Capacity Building Toolkit for Nonprofits: Essential Steps


Rachel Hector


Writer, researcher, and grants professional

Reviewed by:


May 13, 2024

Last Updated:

May 14, 2024

As a seasoned nonprofit professional, you know that long-term growth is a good thing—the challenge is how to achieve it.

Capacity building is vital to the long-term success of nonprofit organizations, which is why the team at Instrumentl has developed a customizable, comprehensive nonprofit capacity building toolkit to help you find solutions to the most pressing challenges your organization faces.

With the practical resources and support in this guide—from webinars to courses to in-depth self-assessment tools—you’ll be well prepared to jump-start your nonprofit’s growth and ensure its future success!

Let’s get started!

Why Capacity Building Is Essential for Nonprofits

Let’s start with a quick refresher of what we mean by capacity building:

The National Council of Nonprofits defines capacity building as “an investment in the effectiveness and future sustainability of a nonprofit.”

Capacity building improves service delivery and operational efficacy through developing internal mechanisms, staff competencies, and organizational infrastructure that will ensure the organization continues to achieve success for years to come.

So, why is capacity building so vital?

According to a study from Cause Effective, surveyed nonprofits who have invested in capacity building reported a:

  • 25% gain in fundraising, governance, and/or special events capacity
  • 50% increase in board member fundraising involvement
  • 48% increase in giving by their board members

By investing in your nonprofit’s ability to perform more effectively across multiple areas—from governance, fundraising, evaluation, communications, and finance—you can increase revenue, improve programmatic outcomes, and expand your organization’s reach.

Key Components of the Capacity Building Toolkit

Regardless of your nonprofit’s size or sector, you can use the resources within this capacity building toolkit to optimize processes, develop staff competencies, improve outcomes, and learn how to increase efficiency across your organization.

We’ll specifically refer you to resources for:

  • Assessing your organization and gauging growth;
  • Strengthening leadership and governance;
  • Making improvements to financial systems and planning;
  • Improving program design and evaluating outcomes;
  • Engaging people at every level of the organization from volunteers to staff;
  • Upgrading external marketing and communications to reach a wider population; and
  • Mitigating risk and ensuring operational sustainability.

With this toolkit you will be ready to take your nonprofit to the next level.

Let’s dive in!

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1. Assessment Tools To Gauge Your Nonprofit's Stage of Growth

Sustainably growing your nonprofit requires careful planning and assessment at every stage.

Before you begin building capacity you want to identify your strengths and—most importantly—your areas for improvement. This can be achieved by using self-assessment tools!

Organizational Self-Assessment

An organizational self-assessment can help you gather data to identify areas of the operation that need work and areas that are strong and can be used to your nonprofit’s advantage.

The best self-assessment tools show you where you are and point you in the direction you need to go!

Resources for Self Assessment:

  • You can kick-off the self-assessment process by reviewing the Ford Foundation’s Organizational Mapping Tool. This is an open-source tool designed to help nonprofits identify strengths, anticipate challenges, and make plans for improvement.

The Ford Foundation has designed an intensive organizational mapping tool (OMT) to support nonprofit assessment with the ultimate goal of catalyzing organizational growth.
  • The Management Library’s Nonprofit Organization Indicators is a great resource for starting your self-assessment journey and determining the current status of your organization and where and how you can improve in the future.

Conducting a SWOT Analysis

A SWOT Analysis is a matrix designed to help you identify internal and external factors that could potentially impede or facilitate your nonprofit’s growth.

Utilizing this technique, you will identify the following:

  • Strengths: Internal factors that set your nonprofit apart from similar organizations in your sector and give you an advantage.
  • Weaknesses: Internal factors that require improvement or are keeping your nonprofit from achieving success.
  • Opportunities: External factors that could help your organization grow, improve services, enhance processes, or reach more individuals.
  • Threats: External factors that could present a challenge to your organization or pose a risk to your operations.

Resources for SWOT analysis:

Creatly provides users with the ability to develop their own SWOT matrix.

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2. Governance and Leadership

A nonprofit organization is only as strong as its leaders.

Investing in skill building and development for your Board of Directors, managers, and Executive Director will set a foundation for a strong system of governance even as roles change over time.

Board Development

Determining if an individual will be a good fit for the board and successful in the role requires extensive planning prior to their identification and recruitment in addition to training when they have been initiated.

Instrumentl has developed a helpful guide for determining the roles of each member of your Board of Directors and how to prepare them for their responsibilities, including:

  • Strategic planning,
  • Writing and guiding policies,
  • Monitoring finances and approving budgets,
  • Providing compliance and oversight, and
  • Developing and upholding the organization’s bylaws.

Instrumentl has designed an effective tool for board development, outlining key roles and responsibilities and providing guidance on how to set your board members up for success.

Other resources for board development:

Leadership Development

Leadership development can support various skill sets, including:

  • Financial management,
  • Diversity, equity, and inclusion,
  • Fundraising,
  • Grantseeking and grant management,
  • Relationship building and management, and
  • Ethical leadership, among other competencies.

Resources for Leadership Development:

Succession Planning

With the right tools, guidance, and processes in place you can be prepared to facilitate a smooth leadership transition regardless of timeline or circumstance.

Resources for succession planning:

3. Financial Management

Without the capacity for financial development, your nonprofit organization will not have the tools or processes needed to sustain its revenue and manage expenses.

Budgeting and Financial Planning

Budgeting and financial planning are essential to a nonprofit’s success. However, smaller and newer nonprofits often lack the resources or expertise of larger, well-connected organizations.

Don’t let fiscal challenges intimidate you! Instrumentl has developed an extensive template for developing financial statements to best track, manage, and communicate your organizational finances.

Other resources for budgeting and financial planning:

Fundraising and Grant Writing

You no doubt already know that fundraising and grant writing are major pain points for nonprofits. It is a classic Catch 22—nonprofits require funding to grow their organizations, but few have the funding to invest in robust fundraising initiatives or programs.

Luckily, Instrumentl has you covered when it comes to all of your grant writing or fundraising needs!

Using smart-matching algorithms, Instrumentl is the one-stop grant seeking and management tool designed to help you identify the very best-fit grant opportunities that will result in a high return on investment for your organization.

Additionally, Instrumentl has developed a library of free training and capacity building resources focused on grant writing and fundraising that you can access at any time.

Instrumentl is an all-in-one grant database designed to holistically support your nonprofit’s growth.

Get started by checking out our article, How to Find Grants to Fund Training and Capacity Building from Instrumentl’s blog—a collection of articles and how-to guides authored by nonprofit experts and experienced grant writers.

4. Program Development and Evaluation

Programming is the heart of a nonprofit’s work. With the right tools, you can evaluate your existing programs to ensure their efficacy and design new programs and projects to fulfill your organization’s mission.

Designing Effective Programs

Designing a new program or adapting existing programs requires thoughtful and intentional planning and evaluation, ensuring that the program is delivering favorable outcomes that contribute to the fulfillment of your organization’s mission.

There are a number of approaches to program design that are effective, including:

  • Human-centered design,
  • Theory of change, and
  • Collective Impact, among others.

Here are some program design resources:

Measuring Outcomes

It is vital to measure outcomes that help you track program effectiveness and show progress to internal and external partners.

Instrumentl has prepared several guides to help you get started on developing measurable outcomes, evaluating programs, and measuring for impact:

Other resources for measuring outcomes and evaluation:

  • Evaluation and Measurement Outcomes from the National Council on Nonprofits: learn how to develop strong outcomes and effectively evaluate nonprofit programs;
  • Understanding Outputs and Outcomes by Mindy Hightower King, Ph.D for the Foellinger Foundation: learn the difference between outcomes and outputs and how to use them in evaluation;
  • Measuring Outcomes from the Madison Community Foundation: a high level overview of project outcomes and how to measure them for the greatest impact

The Foellinger Foundation offers a dynamic guide on how to create outcomes and why they are so crucial to your organization’s mission and growth.

5. Human Resources and Volunteer Management

Ensuring nonprofit staff, volunteers, and other key people are connected with your nonprofit’s mission and are well supported is an essential component of building a strong, sustainable organization.

Staff Engagement

Effectively engaging staff will help you retain and recruit top talent.

You can begin to create a staff engagement plan that works best for your organization by using information from the following resources:

Building a Volunteer Base

Volunteers are the core of great nonprofits and are powerful advocates for your mission.

Building a volunteer base can be tricky at first. Identifying who your key audiences are and how to recruit them requires intentional outreach and planning.

You can design an approach for volunteer engagement by following the tips and strategies laid out in the following resources:

6. Marketing and Communications

Investing in effective marketing and communications strategies will help your nonprofit amplify its message and connect with new audiences and potential supporters over a shared mission.

Crafting Your Nonprofit's Brand

Creating a recognizable brand for your nonprofit will help you connect with the community, reach donors, and advocate for your mission more effectively.

With almost 2 million nonprofits operating in the U.S., standing out is imperative. The following resources can set you on track to design and develop a one-of-a-kind brand that works for your organization:

Developing a Social Media Presence

With so many viable strategies for social media management and engagement, it can be intimidating to get started.

Review the following resources to develop a winning approach to social media management for your nonprofit:

7. Collaboration and Partnership Building

Partnerships are one of the key cornerstones of strong nonprofit organizations.

Developing a robust network of partnerships with local organizations, other nonprofits, public entities, and sector experts will help enhance your work and increase your impact.

The following are helpful resources for building relationships and enabling effective collaboration with external partners:

8. Sustainability and Risk Management

As important as it is to equip your nonprofit with the resources and tools it needs to grow over the short term, it is just as vital to prepare your organization for potential challenges and plan for long-term sustainability.

Planning for Sustainability

Planning for your nonprofit’s sustainability can take many forms, such as:

  • Investing in capacity building
  • Building diversified funding streams
  • Strengthening relationships with donors
  • Developing strong financial controls and processes

There are several resources and tools available to nonprofits to help plan for sustainability, including:

Mitigating Risks

Increasing nonprofit sustainability also means mitigating risk and preparing for any internal or external challenges that may arise.

Mitigating risk requires thorough planning and the implementation of systems and processes designed to respond to urgent challenges and unforeseen issues. The following resources can help your nonprofit mitigate risk and prepare for anything that may come your way:

9. Capacity Building Workshops and Training

This nonprofit capacity building toolkit is an incredibly valuable resource for your organization, but it doesn’t end here!

There are so many ways to help your nonprofit organization build capacity. In addition to webinars, courses, guides, and articles, nonprofit professionals can take a more in-depth approach to their development. There are a variety of certifications, degrees, and leadership training programs that can take your expertise to the next level.

Some excellent avenues for further capacity building include:

Wrapping Up

There is no question—nonprofit capacity building is essential. Investing time and energy in capacity building will help give you and your organization the resources, tools, and competencies required to effectively advance your mission and achieve sustainable growth.

In addition to this toolkit, Instrumentl has a library of hundreds of articles, blogs, guides, how-tos, and webinars designed to build nonprofit capacity and strengthen organizations. Visit Instrumentl today and learn how we can help your organization grow and succeed.

Rachel Hector

Rachel Hector

Rachel Hector is a writer, researcher, and grants professional with over 12 years of experience in the nonprofit sector with a Master’s degree in Public Administration (MPA) and nonprofit management from the University of Illinois at Chicago (UIC).

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