The Imperative for Investing in Capacity: Organizations cannot achieve high impact if they skimp on essential overhead functions, including information technology systems, quality physical spaces, fund development and marketing, and staff training and development.
Organizations that invest in capacity have the ability to use funds flexibly, and can withstand shifts or disruption in funding streams. They double down on raising unrestricted revenue, and focus on strategically growing charitable giving through donor cultivation and stewardship and social enterprise.
High-impact organizations use unrestricted revenue to continually improve the operating systems and business functions that support resource generation and high performance, such as information and data systems, professional development, high-quality physical spaces, marketing and fund development, and risk taking.High-impact organizations develop and use their budgets, first and foremost, as policy and strategy guides, as opposed to binding documents. Resources are allocated and redirected based on seizing future opportunities, not maintaining systems and strategies that worked in the past. By seeking and reaping cost savings from efficiencies, high-impact organizations reinvest additional dollars in their missions.
When organizations commit to Investing in Capacity, they commit to advocating for sufficient overhead and funding philosophies that reflect realistic notions of what it takes to run a healthy, high-impact organization. This includes accurately reporting overhead expenditures on tax forms and fundraising materials, educating funders and the general public on the benefits of a robust infrastructure, and rejecting funding for which there are unrealistic expectations.
Investing in Capacity: HumanKind
HumanKind realized the world was changing very rapidly and that it needed to make some significant investments in itself to stay relevant and competitive. In a sense, executives and board felt like the organization needed to go back to school. The organization used funds from its endowment beyond the typical percentage because it believed it would reap higher returns by investing in itself.
The organization chose to focus on its people, programs, and property. Funds focused on its talent were allocated toward recruitment, compensation, and training. In terms of programs, it transitioned from being an almost exclusively residential services provider to operating in more community-based settings. The organization’s property also received much needed maintenance. HumanKind believed that, by making these investments, the organization seized significant opportunities at a key point in time by investing in three of its major assets, making it more sustainable and relevant to its community and donors.