Assessing nonprofit capacity: A guide to tools

Nonprofits come in all different shapes and sizes. They have different program and geographic areas, staff and budget sizes, and approaches to their work. They also have something important in common: the need to be a healthy organization to effectively provide services, conduct research, and adapt to emerging needs.  But what is the best way to gauge whether an organization is healthy?

This is what the Hewlett Foundation’s Effective Philanthropy Group were curious to discover, so we commissioned a study to learn more about which tools exist that can help both funders and nonprofits better understand a nonprofit’s health and capacity—areas of strength, and ways for improvement.

Working with Informing Change (a consulting firm in Berkeley, Calif.), we wanted to better understand which organizational assessment tools exist, what they measure, and how they are administered. We then sought to dig deeper into how funders and nonprofits have experienced using these tools, to see what we could learn from past experiences.

Organizational assessment tools often gauge an organization’s strategic focus, leadership and management, governance, human resource capacity, financial and fundraising structure, and learning and evaluation ability. These tools support a nonprofit to assess and determine which capacity areas need to be strengthened, and can facilitate important discussions among leadership, board, and staff to help shape resulting priorities.

The Informing Change team produced a list of 91 comprehensive OA tools, checklists and guides, as well as a memo describing tool types and best practices based on user experience interviews. Among the many rich findings in the database and accompanying memo, a few points stood out:

• Organizational assessment tools can play a vital role in organizational improvement. They can help an organization identify shared concerns, facilitate reflection, and provide a common language for dialogue and decision-making.
• There are many different organizational assessment tools. No one tool rises to the top as best, but the most highly regarded tools are typically customized or adapted to a specific organization’s context.
• The process in which a tool is used is critical—and can be even more important than the tool itself. Tools work best in a facilitated, well-managed, intentional process.

We hope that the full set of information and findings will be useful for both foundations and nonprofits. Internally, at the Hewlett Foundation, we are already beginning to use what we have learned in several ways. In our Organizational Effectiveness program, we are using the findings to explore how to best support grantees in their capacity-building work.  Our Grants Management team is digging into the findings to see if there’s anything we might learn about how to conduct better due diligence. And we are sharing what we find with program officers across the foundation, both to use with their grantees, and for their own use.

One important note: while the important issues of stakeholder (including intended beneficiary) engagement and diversity, equity, and inclusion are mentioned in some tools in the database, there is still room to incorporate these areas more consistently across capacity areas and tools.

Finally, this study is an analysis at a point in time; we do not currently plan on maintaining the spreadsheet in an ongoing way. We hope that perhaps others may take that up sometime in the future and continue to make it broadly available. That said, if you do know of other tools, we are happy to collect them and share our most up-to-date information upon request. Please send these, and other thoughts or feedback, to our organizational effectiveness officer: Jennifer Wei.