The Nimble Nonprofit

The Hawai'i Community Foundation recently completed a three-year evaluation that demonstrates how and why adaptive capacity — an organization's ability to successfully navigate changed circumstances — is central to organizational capacity building. This realization has powerful implications for the relationship of grantmaker and grantee, suggesting that capacity building occurs best in a group setting that includes not only these two but also peer grantees, consultants, and other interested leaders. It also appears that “putting the grantees in the driver's seat” of the capacity-building program improves outcomes by enhancing learning and leadership.

Much philanthropy has focused on capacity building in the past twenty-five years, and much has been learned about what it is and how to do it. Grantmakers inside and outside the arts field have employed numerous variations of grants, technical assistance, program goals, and evaluation, and a significant amount of scholarship has accumulated in this area. Nearly all capacity-building programs emphasize strengthening management capacity (“infrastructure”). The Hawai‘i Community Foundation created a three-year pilot program for cultural and arts organizations in 1999 with a rigorous evaluation component. This evaluation demonstrated that higher adaptive capacity was associated with better organizational performance, by almost all measurements. The implication is that while better management capacity is important, the goal of capacity building should include, or even emphasize, adaptive capacity.

So what is adaptive capacity? A good working definition is organizational “nimbleness,” the ability to successfully adapt to change. The Hawai‘i study suggests that it includes the mindset of key leaders. Leaders who can look beyond their immediate and familiar management challenges are better able to address organizational needs. Leaders who seek new information and relationships inside and outside their fields, and who confer with others more often, are more likely to be successful.

How can grantmakers promote adaptive capacity? Although more investigation is clearly needed, group and individual learning programs are key. It is also important to create structures that allow grantees to take responsibility for the capacity-building program and provide a group context. The Hawai‘i program observed what others have termed the “cohort effect,” effective learning and change arising from a grantee group selected for the special purpose of building capacity and working together towards that end.

From a theoretical point of view, adaptive capacity is one of three organizational capacities, along with program and management capacities. Capacity-building programs often focus explicitly on management capacity, while probably having an indirect impact on grantees' adaptive capacity.

Adaptive capacity is associated with several characteristics and management systems:

• Self-awareness: understanding the strengths and weaknesses of one's organization and its place in the larger context of its field and the overall culture.
• Leadership
• Responsiveness to constituents: understanding constituents' needs and interests through research and community input.
• Motivating staff and volunteers
• Innovativeness: the ongoing capacity to innovate, as distinguished from specific, one-time innovations.
• Evaluation
• Benchmarking: identifying “best practices” in management or artistry, either in other arts organizations or in other industries, and learning by comparing one's organization to these practices.

Grantmaking programs that not only strengthen management capacity, but also promote learning and development in these areas will likely produce better outcomes.

Ultimately, the lesson of adaptive capacity is that we live in a world of increasingly rapid and discontinuous change. Nonprofits face an ever-larger series of opportunities and threats as their environments transform in sometimes unpredictable ways. For the grantmaker, the goal of capacity building — strengthening grantees to better serve the community — assumes even greater importance. The methods for accomplishing this end are themselves changing, and increasingly reflect a “systems approach.” Nonprofit organizations and their environments compose a dynamic system that requires not a strong bulwark, but an aware and flexible mind, and the organizational culture to adapt.

The Hawai‘i Community Foundation's study measured changes in all three organizational capacities and outcomes in relation to each grantee's goals. It also compared the performance of the grantees as a group to a control group. For a copy of the study, please contact Karen Masaki, culture and arts program officer, Hawai‘i Community Foundation, 1164 Bishop Street, Suite 800, Honolulu, HI 96813, (808) 566-5541, kmasaki@hcf-hawaii.org. The study was conducted by the Cultural + Planning Group in Los Angeles.

Karen Masaki is culture and arts program officer, Hawai‘i Community Foundation.
David Plettner and Mark Anderson are principals with the Cultural + Planning Group.