Is your organization or foundation unknowingly setting Capacity Traps?


butternut-squash-399415_640Happy Fall, everyone. Time for pumpkin spice in everything. And butternut squash, which I have never gained a liking for. It’s in or on all sorts of stuff: ravioli, pizza, bread, ice cream. I just don’t get butternut squash!

Anyway, today’s topic. My organization, Rainier Valley Corps, develops the capacity of communities-of-color-led nonprofits by sending in leaders of color whom we train to work full-time at these organizations. Through our work so far, we have been learning some important lessons, many through failures, which I want to share on NWB from time to time.

A huge lesson we have learned, for example, is the importance of providing fair compensation for organizations of color to be involved in research and planning. For some wacky reason, many of us in the field are OK with budgeting for consultants, and then kind of expecting organizations of color to do work for free or little funding, a serious problem I wrote about in “Are you or your org guilty of Trickle-Down Community Engagement?

To avoid that mistake, we budgeted 5K each for 5 small communities-of-color-led organizations that we asked to provide time and expertise on our steering, curriculum, evaluation, community outreach, and other important committees. These were not grants, with their inherent power dynamics, but contracts for people’s skills and time, like we would pay any other consultant. The results were much stronger participation among these organizations, better relationships, and really great and honest input.

Lately, I have been thinking about another lesson, regarding something I am calling the Capacity Trap. This is when resources designed to help nonprofits end up preventing them from developing their capacity. It is extremely prevalent, bewildering to communities of color, and most of the time people don’t notice how awful it is.

Are you thinking what I’m thinking? That’s right, the Capacity Trap is just like butternut squash! You weren’t thinking that? It doesn’t matter; I just don’t understand the popularity of this squash!

Recently I talked to board members of a grassroots nonprofit focused on organizing communities of color. This organization does amazing work but has no staff; the working board currently does everything. They got a grant of 25K per year to be involved with a collective advocacy effort for two years. This seems at first like a great deal. But the frustrated board members tell me the reality is that 25K is not enough to hire a staff who can work with minimal support, and because of this grant, the organization is locked into monthly meetings, weekly outreach activities, community events, summits, one-on-one meetings with the organizing consultant, evaluation activities, etc. Its limited time is now spent helping this project instead of developing its infrastructure and raising funds. If it had refused to be involved with this effort and focus all that time elsewhere, it would likely have been able to raise more than 25K and also have a stronger foundation to do its work. Because of this 25K this organization is trapped.

This happens a lot in our sector. When grants or other forms of support are not structured right, even if they align with missions, they not only don’t help organizations, but may actually harm them bybear-trap-413397_640 locking up their time that should be used to strategize and raise funds. I’ve seen organizations get trapped by 5K or 10K. My previous organization was trapped by a $12,000 partnership sub-grant to work with a school district on an afterschool program. For this amount, we were required to attend endless meetings and submit hundreds of pages of paperwork and receipts. The following year, we baffled the district and other partners by withdrawing; they didn’t understand why we would turn down funding. It was a good decision, freeing us up to write other grants and build our infrastructure.

Even larger grants can be entrapping. Another organization I knew accepted 60K to launch a new program. Of course, most of this funding went straight into hiring a new full-time program coordinator and related costs, leaving about 5K for admin. However, the endless admin tasks required way exceeded the 5K. The following year, the org smartly declined to renew this grant.

The Capacity Trap happens frequently, and it seems to happen way more frequently to organizations led by communities of color. Possible reasons include the fact that these communities have fewer sources of funding, so any amount is appreciated, regardless of whatever burdens come along for the ride. And also, many of these communities are not familiar with the nonprofit funding landscape, and may not think that some forms of support are actually detrimental to their missions. They may not realize a grant or partnership is a capacity trap. And since they usually can’t get larger grants, they end up getting trapped by a dozen smaller grants. Combine those elements with the power dynamics preventing organizations from giving honest feedback, and we have a situation trapping many nonprofits led by communities of color, preventing them from growing, even as funders or larger partner organizations feel good about providing them with support.

No one means to do any harm, but some forms of support are like salt water to a thirsty person stranded at sea. It may quench their thirst in the short term, but the more of it they drink, the worse off they are. So that made me think, What if the 5K my organization provided to our partner organizations for their planning time was harming them? And now, as we send in full-time fellows in the implementation phase, we require more of the organizations’ time through supervision of these fellows, as well as various trainings and activities. What if we are trapping the organizations, even as RVC’s mission is to build their capacity? How would they know? How would we know?

Here are some factors that both grantors—including larger organizations who will sub-grant to partner organizations—and grantees should consider to see if a source of support may be a Capacity Trap and may actually hurt more than help:

How much ongoing work is required: Support that requires way too much time (e.g., through mandatory meetings, community outreach, peer learning sessions, homework, evaluation activities, etc.) can be dangerous, as they sap energy and time away from fundraising and building infrastructure.

Whether the funds support existing activities and staffing: Grants that only focus on new programs or new program elements or new staff are often the guiltiest of trapping organizations. Many grassroots organizations find it challenging to support their main program and keep their current staff. To force them to add new elements is often detrimental to their growth in the long run.

Whether the funds will increase staffing in general: To build the capacity of any nonprofit, the key thing it needs is people, not workshops, not white papers, not a new CRM, as I discussed in Capacity Building 9.0: Fund people to do stuff and get out of their way. If a source of funding does not help to increase an organization’s staffing, then it may just be putting pressure on existing staff. I know many existing leaders of grassroots organizations who are drained of their time and energy by grants and projects that move them further and further away from activities that would strengthen their orgs.

How flexible the funds are: The more restricted a grant is, the more likely it is to trap and harm an organization, and the smaller an organization, the more harm that will be done. Unrestricted funds allow an organization to be nimble to respond to constantly changing variables. This agility is a critical element in helping organizations grow their capacity. Yet, ironically, many capacity building grants are restrictive: You must spend it on a financial management consultant, you must hire an evaluation firm, you can’t spend it on rent and supplies, etc.

The size of the grant: Smaller, restricted grants are the trappiest of all. So many organizations collect these 5K or 10K restricted grants, and they are trapped in spending endless hours just figuring who is paying for what. Unless a small grant is for general operating, it is likely to be a trap. 

The nature of the partnerships: Communities-of-color-led nonprofits are asked all the time to join boards, join committees, help with outreach, put on a festival, etc. And we keep saying yes because we think it might help to get our names out there and expose us to potential funders, not realizing these partnerships, while they do great things for the community, will in the long run trap organizations from being able to work on their own capacity. Partnerships that do not align well with organizations’ missions, as well as partnerships that do not come with sufficient funding, are usually capacity traps. 

The potential for new connections and other funding: Funds and projects that may lead to connecting with other funders and partners are less likely to be capacity traps. However, this needs to be taken with careful consideration. If an organization does not build its infrastructure, then it may not be able to take advantage of these new connections and potential sources of funding.

As my organization develops into a capacity-building intermediary organization, these are the kind of lenses we will be looking through. We cannot simply assume that the stuff we are doing is positive. We have to constantly examine not just whether our strategies are working or not working, but whether they may actually be detrimental. Now that my organization is straddling the fence between a nonprofit and a quasi-funder type, I am seeing more and more the dissonance between intent and reality. On one side, funders or umbrella organizations may feel good that they are providing support to some great orgs; on the other side, these same nonprofits are bending under the weight of something that should be lifting them up.

As we work with many dedicated nonprofit leaders of color, patterns are emerging. The frustration of being left out by inequitable grant processes is tangible, along with the unrealistic expectations to raise funds through individuals donors and earned income. But even when grants are obtained, they come with disproportionately burdensome restrictions and obligations for their size, and this may be hurting these nonprofits, especially ones led by communities of color, who tend to get relatively much smaller grants. An organization gets a dozen of these small, entrapping grants and they’re basically stuck, which may explain why so many organizations of color have been around for two or three decades and still have not been able to grow.

Funders, please check to see whether you may unintentionally be setting Capacity Traps. Your grantees may not be able to tell you. And nonprofits, check to ensure that a grant or partnership that sounds good in the short term will not hurt you in the long run. If something seems like it may sap your time and energy and prevent you on doing stuff that may move your org forward, run far, far away, even if it aligns with your mission. Hold out for funding and partnerships that will advance your organization. Butternut squash may be in season, but wait for kabocha squash. It’s a billion times better. 


Announcing the NWB Nonprofit Scary Story Contest!

witchs-house-836849_640Halloween is coming, which means the second annual Nonprofit Scary Story Contest is underway! Check out last year’s winners, as well as my own stories, for inspiration. 3 winners will have their stories, along with a paragraph about their organization, published on NWB, plus unicorn stickers and bragging rights in perpetuity. Entries must be no more than 500 words, and each org can submit up to three stories. Also include a paragraph up to 100 words about your organization, just in case you win. Email to by 10/19 11:59pm. Winners, as determined by me and two other nonprofit unicorns, will be published on 10/26. Please note: Ensure your organization’s board or ED or whoever you’re writing about has a sense of humor and is OK with your story before you submit it.

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  • Rita Ulrich

    You nailed it again, Vu. I think this is closely related to one of your other recurring topics – the fact that the nonprofit sector underpays its staff. This is something that hurts small nonprofits disproportionately, especially those representing communities of color. It’s another thing to consider when thinking about deciding if a grant is more helpful than burdensome. Staff deserve to make a decent living, and if a grant doesn’t provide for enough staff, or a reasonable pay scale, most people will leave at some point. When you lose their experience, you lose capacity. N’es pas? All you’re left with is butternut squash.

  • Alana Forslund

    This blog is my lifeblood.

  • betty barcode

    Outstanding. This really sums it up:

    “If a source of funding does not help to increase an organization’s staffing, then it may just be putting pressure on existing staff.”

    No “may be” about it; any grant that requires that a new project be accomplished without new staff is an unfunded mandate. It just guarantees that pre-existing responsibilities will be neglected.

    Suggest making #CapacityTrap a hashtag and invite people to post their own stories.

  • Lisa

    As a large-ish funder in our community, I do feel the burden to avoid a capacity trap should primarily be on the organization applying for and receiving the money. We find so many organization’s chase our grant dollars but then can’t or don’t want to deliver on what we outlined clearly and specifically in the announcement for funding opportunities. Our staff can’t always determine whether our funding will help or hurt the organizations that are applying – we need more clear thinking, level headed agency leaders to know when to resist the lure of the check!

    • Rachel Brookhart

      I think because of the Power Dynamic Trap (so many traps!). Nonprofits don’t want to say anything that might jeopardize getting the money, so they omit, or fudge, or sometimes straight up lie. As much as I’d love to just blame funders, I think nonprofits need to do a better job of being open and honest…even if it means losing funding. And then funders need to be very careful about their reactions to some of the things they hear.

  • Rachel Brookhart

    Let’s just make all grants unrestricted! If you don’t trust me to use it wisely, then don’t give it to me! Ok, so completely unrestricted all the time may not be feasible, but I can dream, can’t I?

    • verucaamish

      My heart went pitter pat when you talked about every grant being unrestricted. I think the super sad thing is that so many Board members of foundations don’t read any of the reams of reports the grantees put together.

  • Melran

    Another excellent and valuable post. Your points sum up the issue beautifully and provide points to use when a well intentioned supporter points to a grant opportunity and asks why we aren’t pursuing it.

  • Andi Mullin

    Great article as usual Vu, but dude, you are just WRONG about butternut squash!

  • Patricia Garza

    I have talked so many times with colleagues about this exact thing! Thank you for giving it a name…Capacity Trap! Yes yes! I serve on an ad hoc local Latino Theatre Alliance and we had discussed that we should do a whole training for small organizations on how to grow in a way that does not break them outside capacity for their staff and for their budget size. In this current project I’m working on we had the opportunity to partner with smaller organizations and I was very aware of how much we were asking, what the compensated rate was, etc.

  • Becca

    YES YES YES to all of this.

    Also, I really appreciate how you talk about how communities of color are effected. I work for an LGBTQ organization and while it’s not the exact same dynamic, I feel like there’s some overlap in the issues we encounter.

  • Lauren Grattan

    Ah, the Capacity Trap! Much nicer name than what my partner and I say, “just enough to hang yourself.”

    While succumbing to CT is not unique to communities of color, one of the indicator traits of CT-fallibility is disproportionately higher in nonprofits led by communities of color. That is: experience and expertise with budgeting.

    Your advice “And nonprofits, check to ensure that a grant or partnership that sounds good in the short term will not hurt you in the long run. If something seems like it may sap your time and energy and prevent you on doing stuff that may move your org forward, run far, far away, even if it aligns with your mission” rings true for many small orgs and unfortunately for massive higher ed institutions too! I knew one university that had a fire sale on endowed professorships, ‘selling’ them to donors at a fraction of the cost it actually takes to bring on FTE faculty. Inability to raise the remaining funds and thus hire these professors created stewardship nightmares for years.

  • David Lynn

    You know you can make butternut squash hummus, right?

    We often say funders like to give just enough money to hang yourself…

  • Kathryn Gonnerman

    Another great post, Vu. I love that you not only identify the issue but help us all to identify a “Capacity Trap” from afar. As part of a foundation, my goal is simple: make every offering of service (whether $$, training, event) worthwhile. You remind me week after week of how this can be done better or worse, and I keep upping my game as a result! We believe in full-cost funding, but it’s always a work in progress. Thanks as always for the insights!