Nonprofit Builder: a scalable capacity building marketplace

“It blows my mind that capacity building is relatively inexpensive and can create tremendous impact, yet we don’t invest in it more as a field.”

— Doug Bauer, Clark Foundation, in “Supporting Grantee Capacity: Strengthening E ectiveness Together”

What is capacity building and does it work?

Capacity building is a holistic approach to supporting organisations to reach their goals that develops leadership, governance, strategy, culture, fundraising, communications, financial management, human resources, security and technology.

We believe that the right capacity building can be transformational and catapult the nonprofit to a higher level of understanding and performance. We want to make that happen at scale.

What is the problem with capacity building?

Nonprofits are the workhorses for achieving positive social change. But most nonprofits fail to reach their full potential because they have trouble improving their organisational capacity:

• Still too few donors fund capacity building despite demonstrable impact.
• Many regions of the world are underserved by capacity builders.
• Many nonprofits misdiagnose their problems and are not aware of solutions.
• It is difficult for nonprofits to find capacity builders they can trust.
• Gap between what a nonprofit will pay and what a capacity builder needs to charge.
• Each organisation learns for itself, there is little exchange of learning between peers.

Foundations invest $2.7 billion annually in nonprofits. If we can help only 10% of these nonprofits improve their organisational capacity to learn twice as fast, be twice as efficient, and get twice the results, then we shall be creating $270 million of social value.

Our goal : We want to transform the way the nonprofit sector learns, making it efficient, affordable, and collaborative, so nonprofits can have greater impact on the communities they serve, and better adapt to the rapidly changing world they seek to change.

The solution: The Nonprofit Builder

We researched the needs of 40 nonprofits and their strongest request was for a database of capacity builders who they could trust, combined with the means to lower prices to affordable levels. This led us to the Nonprofit Builder concept:

• A database of capacity builders servicing small to medium nonprofits.
• Scope: leadership, governance, strategy, communications, fundraising, and more.
• Vetting and rating by the user community to ensure quality.
• A subsidy system of up to 75% to make capacity building affordable.
• Governed by nonprofit leaders, capacity builders, and foundation grantmakers.

Who will benefit and how?

• Nonprofits will be able to efficiently access the capacity building support they need, at a price they can afford.
• Capacity builders will enjoy deeper work with nonprofits committed to change, and a community of peers to network, exchange learning and keep up with trends.
• Funders will have a high quality turnkey solution to offer trustworthy capacity builders to their grantees, and multiply the value of their investment.

What success looks like and how we’ll achieve it

We will consider ourselves successful if after 5 years we are financially viable and have helped 1’000 top small-to-mid-size nonprofits demonstrably double their social impact, with the help of 300 capacity builders, who will be receiving $10 million each year in subsidies from 50 funders.

We’ll achieve this in three stages:

1. We’ll start by developing a pilot ecosystem of about 50 nonprofits and capacity builders, to develop a working model for the marketplace and shape a great organisational culture.
2. We’ll develop methods so nonprofits can easily self-assess their capacity building needs, find the right capacity builders, and later self-evaluate the impact of interventions. We’ll need these to scale all parts of the process and demonstrate ROI.
3. Once we are ready we’ll have expand our ecosystem, and then use our process innovations and network effects to scale.

What is our Endgame?

Alice Gugelev & Andrew Stern identify six strategic endgames. Ours is a commercially viable service, filling a gap by making the market for nonprofit consultants very efficient and driving more 10x more investment into into it.

Once the marketplace is running, we’ll focus on advocacy towards new foundations so that they join, bringing along their ecosystems of nonprofits, and work with partners to develop new capacity builders to serve underserved geographical areas.

How will we be financially sustainable?

Our business model is to take a percentage on the subsidies that we broker for nonprofit capacity building projects. Once the service has a critical mass, we can also charge member fees to foundations, capacity builders and nonprofits.

Key unknowns

• The matching of nonprofit and consultant is crucial. Will we be able to scale it?
• Will we be able to convince enough foundations and move enough business to thrive commercially?

Why do we need funding?

We need funding to finance the first series of subsidies for capacity building projects brokered through the Nonprofit Builder, so that we can demonstrate the value of our approach, and persuade funders who already believe in building the capacity of their grantees, but want to see a working model of our marketplace before they will invest.

Project team & contacts

We are strong three-person team of founders: Daniel D’Esposito, foundation outreach & project lead; Mike Romig, consultant outreach & project coach; and Marina Soula, nonprofit outreach. We’ve raised $40k seed money from the Oak Foundation which we’ve used to test our assumptions and value propositions, and build a working prototype of the Nonprofit Builder marketplace.

More information at: http://demo.nonprofitbuilder.org/