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The researchers then assessed the financial trends for each organization for three years following the year of each grant decision. The researchers compared the financial trends of nonprofits that did not receive capacity grants to the data from nonprofits that did receive capacity grants, paying particular attention to three things: the long-term financial impact of receiving any kind of grant; the impact of receiving any capacity-building grant; and the impact of receiving a capacity-building grant that focused specifically on building financial capacity. Financial capacity grants funded actions such as hiring a grant writer or developing an in-depth fundraising plan. "We found that 184 of the nonprofits received capacity-building grants, and that receiving any capacity grant was associated with financial growth for a nonprofit," Stewart says. "But we also found that receiving a financial capacity grant did not boost financial growth more than receiving any other kind of capacity grant." Organizations that received any capacity grant grew by around 10 percent in the three years following the grant. Grants that specifically targeted financial capacity development did not lead to greater long-term financial outcomes than grants that focused on other management or governance issues. "This tells us that capacity grants are effective investments in nonprofit organizations, but the benefits are not necessarily as targeted as one might expect," Stewart says. "We think that one benefit of these grants may stem from receiving the explicit imprimatur of a foundation," Stewart adds. "In other words, receiving a capacity grant from the foundation may serve as a seal of approval that makes the nonprofit organization more attractive to other foundations and donors." The paper, "As you sow, so shall you reap? Evaluating if targeted capacity building improves nonprofit financial growth," is published in the journal Nonprofit Management and Leadership. The paper was co-authored by Lewis Faulk of American University.
For the original version including any supplementary images or video, visit https://www.eurekalert.org/pub_releases/2016-11/ncsu-fne112916.php