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Is funding “infrastructure capacity building” the new unicorn?

I have noticed an alarming trend. A nonprofit grantee organization receives funding for its work from several funders, but a cursory look into the organization’s infrastructure reveals that the organization is dangerously fragile, almost subject to collapse; its funding is inconsistent; it is seriously understaffed; its processes are undeveloped or underdeveloped; its leaders are grossly underpaid; it has critical board recruitment and engagement issues; and its organizational oversight and management are inconsistent. In short, its infrastructure desperately needs to be built.

Before providing funding to the organization, a funder may have asked some questions about the organization’s board – its composition, the number and frequency of meetings, and the number of board members who regularly attend those meetings – and finances – is it in the red? The black? The green? Has it somehow created a reserve? Lots of questions swirl around what seems to qualify as infrastructure, but few rarely get close to assessing or funding it, and no real conversation happens about the organization’s infrastructure.

If you ask about this organization in the field, however, many people will tell you how amazing its work is, how its last convening was a game changer, or how its leader is so passionate about the cause and is driving the organization’s mission forward. Coincidentally, those factors are usually the reasons funders fund the organization.

Moreover, if you examine many funders’ strategies, you will notice capacity building as a large part of their funding portfolios. Indeed, many have grant-making programs dedicated to capacity building, going so far as to call these grants “capacity building” grants instead of general support (I know; another conversation for another day). And when you talk to grantees, they say they need capacity, they need general support, and need support for the work they are doing.

So, organizations have expressed the need to build their capacity and a stated desire to fund that need exists. It seems as though the conversation about the desperate need for infrastructure capacity building funding would therefore be moot. It is not, however, because the trend I described above still exists. So, where is the disconnect? Why is funding for infrastructure capacity building not more prevalent throughout the sector? Why are so many grantees still incredibly fragile although nearly all funders say they understand the need for capacity building funding?

I believe the answer to each of these questions is that we are not having the right conversations. Namely, we fail to have productive conversations about funding infrastructure capacity building.

Infrastructure capacity building is a type of capacity building, and is often overlooked. It is focused on designing and strengthening an organization’s infrastructure in order to enable the organization to effectively deliver on its mission. Infrastructure capacity building does not focus on an organization’s external environment, such as raising development dollars, increasing community resources, or examining the ecosystem in which the organization is working or the field in which it exists. It instead refers to the internal skeletal ecosystem that both makes up the organization and supports its programmatic work.

In April of this year, I wrote an article for Philanthropy New York explaining that visionary organizations are only created when infrastructure design is paired with program strategy. The infrastructure design I reference in that article is at the core of my definition of infrastructure capacity building.

From my conversations with leaders in the sector, my own experience working in and with grantee organizations and philanthropies, and working on capacity building initiatives in nearly every region of the world, I believe we need to address several essential components before we can strengthen a grantee’s infrastructure and sustain its organizational capacity.

To that end, I suggest five fundamental elements that need to be present in order to have an effective conversation that leads to consistent provision and successful use of infrastructure capacity building funding:

  • Unambiguity about the definition of infrastructure capacity building. Many definitions of capacity building are floating around the sector. To some, the term means developing the external environment in which the organization sits; to others, it means developing the internal environment of the organization’s programmatic work; and still to others, it means leadership development both within the organization and the environment in which the organization operates. The term, infrastructure capacity building, focuses instead on building governance structures, organizational structure design and controls, and process roadmaps and efficiencies. Infrastructure capacity building focuses solely on the internal, organizational structure and aims to strengthen the interaction and design of various elements of the infrastructure holding the organization together at its seams, so to speak. It is the organization’s backbone and is the area from which some of the most critical organizational risks surface. So, having a clear definition of infrastructure capacity building, which is integral to an organization’s existence and excellence, must be at the core of the conversation about infrastructure capacity building.
  • Appreciation of the benefits of infrastructure design to program strategy. If we are unable to clearly articulate the benefits of how essential infrastructure design is to the execution and sustainability of any program strategy, we cannot have a productive conversation about infrastructure capacity building. After all, why would a funder fund infrastructure capacity building, if it believes infrastructure design has no value to the work an organization does? And an organization will spend time thinking about how to fund or improve its infrastructure capacity, only if it can articulate the value of infrastructure capacity building to its overall work. Indeed, the benefits infrastructure brings to program strategy include improved staff performance and an elevation of the quality of the organization’s work, visibility, and impact. Infrastructure design certainly impacts the way an organization works so it is critical that its value to program strategy be recognized and understood in order to move the infrastructure capacity building conversation forward.
  • Knowledge of sustainability strategies. Whether an organization intends to be around for many years or many months, it needs to know both its program and exit strategy in order to design and build its infrastructure accordingly. And a funder should be clear not only about its own sustainability, but about its grantees’ sustainability as well. With each grant a funder makes or a grantee receives, each should know how that particular grant supports its sustainability strategy. Designing a sustainability strategy is often a complex undertaking, but a necessary one, and it should be deliberate. This strategy then informs how robust an organization’s infrastructure must be to support that strategy. An organization therefore needs to know what its sustainability strategy, needs, and vision are in order to have a successful conversation about infrastructure capacity building.
  • Understanding of programmatic strength. By programmatic strength, I do not mean that the organization simply has an untested, good idea or concept; instead, an organization’s programmatic strength is measured by determining the extent to which the good idea has been tested by the community that requested it and whether the community has already benefited from implementation of the idea. When an organization has programmatic strength, infrastructure design becomes necessary to reap the full benefits of and grow this strength. This programmatic strength clarifies the need to build infrastructure capacity and identifies the type of infrastructure design needed to meet those capacity needs. Without a solid understanding of an organization’s programmatic strength by either the funder or the grantee, however, the conversation about capacity building is unfocused and fails to appreciate the value of or identify the infrastructure capacity building needed. This understanding is therefore critical to having a productive conversation about infrastructure capacity building.
  • Understanding of the human-centered design of infrastructure capacity building. Some incorrectly believe that capacity building happens solely through organizational structures and designs. On the contrary, infrastructure design occurs in both structures and in the people within those structures. In fact, successful infrastructure capacity building must also invest in and build human capacity to allow individuals and teams to successfully operate and innovate within the organization’s infrastructure to ultimately strengthen its program strategy. So, the mindset that is essential for a forward-looking conversation on infrastructure capacity building starts with a profound understanding that this capacity building is not limited to structures and must also occur with the people working in and with these organizations. Ignoring the people in the design will always result in a substandard infrastructure design. Recognizing people’s capacity as crucial to infrastructure capacity building is one of the key components to having a constructive conversation about infrastructure capacity building.

Infrastructure capacity building is critical to enable organizations, often with limited resources, to thrive. It is a huge disservice to provide thousands of dollars to a grantee for project support and fail to inquire about its capacity to adequately support both the project as well as its organizational capacity to survive beyond the project.

It is a grantee’s responsibility to notice the gaps in its infrastructure to do the work and ask for support to fill those gaps. It is a funder’s responsibility to ensure that the organizations it funds have the infrastructure capacity to do their best work.

When either of these responsibilities is absent, grantees have inconsistent impact, funders fund in blind spots, the sector underperforms, and, ultimately, the communities they serve will receive fewer resources. None of us want those results.

We clearly need to have brave, serious conversations about funding infrastructure capacity building. Are you ready?