Grantmakers for Effective Organizations
IMPACT
April 2007

Working with Intermediaries to BuildNonprofit Capacity

by Martha Campbell, The James Irvine Foundation

Like many other funders, The James Irvine Foundation has been experimenting over the past decade with ways to support the organizational capacity building of our grantees. We believe in the inherent value of capacity building for grantees and our grantmaking demonstrates that strong and stable organizations are a critical component of program impact, and, ultimately, advancing our mission. And although Irvine’s belief in the importance of organizational capacity building is seen in our day-to-day work, we continually search for ways to more effectively focus and structure capacity-building assistance for our grantees.

The Grantmaker's Role in Capacity Building Programs
Long-term capacity-building initiatives represent one way in which Irvine has organized such assistance. Through LTCB initiatives, a foundation directs support to a cohort of organizations over a defined time period to address specific capacity-building needs. By working across multiple organizations and sites, the foundation achieves economies of scale and also provides additional benefits to participating grantees by linking them through meetings, peer exchange and training opportunities.

LTCB initiatives, however, introduce greater complexity into the underlying grantmaking processes because of the need for a longer time horizon, multiple sites, issues of confidentiality and movement beyond project-based support that such efforts entail. A central design feature of any LTCB initiative is the role of the foundation in identifying and providing a range of capacity-building services to grantees. Grantmakers must determine and articulate upfront its role, including whether it will provide technical assistance services directly to grantees, partner with an intermediary organization (intermediaries) or operate within the various alternative arrangements in between.

Irvine’s Approach
In Irvine’s LTCB initiatives, intermediaries have undertaken the following roles:

• Facilitate organizational self-assessments, prioritization of key capacity issues and objectives and development of related capacity-building action plans for each initiative participant.
• Provide direct consulting or serve as a broker to other consultants for each initiative participant.
• Manage initiative-wide communications and meetings.
• Create a peer network to foster cross-cohort information exchange and learning.
• Develop common tools and other resources for the initiative.
• Assist in the dissemination of program results and experiences to the broader field.

In turn, Irvine’s program staff oversee the initiative and work to underscore its value, ensure alignment with our goals and mediate between the intermediaries and grantees when necessary.

The Pros and Cons of Intermediaries
Intermediaries serve important functions for an LTCB initiative because they possess technical skills in capacity building that the foundation may not have internally and they can serve as an effective partners to grantees in identifying and addressing sensitive organizational issues given their neutrality and expertise.

However, several risks and drawbacks associated with working through intermediaries have surfaced in our past initiatives, including:

• The lack of the foundation’s direct involvement has impeded its learning about grantee experiences and required feedback mechanisms directly from grantees to foundation staff that are not filtered by the intermediary.
• Grantees may perceive that the intermediary is primarily accountable and more responsive to the foundation and not the grantees, raising issues of trust and credibility.
• The services may not be tailored to the grantees’ needs, being more aligned with the intermediary’s internal competencies, agenda or prescribed menus and timelines.
• When an intermediary fails to use its expert, objective perspective and instead seeks to please grantees, efforts rarely go beyond “presenting symptoms” of organizational needs (such as fundraising) and often do not address underlying organizational issues (such as leadership or program quality) that, if tended to, could result in higher organizational performance.

Lessons Learned
While we recognize the inherent value of intermediary organizations in extending the reach and significantly enhancing the work of the foundation, we also acknowledge that we have, at times, underestimated the complexity and risks involved in placing intermediaries between our grantees and us. Intermediaries tend to become our “public face” and agent in dealing with valued grantees. Roles or lines of accountability can easily be misperceived by grantees unless they are negotiated, established, and clearly communicated up-front. To address these concerns, we emphasize up-front:

• our objectives and rationale for using an intermediary,
• our expectations of the partnership, the roles and capabilities of the intermediary, and
• the information-gathering or learning that the foundation seeks from the activity.

Ultimately, through this planning and set of agreements, we aim to ensure that the intermediary appropriately represents the foundation and implements transparent and effective processes for any LTCB effort.

For More on Long Term Capacity Building
Irvine provided major funding to create and publish a briefing paper on LTCB initiatives by Paul Connolly, senior vice president of the TCC Group, a management consulting firm that works with both nonprofits and foundations to improve the impact of their work. The paper, “Deeper Capacity Building for Greater Impact: Designing a Long-Term Initiative to Strengthen a Set of Nonprofit Organizations,” describes how to effectively design long-term, capacity-building initiatives, using examples of TCC Group’s and Irvine’s work over the past decade. In the paper, Connolly provides examples of tangible design options and discusses best practices and common challenges of LTCB initiatives. We hope the paper will stimulate discussion among grantmakers, intermediaries and grantees. Published in April, 2007 by the TCC Group.

Weighing the Pros and Cons of Using an Intermediary
Pros	Cons
Use of intermediaries may: 1) Provide additional human resources and save time and money. Intermediaries supply the human resources needed to manage a labor intensive initiative reduce administrative burdens and help lower staff costs 2) Add expertise and credibility. Intermediaries offer greater capacity building or other expertise than a funder has or wishes to have provide other specialized capabilities, legitimacy and networks 3) Bring neutrality. Intermediaries serve as neutral “third parties” that act as buffers between grantmakers and grantees when addressing sensitive organizational issues	Use of intermediaries may: 1) Create confusion about roles and accountability. Grantmakers will need to negotiate, establish and clearly communicate their expectations up front. 2) Increase management oversight responsibility and certain costs. Although administrative and transactional burdens decrease, grantmakers should expect to increase their management and oversight responsibilities. 3) Reduce opportunities for grantmakers to build internal capacity-building expertise, learn about grantees’ experiences or develop relationships with grantees. To offset this, grantmakers should clarify the information or learning that it seeks from the activity and establish a plan and related set of processes to achieve those objectives.

Martha Campbell is a GEO board member and vice president for programs at The James Irvine Foundation.