Summary of Literature:
Nonprofit Capacity Building & Nonprofit Support Infrastructure
1 November 2010
Please Note: At the request of the Texas Health and Human Services Commission (HHSC) Task Force on Strengthening Nonprofit Capacity, graduate student researchers in the Masters of Public Service Administration at the Bush School of Government and Public Service, Texas A & M University, under the supervision of faculty member, Angela L. Bies, respectfully submit this brief summary of the academic literature on nonprofit capacity building and the nonprofit support infrastructure as background material.
Use of this document to inform efforts related to HB 492 can be supplemented by further review of the recent research on the nonprofit-funding relationship from the Government Accounting Office and on nonprofit employment in Texas by Johns Hopkins University and the OneStar Foundation, which we review in the Texas Nonprofit Sector section and list in the reference section.
****************************************************************************
Bush School of Government & Public Service, Texas A & M University graduate student researchers: Yusun Cho, Victor Gongora, Annie Haymond, Joy Jauer, Emily Neal, Eddiemae Nash, Julie Rogers, and Chang Yun
Contact Information:
Angela Bies,
[email protected]
ph: (979) 862-8829
MS 4220, Texas A & M University
College Station, Texas 77845
Background
Nonprofit capacity building and the nonprofit support infrastructure have emerged as an important element of the call to strengthen nonprofits. Much of the theoretical development and empirical study of nonprofit infrastructure organizations and capacity-building are in a relatively nascent stage, with most of the extant literature focusing on capacity-building (Backer, 2001; Bies & Millesen, 2006; Bies & Sinatra, 2006; Boris, 2001; Connolly & York, 2003; De Vita & Fleming, 2003; Light, 2003; Linnell, 2003; Millesen & Bies, 2004; Millesen & Bies, 2005; Millesen, Carman & Bies, in press; Sussman, 2003; Wing, 2004). Recent study of nonprofit infrastructure organizations moves the literature forward in two primary ways: providing a focus on nonprofit support infrastructure (and related conceptions, definitions, and measures) and extending the conception of nonprofit support infrastructure beyond the more prevalent and narrower focus on capacity-building (Malveaux, 2007; Paarlberg & Varda, 2009; Sobeck & Agius, 2007; Renz, 2008). Emerging literature incorporates capacity-building as a role and function inherent to and a part of any notion of the nonprofit support infrastructure.
Although recent studies distinguish between capacity building and nonprofit support infrastructure, the larger discussion of capacity building is not always clear. The net result is some confusion in the nonprofit practice and academic lexicons, with sometimes vague, imprecise, overlapping or competing conceptions of terms relating to nonprofit infrastructure and capacity building. The brief review of recent literature on capacity building that follows summarizes key studies on nonprofit capacity building. The review also includes a comparative analysis of the Texas nonprofit capacity-building structure with other states and a snapshot of the discussion on capacity building as a function of infrastructure support.
Definitions and Core Concepts of Nonprofit Capacity Building
Multiple definitions of capacity-building exist in the literature. Sobeck and Agius note that “capacity building has become an important tool to support nonprofit organizations by giving them training, technical assistance and other resources to achieve their mission” (2007, 237). Work by Malveaux (2007) and Wing (2004) reinforces the importance of capacity building and points to the challenges funders face in identifying organizations with appropriate and effective levels of organizational capacity. Similarly, Connolly and Lukas (2002) and Blumenthal (2003) have produced volumes devoted to providing funders with guidance on how best to approach nonprofit capacity. The National Council of Nonprofits defines capacity building in general terms: “Simply put, nonprofit capacity building refers to activities that improve and enhance a nonprofit’s ability to achieve its mission and sustain itself over time” (NCN, 2010).
In much of the literature on capacity building, conceptions and definitions of capacity building have been focused on the organizational level, either situating nonprofit organizations within the context of capacity-building resources or as an exchange between capacity-building providers and nonprofit organizations (Millesen & Bies, 2004). Connolly and York (2003) also conceptualize capacity building at the organizational level, but further refine capacity building around four central types of capacity: adaptive, leadership, management, and technical capacity. These capacities are defined in the following ways:
Work by David Renz (2008) is more extensive and uses the organization as the unit of analysis. According to his definition, capacity-building organizations are those that, “build the capacity of individual nonprofit organizations through management assistance and support, organization development, and other consulting and support services” (2008, 13). Renz further defines 11 key functions of the nonprofit support infrastructure, encompassing the capacity-building function but extending beyond to define other core infrastructure functions to include self-regulation, nonprofit advocacy, nonprofit associations and networks, nonprofit management education, and funders. The Renz nonprofit support infrastructure conceptions are being used in research sponsored by the Meadows Foundation and OneStar Foundation and carried out by the Bush School of Government and Public Service at Texas A & M University (Bies et al, 2009-2011) to “map” the nonprofit infrastructure in Texas.
In 2003, an Arizona initiative sought to determine the need for association, coordination, linkages, and new strategies and structures to accommodate the nonprofit community. The term capacity building is used in the Arizona study, but the term encompasses much more of Renz’s definition of infrastructure functions (Arizona Nonprofit Capacity Building Initiative Executive Committee, 2003). Related studies, in which the term capacity building is used, have also been conducted in other states, including Pennsylvania (Millesen & Bies, 2004) and Minnesota (Bies, 2006). The goals of the research in the Pennsylvania and Minnesota studies were to assess the adequacy of capacity-building resources and to make recommendations for improving the nonprofit support system.
Nonprofit Capacity-building at the State Level
States have encountered specific problems in their attempts to strengthen the nonprofit infrastructure for capacity-building. In Arizona, researchers conducted a survey of organizations throughout the state and formulated conclusions on the quality of capacity-building. Researchers found that nonprofits tend to be displeased with the offered capacity-building resources and would be willing to participate in an association if it would improve the availability and accessibility of those resources. In addition, researchers found that there is agreement among brokers and nonprofits concerning the need for a mechanism to connect nonprofits with resources. Lastly, they determined that the size and location of organizations affected their awareness of the availability of services and providers, which they posited could be remedied by a centralized organization (Arizona Nonprofit Capacity Building Initiative Executive Committee, 2003).
Studies conducted in other regions of the country provide additional insight into efforts to improve capacity building. In an examination the Forbes Funds, a grantmaking organization that provides capacity-building and support services to nonprofits in the Pittsburgh area, researchers formulated recommendations to aid Forbes Funds in furthering its mission. These recommendations included: fostering credible and collaborative leadership, a centralized institutional headquarters and endowed administration, more committed community philanthropic partners, and the use of diverse resources to take on projects (Kearns, 2004).
Forbes has funded additional geographic studies in Pennsylvania. Key findings from these reports include: capacity building is influenced by nonprofit incentives such as access to funding, legitimacy concerns, and views that capacity building investments are related to and will strengthen mission and not just “overhead”; employment of strategies to align nonprofit incentives in favor of capacity building is needed by funders and nonprofit intermediaries such as nonprofit associations and networks; and economic incentives could foster nonprofit organizations to combine resources, especially for non-mission services and functions to further contribute to their organizational capacity(Bies & Millesen, 2005; Bies & Sinatra, 2006).
Moreover, one Forbes study focused on directly comparing the nonprofit sector in the Pittsburgh area to that of Austin, Texas. Researchers concluded that there are several key differences in capacity-building in the two areas, which might be a result of local resources; organizational age, size and staffing; and other contextual or cultural factors (Bies & Millesen, 2005; Bies & Sinatra, 2006). A study of the San Francisco area revealed that the nonprofit sector struggles most with the procurement of funding and resources (San Francisco Urban Institute for Nonprofit Organization Management, 2009). Additionally, there have been a series of studies focusing on the improvement of nonprofit capacity building resources in metropolitan areas, including: Denver, CO; Lake County, IN; Summit County, OH; Philadelphia, PA; and Bibb County, GA (Urban Institute, 2010). These studies have helped experts frame capacity issues in terms of the nonprofit role in building community capacity rather than on individual nonprofit needs.
Lee Draper’s (2005) work also provides insight from nonprofits around the country on the issues of nonprofit capacity-building resources by presenting five different case studies based on anonymous interviews. Draper concludes that sustainable nonprofit organizations are achievable through capacity-building support and that the quality, effectiveness and availability of services are made possible by the funders that strive to reinforce nonprofits from the inside out, i.e. through deliberative and strategic funding relationships that focus on learning and improvement. Draper also warns that fostering relationships between funders in the nonprofit sector necessitates sensitivity and cooperation with the nonprofits, which is a vital aspect of successful capacity-building.
Recent Contributions to Literature on Nonprofit Capacity Building
Community Carrying Capacity
A topic of recent research has been the capacity of a community to support nonprofits. Paarlberg and Varda examine the available resources of a community for nonprofits (e.g. funding, services, in-kind goods, etc.) and whether resources have an effect on the “carrying capacity” of a community (2009, 597). The authors propose that the relationships and exchanges among these organizations are more important to their ability to be effective than the available resources. The infrastructure support scheme is a collected system of resources (Renz, 2008), and the process in which nonprofit organizations exchange resources and information provides a snapshot of the organizations within the nonprofit infrastructure. When combined with research on how the infrastructure organizations function, the snapshot will illuminate the needs or gaps within the respective network, as well as the needs of the network that are relational in nature versus solely resource-based (Paarlberg & Varda, 2009).
Nonprofit Employment
Additionally, there are several other recent contributions to the literature regarding the nonprofit sector that address employment, nonprofit-state funding relationship, and evaluation. For example, the Johns Hopkins Center for Civil Society Studies and the OneStar Foundation: Texas Center for Social Impact released a report describing the size, composition, distribution, and growth of paid employment in the state’s charitable organizations in August 2010. In the report, “Texas Nonprofit Employment Update”, Geller and Salamon draw upon Texas Workforce Commission data gathered through the Quarterly Census of Employment and Wages to explore trends in the workforce. Their research led to several key findings. First, the state’s nonprofit sector represents a significant economic force and employs almost five times the number of workers as the oil and gas extraction industry in Texas. The employees also contribute about $1.6 billion to state and local tax revenues. The industry grew by 3.1% from 2007 to 2008 with the most gains in the professional, scientific, and technical services field and more than half of nonprofit jobs held in the health services field. Between 2002 and 2008, however, research shows that for-profits operating in the same field have grown faster than their nonprofit counterparts. The study found that weekly wages of nonprofit employees were lower than for-profit employees but the reverse was true in industries with significant participation from both nonprofit and for-profits. Additionally, the geographic distribution of nonprofit employment is concentrated in metropolitan areas but spans rural and urban areas as well (Geller and Salamon, 2010).
Public Contracting and Grants to Nonprofits: Accounting and Overhead
In a May 2010 Report to the House Committee on the Budget, the Government Accountability Office (GAO) explored the variance of the accounting treatment and reimbursement of indirect costs in several types of grant programs. The GAO studied grant relationships between 17 nonprofits and six Departments of Health and Human Services and Housing and Urban Development in Louisiana, Maryland, and Wisconsin. Researchers reviewed policies and documents and conducted interviews of relevant officials and leaders. Despite federal guidelines regarding grant award procedures, differences in terminology, reimbursement methods, and gap funding existed across federal, state, and local government practices. These differences raised concerns about fiscal strain in the nonprofit sector. The study documented variance in reimbursement rates for the same grant across the three states as well as variance in definitions of “indirect cost.” Further, many nonprofits experienced funding gaps when grant income failed to cover the indirect (or administrative) costs, causing the organizations to cut services or administrative functions in the office. As a result, the study recommended that the OMB provide more clarity and improved understanding of the treatment of indirect costs (United States Government Accountability Office, 2010).
Evaluation Capacity
In a November 2009 publication, Carman and Fredericks explored the evaluation capacity of nonprofits through a cluster analysis. They sampled 340 organizations from three human service fields (social services, physical or developmental disabilities, and housing and community development) in Ohio and New York that typically require evaluation with a mail survey. They found three types of organizations: those struggling with evaluation efforts all-around, those satisfied with their approach but struggling with implementation, and those generally satisfied with evaluation practices but struggling with a lack of time to devote to them. Carman and Fredericks found that success in implementing evaluation may relate to an organization’s developmental stages and that organizations struggling with technical capacity also struggled with evaluation. They suggest that using learning networks, using evaluation as an internal management tool, and training both organization leadership and board members may help nonprofits implement evaluation techniques. Further, the type of assistance nonprofits require varies across organizations according to their needs—ranging from developing computer infrastructure to technical assistance for evaluation system design (Carman and Fredericks, 2009).
Conclusion
While the emerging and recent literature discussed in this review makes a distinction between capacity building and the larger idea of nonprofit infrastructure support, it is not accurate to say that these are the only works to address the defined functions. Capacity building and infrastructure support have been used interchangeably by many, and research has focused on the functions of infrastructure support. For example, Da Vita, Fleming and Twombly (2001) put forth recommendations and a framework for addressing the problem of nonprofit capacity. Young (1996) examines the self-regulation role of national or federated organizations vis-à-vis nonprofit capacity and improvement. The emerging and recent literature contributes a way of defining infrastructure support functions and distinguishing amongst those functions. The latest works also provide a framework for researchers to move forward in the study of nonprofit infrastructure organizations.
The nonprofit sector is an economic force in Texas providing significant revenues and jobs. The research discussed in this literature review is intended to provide a background of nonprofit capacity building to assist in understanding the nonprofit infrastructure of Texas. Although research on nonprofit capacity building and nonprofit infrastructure organizations is a relatively young field, findings point to the need for such organizations to build a strong, successful and sustainable nonprofit sector.
References
Arizona Nonprofit Capacity Building Initiative Executive Committee. 2003. “Arizona Nonprofit Capacity Building Final Report.” March: 1-23.
Backer, Tom E. 2001. “Strengthening Nonprofits: Foundation Initiatives for Nonprofit Organizations.” Building Capacity in Nonprofit Organizations. Ed. Carol De Vita and Cory Fleming. Washington, D.C.: Urban Institute Press.
Backer, Tom E., Jane Ellen Bleeg, and Kathryn Groves. 2004. The Expanding Universe: New Directions in Nonprofit Capacity Building. Washington, D.C.: The Alliance for Nonprofit Management.
Bies, Angela and Judith Millesen. 2005. “Nonprofit ‘Capacity-Building Orientation’: The Role of Learning in Building Nonprofit Performance.” Tropman Reports, 4:2. The Forbes Funds.
Bies, Angela and Judith Millesen. 2005. “Why Engage? Understanding the Incentive to Build Nonprofit Capacity.” Tropman Reports, 4:2. The Forbes Funds.
Bies, Angela and Judith Millesen. 2004. “An Analysis of the Pittsburgh Region’s Capacity-Building Industry: Who Is Doing What for Whom and to What End?” Tropman Reports, 3:3. The Forbes Funds.
Bies, Angela and Christine Sinatra. 2006. “A Comparative Analysis of the Capacity-building Industries in Pittsburgh and Central Texas.” Tropman Reports, 5:3. The Forbes Funds.
Blumenthal, B. 2003. “Investing in Capacity Building: A Guide to High-Impact Approaches.” New York, NY: Foundation Center.
Boris, Elizabeth T. 2001. “Next Steps for Building Capacity in Nonprofit Organizations.” Building Capacity in Nonprofit Organizations. Ed. Carol De Vita and Cory Fleming. Washington, D.C.: Urban Institute Press.
Carman, Joanne G. and Kimberly A. Fredericks. 2009. “Evaluation Capacity and Nonprofit Organizations: Is the Glass Half-Empty or Half-Full?” American Journal of Evaluation 31 (1): 84-104.
Connolly, Paul and Carol Lukas. 2002. “Strengthening Nonprofit Performance: A Funder’s Guide to Capacity Building.” St. Paul, MN: Amherst H. Wilder Foundation.
Connolly, Paul and Peter York. 2003. “Building the Capacity of Capacity Builders: A Study of Management Support and Field-building Organizations in the Nonprofit Sector.” Retrieved on 26 December 2009 from http://www.tccgrp.com/pdfs/buildingthecapacityofcapacitybuilders.pdf
De Vita, Carol, Cory Fleming and Eric Twombly. 2001. “Building Nonprofit Capacity: A Framework for Addressing the Problem.” Building Capacity in Nonprofit Organizations. Ed. Carol De Vita and Cory Fleming. Washington, D.C.: Urban Institute Press: 22.
Draper, Lee. 2005. "Funder's Little Shop of Horrors: Misguided Attempts at Nonprofit Capacity Building." Foundation News & Commentary, vol. 46 (September-October):18- 27.
Geller, Stephanie Lessans and Lester M. Salamon. 2010. “Texas Nonprofit Employment Update.” Johns Hopkins Center for Civil Society Studies and the OneStar Foundation: Texas Center for Social Impact.
Kearns, Kevin P. 2004. "Management-Capacity Building in the Pittsburgh Region." Nonprofit Management & Leadership, vol. 14 (Summer): 437-452.
Light, Paul. C. 2004. “Capacity Building and the National Infrastructure to Support It.” Nonprofit Quarterly: 36-41.
Linnell, Deborah. 2003. “Evaluation of Capacity Building: Lessons from the Field.” Alliance for Nonprofit Management. Washington, D.C.: 23.
Malveaux, Antoinette M. 2007. “The Nonprofit as a Business Enterprise: Adapting to the Expanding Philanthropic Market.” Mapping the New World of American Philanthropy: Causes and Consequences of the Transfer of Wealth. Ed. Susan U. Raymond and Mary Beth Martin. Hoboken, NJ: John Wiley and Sons.
Paarlberg, Laurie E., and Danielle M. Varda. 2009. "Community Carrying Capacity: A Network Perspective." Nonprofit and Voluntary Sector Quarterly. 38.4: 597-613.
Renz, David O. 2008. “The U.S. Nonprofit Infrastructure Mapped.” The Nonprofit Quarterly. Winter: 17-20.
Renz, David O. 2009. “U.S. Nonprofit Infrastructure Mapped.” [11 paragraphs, 1 table]. Accessed: 21 September 2009 <email: [email protected]>.
Salamon, Lester M., and Stephanie Lessans Geller. 2007. "Texas Nonprofit Employment." Center for Civil Society Studies. Web. Retrieved on 29 April 2010 from <http://www.onestarfoundation.org/includes/files/JohnsHopkinsReport.pdf>.
San Francisco Urban Institute. 2002. “A Comprehensive Profile of San Francisco’s Nonprofit Human Service Providers.” San Francisco, CA: San Francisco State University.
Sobeck, Joanne & Elizabeth Agius. 2007. “Organizational capacity building: Addressing a research and practice gap.” Evaluation and Program Planning. 30: 237-246.
Sussman, Carl. 2003. “Making Change: How to Build Adaptive Capacity.” Nonprofit Quarterly 10: 18-24.
United States Government Accountability Office. 2010. Nonprofit Sector: Treatment and Reimbursement of Indirect Costs Vary among Grants, and Depend Significantly on Federal, State, and Local Government Practices. Washington, DC.
Urban Institute. 2010. Urban Institute: Research of Record. October 26. http://www.urban.org/ (accessed October 26, 2010).
Wing, Kennard T. 2004. “Assessing the Effectiveness of Capacity-Building Initiatives: Seven Issues for the Field.” Nonprofit and Voluntary Sector Quarterly. 33: 153-160.
Young, Dennis R., Neil Bania & Darlyne Bailey. 1996. “Structure and accountability a study of national nonprofit associations.” Nonprofit Management & Leadership, 6.4. A Wiley Company: 347-365.
Please Note: At the request of the Texas Health and Human Services Commission (HHSC) Task Force on Strengthening Nonprofit Capacity, graduate student researchers in the Masters of Public Service Administration at the Bush School of Government and Public Service, Texas A & M University, under the supervision of faculty member, Angela L. Bies, respectfully submit this brief summary of the academic literature on nonprofit capacity building and the nonprofit support infrastructure as background material.
Use of this document to inform efforts related to HB 492 can be supplemented by further review of the recent research on the nonprofit-funding relationship from the Government Accounting Office and on nonprofit employment in Texas by Johns Hopkins University and the OneStar Foundation, which we review in the Texas Nonprofit Sector section and list in the reference section.
****************************************************************************
Bush School of Government & Public Service, Texas A & M University graduate student researchers: Yusun Cho, Victor Gongora, Annie Haymond, Joy Jauer, Emily Neal, Eddiemae Nash, Julie Rogers, and Chang Yun
Contact Information:
Angela Bies,
[email protected]
ph: (979) 862-8829
MS 4220, Texas A & M University
College Station, Texas 77845
Background
Nonprofit capacity building and the nonprofit support infrastructure have emerged as an important element of the call to strengthen nonprofits. Much of the theoretical development and empirical study of nonprofit infrastructure organizations and capacity-building are in a relatively nascent stage, with most of the extant literature focusing on capacity-building (Backer, 2001; Bies & Millesen, 2006; Bies & Sinatra, 2006; Boris, 2001; Connolly & York, 2003; De Vita & Fleming, 2003; Light, 2003; Linnell, 2003; Millesen & Bies, 2004; Millesen & Bies, 2005; Millesen, Carman & Bies, in press; Sussman, 2003; Wing, 2004). Recent study of nonprofit infrastructure organizations moves the literature forward in two primary ways: providing a focus on nonprofit support infrastructure (and related conceptions, definitions, and measures) and extending the conception of nonprofit support infrastructure beyond the more prevalent and narrower focus on capacity-building (Malveaux, 2007; Paarlberg & Varda, 2009; Sobeck & Agius, 2007; Renz, 2008). Emerging literature incorporates capacity-building as a role and function inherent to and a part of any notion of the nonprofit support infrastructure.
Although recent studies distinguish between capacity building and nonprofit support infrastructure, the larger discussion of capacity building is not always clear. The net result is some confusion in the nonprofit practice and academic lexicons, with sometimes vague, imprecise, overlapping or competing conceptions of terms relating to nonprofit infrastructure and capacity building. The brief review of recent literature on capacity building that follows summarizes key studies on nonprofit capacity building. The review also includes a comparative analysis of the Texas nonprofit capacity-building structure with other states and a snapshot of the discussion on capacity building as a function of infrastructure support.
Definitions and Core Concepts of Nonprofit Capacity Building
Multiple definitions of capacity-building exist in the literature. Sobeck and Agius note that “capacity building has become an important tool to support nonprofit organizations by giving them training, technical assistance and other resources to achieve their mission” (2007, 237). Work by Malveaux (2007) and Wing (2004) reinforces the importance of capacity building and points to the challenges funders face in identifying organizations with appropriate and effective levels of organizational capacity. Similarly, Connolly and Lukas (2002) and Blumenthal (2003) have produced volumes devoted to providing funders with guidance on how best to approach nonprofit capacity. The National Council of Nonprofits defines capacity building in general terms: “Simply put, nonprofit capacity building refers to activities that improve and enhance a nonprofit’s ability to achieve its mission and sustain itself over time” (NCN, 2010).
In much of the literature on capacity building, conceptions and definitions of capacity building have been focused on the organizational level, either situating nonprofit organizations within the context of capacity-building resources or as an exchange between capacity-building providers and nonprofit organizations (Millesen & Bies, 2004). Connolly and York (2003) also conceptualize capacity building at the organizational level, but further refine capacity building around four central types of capacity: adaptive, leadership, management, and technical capacity. These capacities are defined in the following ways:
- adaptive capacity refers to the ability of a nonprofit to monitor and respond to external and internal challenges;
- leadership capacity refers to the board and the executive leadership and vision;
- technical capacity relates to the ability of an organization to conduct its operations and programs;
- and management capacity focuses on the use of organizational resources and personnel, volunteer and paid. (Connolly and York 2003)
Work by David Renz (2008) is more extensive and uses the organization as the unit of analysis. According to his definition, capacity-building organizations are those that, “build the capacity of individual nonprofit organizations through management assistance and support, organization development, and other consulting and support services” (2008, 13). Renz further defines 11 key functions of the nonprofit support infrastructure, encompassing the capacity-building function but extending beyond to define other core infrastructure functions to include self-regulation, nonprofit advocacy, nonprofit associations and networks, nonprofit management education, and funders. The Renz nonprofit support infrastructure conceptions are being used in research sponsored by the Meadows Foundation and OneStar Foundation and carried out by the Bush School of Government and Public Service at Texas A & M University (Bies et al, 2009-2011) to “map” the nonprofit infrastructure in Texas.
In 2003, an Arizona initiative sought to determine the need for association, coordination, linkages, and new strategies and structures to accommodate the nonprofit community. The term capacity building is used in the Arizona study, but the term encompasses much more of Renz’s definition of infrastructure functions (Arizona Nonprofit Capacity Building Initiative Executive Committee, 2003). Related studies, in which the term capacity building is used, have also been conducted in other states, including Pennsylvania (Millesen & Bies, 2004) and Minnesota (Bies, 2006). The goals of the research in the Pennsylvania and Minnesota studies were to assess the adequacy of capacity-building resources and to make recommendations for improving the nonprofit support system.
Nonprofit Capacity-building at the State Level
States have encountered specific problems in their attempts to strengthen the nonprofit infrastructure for capacity-building. In Arizona, researchers conducted a survey of organizations throughout the state and formulated conclusions on the quality of capacity-building. Researchers found that nonprofits tend to be displeased with the offered capacity-building resources and would be willing to participate in an association if it would improve the availability and accessibility of those resources. In addition, researchers found that there is agreement among brokers and nonprofits concerning the need for a mechanism to connect nonprofits with resources. Lastly, they determined that the size and location of organizations affected their awareness of the availability of services and providers, which they posited could be remedied by a centralized organization (Arizona Nonprofit Capacity Building Initiative Executive Committee, 2003).
Studies conducted in other regions of the country provide additional insight into efforts to improve capacity building. In an examination the Forbes Funds, a grantmaking organization that provides capacity-building and support services to nonprofits in the Pittsburgh area, researchers formulated recommendations to aid Forbes Funds in furthering its mission. These recommendations included: fostering credible and collaborative leadership, a centralized institutional headquarters and endowed administration, more committed community philanthropic partners, and the use of diverse resources to take on projects (Kearns, 2004).
Forbes has funded additional geographic studies in Pennsylvania. Key findings from these reports include: capacity building is influenced by nonprofit incentives such as access to funding, legitimacy concerns, and views that capacity building investments are related to and will strengthen mission and not just “overhead”; employment of strategies to align nonprofit incentives in favor of capacity building is needed by funders and nonprofit intermediaries such as nonprofit associations and networks; and economic incentives could foster nonprofit organizations to combine resources, especially for non-mission services and functions to further contribute to their organizational capacity(Bies & Millesen, 2005; Bies & Sinatra, 2006).
Moreover, one Forbes study focused on directly comparing the nonprofit sector in the Pittsburgh area to that of Austin, Texas. Researchers concluded that there are several key differences in capacity-building in the two areas, which might be a result of local resources; organizational age, size and staffing; and other contextual or cultural factors (Bies & Millesen, 2005; Bies & Sinatra, 2006). A study of the San Francisco area revealed that the nonprofit sector struggles most with the procurement of funding and resources (San Francisco Urban Institute for Nonprofit Organization Management, 2009). Additionally, there have been a series of studies focusing on the improvement of nonprofit capacity building resources in metropolitan areas, including: Denver, CO; Lake County, IN; Summit County, OH; Philadelphia, PA; and Bibb County, GA (Urban Institute, 2010). These studies have helped experts frame capacity issues in terms of the nonprofit role in building community capacity rather than on individual nonprofit needs.
Lee Draper’s (2005) work also provides insight from nonprofits around the country on the issues of nonprofit capacity-building resources by presenting five different case studies based on anonymous interviews. Draper concludes that sustainable nonprofit organizations are achievable through capacity-building support and that the quality, effectiveness and availability of services are made possible by the funders that strive to reinforce nonprofits from the inside out, i.e. through deliberative and strategic funding relationships that focus on learning and improvement. Draper also warns that fostering relationships between funders in the nonprofit sector necessitates sensitivity and cooperation with the nonprofits, which is a vital aspect of successful capacity-building.
Recent Contributions to Literature on Nonprofit Capacity Building
Community Carrying Capacity
A topic of recent research has been the capacity of a community to support nonprofits. Paarlberg and Varda examine the available resources of a community for nonprofits (e.g. funding, services, in-kind goods, etc.) and whether resources have an effect on the “carrying capacity” of a community (2009, 597). The authors propose that the relationships and exchanges among these organizations are more important to their ability to be effective than the available resources. The infrastructure support scheme is a collected system of resources (Renz, 2008), and the process in which nonprofit organizations exchange resources and information provides a snapshot of the organizations within the nonprofit infrastructure. When combined with research on how the infrastructure organizations function, the snapshot will illuminate the needs or gaps within the respective network, as well as the needs of the network that are relational in nature versus solely resource-based (Paarlberg & Varda, 2009).
Nonprofit Employment
Additionally, there are several other recent contributions to the literature regarding the nonprofit sector that address employment, nonprofit-state funding relationship, and evaluation. For example, the Johns Hopkins Center for Civil Society Studies and the OneStar Foundation: Texas Center for Social Impact released a report describing the size, composition, distribution, and growth of paid employment in the state’s charitable organizations in August 2010. In the report, “Texas Nonprofit Employment Update”, Geller and Salamon draw upon Texas Workforce Commission data gathered through the Quarterly Census of Employment and Wages to explore trends in the workforce. Their research led to several key findings. First, the state’s nonprofit sector represents a significant economic force and employs almost five times the number of workers as the oil and gas extraction industry in Texas. The employees also contribute about $1.6 billion to state and local tax revenues. The industry grew by 3.1% from 2007 to 2008 with the most gains in the professional, scientific, and technical services field and more than half of nonprofit jobs held in the health services field. Between 2002 and 2008, however, research shows that for-profits operating in the same field have grown faster than their nonprofit counterparts. The study found that weekly wages of nonprofit employees were lower than for-profit employees but the reverse was true in industries with significant participation from both nonprofit and for-profits. Additionally, the geographic distribution of nonprofit employment is concentrated in metropolitan areas but spans rural and urban areas as well (Geller and Salamon, 2010).
Public Contracting and Grants to Nonprofits: Accounting and Overhead
In a May 2010 Report to the House Committee on the Budget, the Government Accountability Office (GAO) explored the variance of the accounting treatment and reimbursement of indirect costs in several types of grant programs. The GAO studied grant relationships between 17 nonprofits and six Departments of Health and Human Services and Housing and Urban Development in Louisiana, Maryland, and Wisconsin. Researchers reviewed policies and documents and conducted interviews of relevant officials and leaders. Despite federal guidelines regarding grant award procedures, differences in terminology, reimbursement methods, and gap funding existed across federal, state, and local government practices. These differences raised concerns about fiscal strain in the nonprofit sector. The study documented variance in reimbursement rates for the same grant across the three states as well as variance in definitions of “indirect cost.” Further, many nonprofits experienced funding gaps when grant income failed to cover the indirect (or administrative) costs, causing the organizations to cut services or administrative functions in the office. As a result, the study recommended that the OMB provide more clarity and improved understanding of the treatment of indirect costs (United States Government Accountability Office, 2010).
Evaluation Capacity
In a November 2009 publication, Carman and Fredericks explored the evaluation capacity of nonprofits through a cluster analysis. They sampled 340 organizations from three human service fields (social services, physical or developmental disabilities, and housing and community development) in Ohio and New York that typically require evaluation with a mail survey. They found three types of organizations: those struggling with evaluation efforts all-around, those satisfied with their approach but struggling with implementation, and those generally satisfied with evaluation practices but struggling with a lack of time to devote to them. Carman and Fredericks found that success in implementing evaluation may relate to an organization’s developmental stages and that organizations struggling with technical capacity also struggled with evaluation. They suggest that using learning networks, using evaluation as an internal management tool, and training both organization leadership and board members may help nonprofits implement evaluation techniques. Further, the type of assistance nonprofits require varies across organizations according to their needs—ranging from developing computer infrastructure to technical assistance for evaluation system design (Carman and Fredericks, 2009).
Conclusion
While the emerging and recent literature discussed in this review makes a distinction between capacity building and the larger idea of nonprofit infrastructure support, it is not accurate to say that these are the only works to address the defined functions. Capacity building and infrastructure support have been used interchangeably by many, and research has focused on the functions of infrastructure support. For example, Da Vita, Fleming and Twombly (2001) put forth recommendations and a framework for addressing the problem of nonprofit capacity. Young (1996) examines the self-regulation role of national or federated organizations vis-à-vis nonprofit capacity and improvement. The emerging and recent literature contributes a way of defining infrastructure support functions and distinguishing amongst those functions. The latest works also provide a framework for researchers to move forward in the study of nonprofit infrastructure organizations.
The nonprofit sector is an economic force in Texas providing significant revenues and jobs. The research discussed in this literature review is intended to provide a background of nonprofit capacity building to assist in understanding the nonprofit infrastructure of Texas. Although research on nonprofit capacity building and nonprofit infrastructure organizations is a relatively young field, findings point to the need for such organizations to build a strong, successful and sustainable nonprofit sector.
References
Arizona Nonprofit Capacity Building Initiative Executive Committee. 2003. “Arizona Nonprofit Capacity Building Final Report.” March: 1-23.
Backer, Tom E. 2001. “Strengthening Nonprofits: Foundation Initiatives for Nonprofit Organizations.” Building Capacity in Nonprofit Organizations. Ed. Carol De Vita and Cory Fleming. Washington, D.C.: Urban Institute Press.
Backer, Tom E., Jane Ellen Bleeg, and Kathryn Groves. 2004. The Expanding Universe: New Directions in Nonprofit Capacity Building. Washington, D.C.: The Alliance for Nonprofit Management.
Bies, Angela and Judith Millesen. 2005. “Nonprofit ‘Capacity-Building Orientation’: The Role of Learning in Building Nonprofit Performance.” Tropman Reports, 4:2. The Forbes Funds.
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