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How Kresge’s investments in the capacity of nonprofits advance the foundation’s mission

When speaking about nonprofit capacity building, Lois DeBacker, managing director of The Kresge Foundation’s Environment Program, stresses the need to take a holistic approach. She points to a fellowship the Environment Program offers, which provides Black and Brown women nonprofit leaders not only with professional development but also a chance to focus on their personal regeneration.

Given that nonprofit executives face low salaries, long hours and demanding work with communities that are struggling with tough challenges, DeBacker believes this kind of assistance should be prioritized alongside other capacity building programs. “It can be personally draining,” she says. “So we think about how to support people as individuals.”

For nonprofits, which, in addition to offering programming, must pay for everything from staff training to succession planning, this kind of support can be hard to secure. And while awareness among grantmakers of the need for non-programmatic funding has increased in recent years, many donors still favor gifts that come with strings attached.

What makes it difficult to attract unrestricted funding for capacity building is that, unlike the construction of a hospital or forestry restoration, donors may not see immediate evidence of the impact of a logistical preparedness workshop or an executive search for a new leader.

Grants that are targeted to programmatic work are, of course, essential. But funding that enables organizations to pay for training workshops or leadership programs not only enables them to meet their social or environmental goals more effectively but also leaves more philanthropic dollars available to invest in mission-driven programs.

Nor does capacity building always require philanthropic dollars. “We have staff with expertise in a number of areas that are important to building a strong organization,” says Wendy Lewis Jackson, managing director for the foundation’s Detroit Program. “Whether it’s helping to build a communications plan or an organization that needs help with IT and the best operating systems to consider, we make ourselves available.”

Belief in the importance of this kind of supports has been present at Kresge from its earliest days, notably in its foundational giving model: the capital challenge grant. Of course, in the case of these grants, the focus was on helping organizations to become more effective in their fundraising campaigns and to learn how to build up their base of loyal donors.

However, the launch of the challenge grants in 1929 marked the start of a pioneering model of grantmaking—one that linked funding to capacity building. And it’s a model that has informed Kresge’s giving ever since. “The challenge grant program really put in our DNA the need to see the whole picture,” says Lewis Jackson, who joined Kresge in 2008.

“Capacity building is critical because the dollars we can give to grantees in any one grant only go so far,” says Caroline Altman Smith, deputy director of the foundation’s Education Program, who also joined Kresge in 2008. “Capacity building is a lasting gift to the nonprofits we work with because it helps them to become stronger, more resilient and to develop a more sustainable funding model.”

Moreover, funding for capacity building also gives nonprofits the flexibility to innovate, to engage in strategic planning, to measure and communicate the impact of their activities and to develop new funding streams.

Meeting a variety of needs

The recipe for successful capacity building has many ingredients. Some involve specific amounts of funding over set time periods. In 1999, for example, Kresge launched a five-year $18 million program to help five Historically Black Colleges and Universities (HBCUs) increase their fundraising capabilities.

More recently, Kresge’s Thrive Leaders Network, launched in 2002, offered 40 leaders of color unrestricted funding, along with executive coach matching, virtual programming, in-person gatherings and networking tools.

However, needs can also be more urgent and might occur mid-way through a grant. “Some are evergreen, and some are more episodic,” says Altman Smith. It might, for example, be support to create a new business model after an evaluation calls for a change in the strategic plan or conducting an executive search after the unexpected departure of a senior leader.

The partnership approach

Responding to these types of needs can be challenging for foundations because they demand flexibility and the ability to move quickly. This is why Kresge’s approach to grantmaking—treating it as partnership-building rather than simply gift-making—is so important.

Critically, long-term partnerships also help build the trust that empowers nonprofit leaders who may be uncertain about asking for help. “We try to have an ear for this,” says Altman Smith. “Sometimes nonprofits are hesitant to ask for this type of support because they worry that it might make them seem weak, vulnerable or poorly managed. So we try to de-stigmatize and normalize the conversation.”

As with capacity building, the partnership approach also grew out of the foundation’s earliest days. “The challenge grant program allowed us to take more of a partnership approach,” says Lewis Jackson. “It’s not just about making a grant and then moving on. It’s about how we think about our relationships over the long term.”

Bill Moses, managing director of the Kresge Foundation’s Education Program, agrees. He says the foundation still extensively uses the combination of capacity building and technical assistance that emerged from the challenge grant era.

He cites the example of Kresge’s support for HBCUs, tribal colleges or nonprofits that are working to promote college access, where part of the value for grantees is that they can decide what is most important to their particular organization. “The idea is to give institutions the resources that they prioritize so they can perform their work more effectively,” says Moses, who joined the foundation in 1997.

Importantly, Kresge’s approach to strengthening leaders and organizations is a recognition that, while nonprofits are working hard to solve the problems of others, many of their challenges lie within their own four walls.

For example, in 2023, the National Council of Nonprofits surveyed 800 leaders of community-based organizations. Respondents expressed their need for support in expanding their organizations, improving their fundraising capabilities, and addressing staff issues like burnout.

“Most of the organizations we fund are change agents working in really challenging circumstances,” says DeBacker. “The issues they’re working on are long-term struggles without easy wins, and to achieve successes, you need strong organizations not just strong leaders. So investing in the infrastructure of an organization helps it be more successful in its work.”

And, as Lewis Jackson points out, when nonprofits succeed, the foundation can advance its own mission more effectively. “So building that capacity,” she says, “is part of the roots of our work.”