Capacity building is defined as actions that improve nonprofit effectiveness. Nonprofit managers are responsible for building capacity, although they may get assistance from consultants or others. Grantmakers get involved by developing capacity building programs that provide resources to support nonprofits as they work to improve their effectiveness.
Organizational effectiveness is difficult to define precisely and impossible to reduce to a set of attributes or activities. It is a rich blend of strong management and sound governance that enables an organization to move steadily toward its goals, to adapt to change, and to innovate. The pursuit of organizational effectiveness means continuous learning and improvement in the management of resources and the coordination and leadership of people. It assumes clarity of vision and alignment of goals and activities with that vision. It embraces the importance of defining hoped‑for outcomes and the need to measure progress toward achieving those outcomes. And, it implies periodic reflection and critical self‑assessment to reevaluate the organization’s role in the context of an increasingly complex and ever‑changing society.