Capacity-building has become a hot topic for governments and foundations everywhere, but what does it really mean and why do we want to invest in it?
The City relies on non-profit organizations to deliver a significant amount of critical human services. The Human Services Department (HSD) currently has 400 contracts with nearly 200 organizations. HSD’s goal is to move organizations towards performance-based contracting practice. In other words, HSD wants organizations to deliver services and track their outcomes through data so that the City and community can see measurable results.
To deliver results, organizations need competence – or capacity – in multiple areas like leadership and staffing, financial and administrative management, and data and analytics. These are the building blocks for a strong organizational infrastructure. But this infrastructure can’t be strengthened unless funders intentionally invest in it.
The $15 minimum wage implementation provides a good example of why capacity-building is needed. Many non-profits have to hustle from one fundraising effort to the next, struggling to keep their doors open as local government priorities shift. The increased minimum wage is one such shift that sent non-profits scrambling; they have to pay a higher wage to their employees while their funding remains largely unchanged.
Through capacity-building, non-profits can improve their financial forecasting, create robust funding reserves, and leverage private funds alongside City of Seattle dollars. Capacity-building can also help organizations align their missions with new practices and developments in addressing the needs of a specific population.
HSD has committed to intentionally invest in capacity-building. As a City, we can invite national organizations to advise on best practices like centralizing back office functions between non-profits to drive down administrative costs. We can bring public and private funders together to align strategies and create more leverage for non-profits. And we can work on creating better data systems that streamline reporting requirements and reduce the burden on non-profits.
In the 2016 budget season, I will steer funding to HSD’s capacity-building efforts. These efforts will lead the way in creating a proactive data-driven non-profit sector.