Nonprofit Capacity Assessment: Indiana Charities, 2007
Survey Report #1
Phase I of the Indiana Nonprofit Capacity Assessment project is now completed. Between January and March of 2007 we surveyed 215 Indiana charities that were either affiliate members of the Indiana Grantmakers Alliance or Indiana grantees of Lumina Foundation for Education. A total of 91 organizations responded to the survey for a response rate of 43 percent. The results are summarized in our first survey report.
We asked responding nonprofit organizations to identify their three most significant needs in each area and the best ways to address them. We also examine several broad categories of capacity building identified in the literature in order to establish which specific dimensions in each category present the most severe and/or widespread challenges. For each of the broad categories, we also asked respondents to indicate how helpful various types of funding, technical assistance, or peer learning would be in addressing the challenges. See the full survey instrument for a complete set of questions.
A number of key findings stand out from our analysis of capacity building and technical assistance needs among respondents to our Indiana capacity assessment survey.
- Indiana nonprofits face many capacity building challenges. When asked to assess a broad array of capacity building challenges, our respondents indicate that securing financial resources presents the most severe and widespread challenge, followed by marketing and networking & advocacy, with information technology, human resources, planning & programs, and governance & operations following in close succession. Financial resources remains the most prominent type of capacity building need when respondents are asked about their own three most important needs in open-ended questions. However, needs related to human resources, program & planning, or operations & governance take on greater prominence when respondents focus on their own significant needs compared to when they assess all areas of capacity building. By extension, marketing, networking & advocacy, or information technology appear to have notably lower priority.
- Six of the nine most prevalent major challenges are related to funding. Almost all of the specific capacity building dimensions across the seven broad categories pose at least a minor difficulty for most nonprofits. However, half or more of all respondents say that expanding the donor base, building an endowment, obtaining funding in general, securing foundation or corporate funding, and enhancing the visibility or reputation of their organization present a major challenge. At least 40 percent also say that developing targeted communications with the community and clients/members, developing public understanding of issues, securing government grants, and developing capital campaigns present major challenges.
- Most types of funding and peer learning are considered very helpful in addressing capacity building challenges. Overall, various types of funding support is seen as the most helpful way to address the challenges, followed by peer learning support and then technical assistance support. The specific type of support deemed most helpful varies somewhat depending on which area of capacity building need is considered. However, multi-year funding and general overhead are seen as very helpful by at least half of all respondents, regardless of type of capacity building.
- Indiana nonprofits do not view capacity building and technical assistance as synonymous terms. It appears that technical assistance is defined mainly as having to do with information technology and other fairly circumscribed processes. Capacity building, in contrast, appears to be applied to broader functional areas, such as fundraising, human resources, and general operation, suggesting that the two concepts appear to capture distinctive underlying dimensions.
See the full executive summary and key findings. Here we present only selected highlights.
A. Capacity Building Challenges
We selected seven dimensions of capacity building that were most prominent in the literature and asked respondents whether indicators within each posed a major, minor, or not a challenge.
- Resource Capacity. All aspects of securing financial resources pose at least a minor challenge to Indiana nonprofits, including four items that are viewed as a major challenge by more than half.
- Marketing Capacity. All indicators pose at least a minor challenge for more than 60 percent of respondents, especially enhancing the visibility and reputation of the organization and developing targeted communication to the community, which are seen as major challenges for close to half.
- Networking & Advocacy Capacity. Enhancing public understanding of key policy issues, strengthening relationships with key policy makers, and responding effectively to community expectations pose at least minor challenges for 80 percent or more of Indiana nonprofits.
- Information Technology Capacity. All indicators are considered to be at least a minor challenge by more than 60 percent of respondents with several reaching 70 percent or more. Creating a comprehensive and interactive website and upgrading computers to support new software is seen as a major challenge by more than one-third.
- Human Resources Capacity. All indicators of human resources capacity are identified as at least a minor challenge by more than 60 percent. Board training is seen as a major challenge by almost one-third and a quarter said that recruiting and keeping qualified board members, staff, or volunteers are also major challenges.
- Programs and Planning Capacity. With regard to programs and planning capacity, evaluating or assessing program outcomes or impact is the most pervasive challenge, with over 70 percent considering it at least a minor challenge.
- Operations and Governance Capacity. Training and/or developing the board is viewed as a minor challenge by 79 percent and as a major challenge by 39 percent. Four other elements in this category are at least minor challenges for three-fifths or more.
Helpful Assistance in Addressing Challenges
For each of the seven broad categories of capacity building, we asked respondents how they would rank the helpfulness of various types of funding, technical assistance, and peer learning in addressing these challenges. Overall, multi-year and general overhead funding are seen as most helpful, followed closely by small grants, learning from peers, and workshops. Challenge grants, consultants, student interns and loaned executives are seen as somewhat less helpfu.
B. Nonprofit Views
To assess how nonprofits define and differentiate Capacity Building and Technical Assistance, we asked respondents to describe (1) their three most significant capacity building challenges and the best ways to address each, and (2) their three most significant technical assistance needs and the best ways to address each.
Extent and Nature of Capacity Building and Technical Assistance Needs.
We analyzed the extent to which respondents provided descriptions of capacity building or technical assistance needs as well as whether those descriptions included references to specific organizational changes or resources needed.
- Not all respondents identify major capacity building or technical assistance needs, but more described needs with regard to capacity building than technical assistance.
- Overall, respondents have less well-developed understandings of the extent to which capacity building involves organizational change compared to technical assistance, but greater awareness of the specific resources they might need for the former.
- Capacity building and technical assistance have different meanings for nonprofits. The latter appears to be defined as having to do with technology, while the former appears to be applied to broader functional areas.
Three Most Significant Capacity Building Needs
- Almost half of the 188 descriptions of capacity buildings include details on the nature and/or direction of organizational changes needed; another 30 percent provide only general reference to organizational activities. More than half of the descriptions reference specific resources needed; another 18 percent identify only general types of resources.
- None of the specific capacity building needs described in the open-ended questions were mentioned by more than 8 percent.
- While needs related to financial resources are clearly the most prominent, those related to human resources, programs and planning, or operations and governance take on greater prominence when respondents focus on their own significant needs than when they assess capacity building in general.
Most Helpful Ways to Address Significant Capacity Building Needs
- Our respondents listed the most helpful ways to address each of their three most significant capacity building needs. Two of these accounted for more than 10 percent of the 171 help descriptions: funding for operations (16 percent) and outside consultant (12 percent).
- While financial resources were listed most often (similar to the findings from the structured questions), our respondents were more likely to include references to consultants and other forms of external technical assistance than peer assistance in this section.
Three Most Significant Technical Assistance Needs
- Of the 123 major technical assistance needs described, 62 percent include at least some details on the nature and/or direction of organizational changes needed, with another 12 percent including only references to some organizational component. Some 39 percent link technical assistance needs to specific resources, with another third identifying a general type of resource.
- Only four technical assistance needs described in the open-ended questions are included in 10 percent or more of the answers: identifying technology tools and resources for service delivery (19 percent), creating a comprehensive and interactive website (15 percent), creating, updating, effectively using databases (13 percent), and staff training (11 percent).
- Sixty percent of the descriptions include some reference to information technology, with items related to human resources trailing far behind at 19 percent and the remaining five categories even less prevalent.
Most Helpful Ways to Address Significant Technical Assistance Needs
- When asked to describe the most helpful ways to address each of their three most significant technical assistance needs, four types of help are included in more than 10 percent of the 115 help descriptions: outside consultant (14 percent), funding for operations (13 percent), training staff/volunteers in software/computer applications (11 percent), and (unspecified) staff training (10 percent).
- Our respondents are more likely to included references to consultants and other external assistance when describing effective ways to address technical assistance needs than when describing capacity building needs.
C. Summary and Recommendations
Based on our analysis of what respondents view as the most helpful types of assistance to meet various types of capacity building and technical assistance needs, we identify four priorities for Indiana grantmakers:
- Top Priority: Funding Assistance. More than 60 percent see multi-year funding and general overhead as very helpful. We recommend that Indiana funders give serious consideration to providing this type of support to nonprofits seeking assistance with capacity building needs. Small grants and challenge grants targeted at particular areas of capacity building are also likely to be useful in some more delimited areas of capacity development, such as financial resources and information technology.
- Second Priority: Peer Learning. The opportunity to interact with and learn from peer organizations is seen as very helpful by at least 30 percent of respondents. Thus, we recommend that funders give serious consideration to creating opportunities for peer interactions and information sharing among nonprofit executives and others in key nonprofit management positions, such as volunteer managers, special event coordinators, grant writers, and the like.
- Third Priority: Workshops and Off-Site Training. More than 29 percent indicate that workshops are very helpful, with 75 percent finding it at least somewhat helpful. We therefore recommend that funders support high quality workshops and other off-site training for nonprofits seeking to build capacity of all types.
- Fourth Priority: Selective Support for Technical Assistance. Outside consultants, student interns, and loaned executives are viewed as very helpful by 30 percent or more of respondents and at least somewhat helpful by half or more, particularly in the areas of marketing and information technology. Thus, we recommend that funders give particular attention to identifying high quality consultants and loaned executives to help nonprofits build their marketing and information technology capacity.
If your nonprofit organization is one of the many Indiana nonprofits that have responded to this survey, we are very grateful for your participation and we THANK YOU for taking the time to do so. Please rest assured that all information from the survey will be kept in the strictest confidentiality.
We have selected at random two nonprofit organizations that responded to the survey to receive a free associate membership with Indiana Grantmakers Alliance ($80 value each). We have also sent a summary of our findings to all respondents who request it.
We are grateful to Mary Grcich Williams, Caroline Altman Smith, Jill Kramer, and Gloria Ackerson from Lumina Foundation for Education, and J. Wesley Simms III of the Indiana Grantmakers Alliance for commissioning and funding the project and for their assistance with the survey.
Additional support has been provided through the ongoing project on the Indiana Nonprofit Sector: Scope and Community Dimensions. This project, directed by Kirsten Grønbjerg, Efroymson Chair in Philanthropy at the Lilly Family School of Philanthropy, is funded by the Efroymson Fund at the Indianapolis Foundation (an affiliate of the Central Indiana Community Foundation), the Indiana University Center on Philanthropy's Indiana Research Fund (supported by Lilly Endowment, Inc.), and the School of Public and Environmental Affairs at Indiana University.