Most nonprofit organizations recognize that strengthening and building their organizational capacity enhances their programs and increases the impact of their essential work. Despite this, it is often a struggle for nonprofits to dedicate resources to build the strength of their organizations.
Organizations, their boards and their supporters tend to focus on programs and even seem to feel a little uncomfortable when discussing building organizational capacity. Yet, without attention to health and strength of the organization, over time, there will be a decrease in the quality of programs, a lack of board and staff clarity regarding the organization’s purpose and mission and diminishing impact of the organization in its community.
Performing an organizational assessment enables leaders to take a clear-eyed look at the strengths and challenges of the organization and how it compares to other organizations in the sector. With this information, leaders can make smart decisions about how to deploy resources to improve an organization’s ability to do its work. This prevents weak internal systems from hampering the organization’s ability to provide quality services and programs. It’s not uncommon for boards and executives to regularly assess the health of their programs and their finances. Examining the other elements of the organization that provide support to these areas—such as human resources, organizational systems, governance and management structures and organizational strategy and culture—can help program and financial sustainability.
Performing an organizational assessment can be as straight forward as benchmarking the organization using the Iowa Principles and Practices for Charitable Nonprofit Excellence from the Waterman Iowa Nonprofit Resource Center, rating the organization using the McKinsey Organizational Capacity Assessment Tool, or using an issue-specific assessment tool available through a nonprofit association. The board and executive should take some time to determine the most appropriate approach for the organization, with the proviso that a good approach today is better than a perfect approach tomorrow.
Once the assessment is completed, the board should develop a plan to address areas for improvement. This can be part of the annual planning process or can occur as a project within the broader organizational plans. After an assessment, the board may feel overwhelmed by the areas that it would like to address. Being strategic and selective and focusing on areas that will have the greatest impact throughout the organization can help leaders build organizational capacity in manageable ways.
For many organizations, finding the time to select and perform an organizational assessment will be a challenge. So many organizations are busy presenting programs and providing services that leaders feel reluctant to take the time for assessment and planning. But without assessment, how can an organization know that it is doing the right things in the most efficient ways possible? And without planning ways to strengthen the organization, it’s difficult to sustain, improve or expand programs and services. The culture of busyness, characterized by inability or unwillingness to attend to important tasks because urgent (“putting out the fires”) activities consume the resources of the organization, is part of the cycle of weak organizations. This culture of constant focus on urgent tasks is a symptom of limited or weak capacity and staying too busy to address important issues contributes to an organization’s continuing weakness and can result in the slow death spiral of programs and services.
Organizational assessment is part of a board’s planning responsibility and its responsibility to ensure that organizational resources are managed well. To fulfill this duty, boards must work with the organization’s executive to perform regular assessments of the entire organization—not just the program and financial areas. Because these assessments drive planning and budgeting, it’s helpful to perform them on an annual basis. The time investment in assessment and planning will yield benefits throughout the organization and will ensure that essential programs and services are supported by sustainable organizational systems and structure.