effective. Capacity building is about supporting nonprofits to choose and invest in how they want to change. 

Listen to what people say their needs are. —Nonprofit Leader

Traditional capacity building often prioritizes a narrow vision of what an effective nonprofit looks like. In an NPQ article from 2019, Sarah EchoHawk emphasizes this issue in relation to Native nonprofits, arguing that forcing nonprofits to adhere to preconceived standards of success turns capacity building into a colonialist practice. As Kathleen Enright, the former head of Grantmakers for Effective Organizations, observed years ago, that vision often rewards nonprofits “most skilled at navigating the thicket of hurdles, requirements and processes put in place by philanthropy,” which disadvantages smaller, BIPOC-led organizations.

This traditional approach is reinforced by white dominant cultural norms of perfectionism (e.g., focusing on perceived inadequacies) and paternalism (e.g., assessing and defining the “weaknesses” for capacity-building support). For example, traditional capacity assessments tend to focus on deficits and reinforce the assumption that an organization needs to be strong in all areas. This assumption isn’t always realistic or helpful. There are alternative ways to think about assessments as tools that lift up different perspectives from internal and external stakeholders and help guide conversation within a nonprofit about where they want to focus their time.

Capacity building should be about resourcing nonprofits so they have the time, networks, and skills they need so they can focus on delivering their mission.

When we conduct capacity assessments, we guard against assessments becoming a punitive tool in a few ways, with the aim of designing them to provide grounding for helpful discussions with funders and nonprofits about opportunities to provide meaningful support. First, the results for individual organizations are shared only with the organizations themselves; funders see aggregate data but not individual reports. Second, we encourage nonprofits to view the assessment and the results as a tool for conversation. The findings can help illuminate where there might be differences in perspective about an organization’s strengths and challenges as well as the types of capacity support that could be most helpful. They are not intended to dictate where an organization focuses its capacity-building efforts. Many nonprofits have shared that the assessments have been a helpful tool for conversations with staff and board and have helped them make decisions about where to invest in strengthening capacity.

The bottom line is, nuance, not a one-size-fits-all approach, is required in supporting nonprofit capacity. Sometimes, the most valuable thing for a nonprofit might be building their current strengths while finding ways to outsource or collaborate around areas of need. Capacity building should be about resourcing nonprofits so they have the time, networks, and skills they need so they can focus on delivering their mission.

Principle 2: Capacity is built through unrestricted funding paired with long-term, tailored supports.

Stop inviting me to trainings. Most of the time we can do the training better. I hear that a lot of leaders go to trainings only because they are tied to funding. Give investments to Black and Brown leaders and trust them. —Nonprofit Leader

First and foremost, capacity is built through unrestricted funding. When organizations have full power to decide how to spend funds, they can invest in their priorities. There’s also data showing the power of pairing unrestricted grants with designated capacity-building grants.

When it comes to how you support designated capacity-building opportunities, one-off trainings certainly have their place but should not be the primary way to strengthen capacity. Instead, capacity-building opportunities need to be sustained over the long term. BIPOC leaders also point to the value of relationship building (connecting with and learning from peers) and individualized support (such as coaching or programs tailored to the needs of a subset of grantees).

The Southern Reconstruction Fund provides what they have coined as restorative capital to organizations and leaders that are transforming their communities, thereby helping strengthen the resilience of the American South. As the fund’s website says, “Traditional philanthropy starts and stops. Restorative Capital walks alongside communities as they rise to health, wealth, and prosperity.” The fund makes philanthropic and equity-based investments in communities of color as they decide for themselves the goals they will pursue and the mix of financial mechanisms (philanthropic grants, program-related investments, loans, etc.) that will best help them achieve their goals.

“For too long philanthropy has rewarded those amongst us who tell the worst stories about our communities the best. We have to realize that Black communities in the South do not have a human capital problem, but we do have a capitalization problem,” said Dr. Dorian O. Burton, managing partner and CEO of the Fund. “These racialized barriers to capital are a result of centuries of racist behaviors and bad policies that continue to be extractive and exclude Black communities from markets, investment, and self-determined community wealth and health. Philanthropy makes decisions about communities often absent this historical context and frames communities as ‘problems’ or having problems that need to be solved.”

Principle 3: Capacity building requires change not only at the individual and organizational level, but also in the ecosystem as a whole.

There is a notion that capacity building needs to happen for people and organizations, but I personally don’t like the term. I would prefer to use “cultural transformation.” If we’re talking about supporting organizations and individuals, we have to think about how we are going to change the systems that have oppressed us. —Nonprofit Leader

Current capacity building often focuses on individuals and organizations as the units of change. Those are critical, yet we know sustainable change relies on the strength of an ecosystem. Capacity building that focuses only on individuals and organizations fails to address the broader ecosystem of funders, service providers, community groups, movement leaders, government, businesses, networks, and groups not formalized into 501c3s.

In Southeast Michigan, a network of local partners came together to create a new definition of capacity building—one that emphasizes the connectivity between individuals and organizations in the nonprofit sector and that also recognizes the racial, social, and economic barriers nonprofits face. In 2019, these partners came together to launch a hub for nonprofits called Co.act Detroit. Co.act’s mission is to accelerate collaborative action among nonprofits and community organizations in Southeast Michigan. The hub works to leverage capacity supports that already exist and fill the gaps that remain so that nonprofits have access to a broad range of services to support their capacity. Since its launch, Co.act has become an essential resource for nonprofits, a trusted partner to intermediaries and a convener of cross-sector partners. Through equitable grantmaking, collaborative networks and expanding nonprofit access to innovative resources Co.act Detroit is addressing systemic barriers that impeded nonprofit success and equitable outcomes for communities.

The ability to help strengthen the collective capacity of organizations within an ecosystem relies on having access to intermediary organizations with the knowledge, skills, and capacity to provide the services organizations need. When the Kresge Foundation designed a program to help develop leadership capacity through a racial equity lens among its grantees, the program included an explicit focus on the intermediary organizations that provide leadership development services to nonprofits. In addition to providing funding, training, and peer support to grantees, Kresge’s Fostering Urban Equitable Leadership (FUEL) program also provides funding and peer support to a set of service providers. Investing in the capacity of these providers has led to outcomes such as 1) increased effectiveness and efficiency of service delivery, 2) strengthened capacity of capacity builders, and 3) greater collaboration and coordination among service providers.

“Being in work that is fee-for-service or grant dependent means that you’re often isolated,” said Jessica Vazquez Torres of Crossroads Antiracism and Training. “The FUEL program provided a place of collaboration, learning, and camaraderie across a set of shared commitments to notions of equity from organizations that normally would compete with each other for the same RFPs or who would be passing each other because we exist in this parallel world.”

Funders’ actions can also impact the strength of an ecosystem. One way that funders can contribute to a strong nonprofit ecosystem is by convening grantees to learn from and support one another. In capacity-building cohorts we have facilitated, time and again grantees find tremendous value in being able to connect with and learn from their peers. Busy nonprofit leaders don’t always have the time to prioritize networking, and the structures and supports funders provide for peer connection are often appreciated.

In addition to fostering connection among grantees, funders can connect and coordinate with one another to help strengthen the ecosystem. Coming together to share strategies and plans can illuminate which areas in an ecosystem are well supported and where there are gaps. Being aware of one another’s timelines and processes might surface opportunities to streamline grant application and reporting requirements, thereby minimizing the fundraising burden on grantees so they have more time to focus on their missions.

 

What Can Philanthropy Do?

The philanthropic sector is awash with recommendations for practice. At Community Wealth Partners, we have created our own resources including an equitable capacity building field guide and a set of five recommendations for leadership programs.

How might foundations shift their capacity-building practices? It starts with a willingness to shift power.

But fundamentally, there is no data problem. Most people in the field know what should be done. Even so, debate continues on whether to trust nonprofits with unrestricted funding—or wait until smaller organizations are “ready.”

The results are evident: leaders burn out, harmful public policies continue to become law, and inequities are deepening. A sea change in philanthropic practice is overdue.

How might foundations shift their capacity-building practices? It starts with a willingness to shift power. Philanthropic leaders can begin to shift power by asking the nonprofits they support what they think and then changing practice to match what the nonprofits they survey say they need.

Of course, it is not enough for philanthropy to survey nonprofits. Foundations should also survey themselves. Here are three sets of starter questions:

• What level of investment is our foundation making in nonprofits’ capacity? Is that sufficient for the outcomes they hope to achieve? Is the level of investment equitable between our white-led and BIPOC-led grantees?
• How else is our foundation supporting BIPOC-led organizations? In what ways are we providing helpful support to them? How might our funding practices present barriers to BIPOC-led organizations? What changes should we consider?
• Do grantees receive multi-year, unrestricted funding? If no, why not? If yes, what share of our grants budget does this represent, and is that enough? What justifications are used to provide restricted support rather than unrestricted?

 

A New Way Forward 

What’s possible when you fund and trust BIPOC leaders and capacity builders to do their work the ways they know it needs to be done?

 —Nonprofit Leader

If philanthropy wants to contribute to thriving, equitable communities, there need to be changes in who receives funding and how funding flows.

BIPOC-led organizations are more likely to be proximate to the communities they serve and have deep, trusting relationships with community members. As a result, they’re more likely to be able to drive change in communities and should receive more support from funders.

Nonprofits pushing for long-term, systemic changes need long-term, flexible support. Offer multiyear, unrestricted grants. Funders must support opportunities for connection, peer support, and collaboration. And, most importantly, they must give nonprofits the type of support they say they need.

Carla Taylor, Megan Coolidge, and Lauri Valerio are vice president, senior consultant, and affiliate consultant, respectively at Community Wealth Partners. Collectively, they have worked with dozens of funders to design and deliver capacity-building programs for hundreds of nonprofit organizations. The authors are grateful to Maria A. Fernandez for review and feedback on this article.