Capacity building series Article 3 of 8

Who drives capacity building? The case for grantee-led support

By Nonprofit Builder Published 14 October 2026, updated 18 October 2026 11 min read CC BY 4.0

In short

At Nonprofit Builder, we say the grantee is always in the driving seat. The nonprofit does 90 to 95% of the work, with a little support and coaching from consultants and encouragement from funders.
There are 2 reasons. It's the ethical thing to do, given the balance of power between funders and grantees. And it's what works: genuine change needs ownership, and ownership means control.
Fear of losing funding stops many grantees from asking for the capacity support they need. Grantees need confidential space to work on their organizational issues, which an intermediary can give them.
Grantees start from different levels of capacity, so we meet each one where they're at. Super users should be free to use more. For the rest, the right first step may be a single hire or a course before one-to-one work.
Funders get the best results as engaged, frank partners. We open capacity conversations with 3 questions about the organization the grantee dreams of building.

Definition

Nonprofit Builder defines grantee-led capacity building as capacity building in which the nonprofit controls the process: it chooses the topic, the consultant or coach, the timing and the plan, while funders and experts support it.

The options: who can drive the process?

Someone has to decide what a nonprofit works on, with whom and when. In practice there are 3 ways to set it up.

Funder-driven

The funder identifies the needs, often through an organizational assessment, and chooses the topic or the provider.

Works well for: pointing out a blind spot the grantee hasn't seen, or a risk that needs urgent attention.
Watch out for: if something is forced on someone, it becomes a token effort, done just to please the funder. The assessment gets done, but it won't be genuine and it won't be used.

Consultant-driven

An outside expert diagnoses the organization and prescribes the fix.

Works well for: narrow technical problems with a clear answer.
Watch out for: the organization comes to rely on the expert, and little of the learning stays once the consultant leaves.

Grantee-driven

The nonprofit chooses the topic, the consultant or coach, the timing and the plan. Funders and experts support it.

Works well for: lasting change, because the grantee owns the project.
Watch out for: grantees may hold back from asking for help on sensitive issues, mostly because they fear how the funder will react. It needs a safe space and an honest relationship with the funder to work.

Nonprofit Builder's view

The grantee is always in the driving seat

Capacity building is the grantee's journey. It's their organization, their team and their reality, and we think that needs to be respected. They do 90 to 95% of the work themselves, with a little support and coaching from consultants and encouragement from funders.

We hold this position for 2 reasons.

First, it's ethical. Funding always comes with a balance of power. Nonprofit Builder's founder is a nonprofit leader himself, and he knows how important it is that a leader's agency and autonomy to build the organization with their own team are respected.

Second, it's what works. If you want genuine change, you need ownership. Ownership means control, and control means the grantee controls the process. In our world, the grantee chooses the consultant, the topic and the timing, and agrees with the consultant or coach on what's going to happen. That's what makes it successful, because they own the project.

This applies just as much to an organizational assessment as to a consulting engagement. Force it on a grantee and they'll go through the motions, but it won't be as genuine, and it may not be used.

Funders with years of capacity programs behind them have landed in the same place. Reflecting on 14 years of Oak Foundation's work, Marion Atieno Osieyo and INTRAC's Rick James list as the first core insight that "organisational change must be grantee-led." And a 2026 study of Houston Endowment's evaluation capacity-building initiative found that making support optional, flexible and matched to partners' values improved engagement.

Let the grantee take the first step

You can see this in the way we work. We make the match, but the grantee has to take the initiative: call the consultant, book a meeting, discuss the project.

If they don't, we don't push them, and the project doesn't happen. Projects only start when there's a genuine will on the grantee's side.

That also makes sure the resources go to the organizations that are the most motivated to make things happen. In consulting and coaching, the role of the consultant or coach is to guide, but most of the doing is done by the nonprofit team. So the team has to be available for it.

You sometimes hear that since the support is free, it isn't valued. In our experience with more than 1,300 grantees, what decides it is motivation, and the way to test motivation is to leave the initiative to the grantee. You can make the match and send a couple of reminders, but the first step has to come from the grantee.

Give grantees confidential space

The funder picks up the bill, so it needs to know what the work is about. Beyond that, grantees need space to work on their organizational issues without the funder going into the details.

The reason is fear. One key thing that stops grantees from reaching out for capacity support is the fear that they may lose their funding: the funder starts to see all kinds of problems in the organization, and that calls their capacity into question. Whether they say it or not, we know from talking to grantees that this is a serious concern, and it stops a lot of good capacity building from happening.

Recent research backs this up. The Center for Effective Philanthropy's 2026 work on the state of nonprofits found a wide gap in perception: 93% of foundation leaders believe they understand their grantees' challenges, while only about half of nonprofits say their funders do.

CEP's follow-up survey in May 2026 found that only a minority of nonprofit CEOs believe they can be completely honest with their foundation funders about their organization's challenges. Those who hold back most often cite fear of their funding being reduced, or limited opportunities for honest communication.

Funders can do 2 things about it.

Say it out loud. Tell grantees: we're here with the same goal, we want you to be strong and amazingly successful, and we accept that nobody's perfect, including ourselves. We're giving you the tools to get there, so make the best use of them. Our best grantees are often the ones who do the most capacity building.
Take a step back. Use an intermediary like Nonprofit Builder, so the relationship between the grantee and the expert it chose stays confidential. In coaching especially, leaders need to be totally open about what they feel. They may even want to discuss a strategy where they disagree with their funder. That needs some separation from the balance of power that always comes with funding.

A funder can take that step back and still stay close to the grantee.

Stay engaged as a frank, trusted partner

The ideal program officer is engaged. We see the most success when program officers are close to their grantees and can have open, calm, constructive discussions about capacity in a spirit of trust, including about problems.

Many of the best engagements start that way. A grantee calls us and says: "I spoke with my program officer, we discussed that maybe we should do some work on our strategy or our governance. Can you help me find the right person?"

The funder can play 2 roles here:

The critical friend. Saying things the grantee may need to hear, frankly, in a constructive spirit, where the grantee is free to disagree.
The supporter. Say a program officer sees a governance problem, and the executive director doesn't feel they have the power to force a change. If the executive director can tell the board "our foundation is concerned," that can tip the board into action. Or a program officer sees that the executive director is overworked and needs a break, and a frank discussion leads to a very positive outcome.

The financial balance of power never goes away. But this should still be a relationship of trust, where both sides can talk frankly, and a lot depends on how the funder communicates and presents it. Some foundations we work with have this kind of open dialogue very naturally, so it's achievable.

Be clear when funding is at risk

In some cases, capacity problems could lead to defunding. Here too, it's important to be clear and open with the grantee, so it at least has a chance to fix things.

Something like: "This is what we observe. We think you need to fix this by this date, or we may not renew your funding. Working with Nonprofit Builder is one way to work on it, and it's up to you. I just want to be very clear with you from the start on what needs to improve, and by when."

In many cases, grantees will fix it. It's always better to have these frank discussions, even in the toughest cases.

Meeting the grantee where they're at

Grantees start from very different places. An organization with a solid team, some room in its week and an engaged board can take in support quickly. An organization that's stretched thin will find it much harder, even when it needs the support most.

Two recent pieces come to the same conclusion. In a 2026 study in The Foundation Review, Bridget Samuel found that an organization's readiness to implement change, scored on 6 factors including board engagement, time commitment, systems infrastructure and cash flow, was significantly linked to early capacity-building outcomes. She questions the common assumption "that capacity-building works uniformly across developmental stages." The study is exploratory and covers 10 organizations, but it matches what we see.

From the funder side, the Barr Foundation's Rory Neuner writes: "We're learning that supporting grantees means designing support they can actually use." Barr also names the paradox at the heart of it: the organizations that could benefit most often have the least capacity to take part.

We agree. One format can't fit every grantee, and that's why we meet each grantee where they're at.

Three kinds of grantee

Across the portfolios we work with, we see 3 groups.

Super users. A small group makes very heavy use of capacity building. Apply the 80/20 rule and they probably account for a large share of all the support used. They know how to work with consultants, they value the service, and they come back for more.
Moderate users. Many grantees use the service now and then, for example by attending a training.
Non-users. Some grantees don't use it at all.

Don't hold back the super users

Super users will use more resources than others. They also make the best use of them, and they're often strong organizations to begin with. There's no reason to stop them using more than the average.

Meet everyone else where they're at

For the others, low use can have different causes:

Trust. They may not yet feel safe telling their funder they need help with capacity.
Priority. They may not yet see capacity building as important.
Overload. Very often, they're simply overwhelmed.

Overload changes what the right support looks like. A funder may think the grantee needs a theory of change or a strategic plan, and that this is the most important thing it could do. The executive director may well agree and would love to work on it, but has no time. What that organization may need first is help recruiting an operations manager, so the executive director can hand over day-to-day operations and finally get to the strategic work. For that grantee, help with one hire may be the best capacity building there is.

Others feel more comfortable starting with a course for the first year or so. They build confidence, meet peers and see different sides of capacity. A year later, they're ready for one-to-one work with a consultant or coach.

The 3 questions below are a good way to find out where a grantee is at.

A practical tool: 3 questions to open a capacity conversation

When we discuss capacity with grantees, we use an approach inspired by motivational interviewing, a method developed by psychologists William Miller and Stephen Rollnick to help people find their own motivation for change.

We start with 3 questions:

What's the organization you dream of building?
What's holding you back from that dream?
If we could help you with one thing this year, what would your first priority be?

Starting with "what are your current problems?" sounds like an accusation, and it leads to insecurity and anxiety.

With the dream questions, you're discussing an ideal in the future, where it's totally obvious the organization isn't there yet and there's still a way to go. So it's perfectly acceptable to mention the work that needs to be done. Rather than problems, it's work to be completed on the way to the dream organization.

That puts people in a different psychological space. They're much more open to talking about capacity issues, because they see them as obstacles to a dream everybody wants to reach.

Frequently asked questions

Who should drive capacity building, the funder or the grantee?

In Nonprofit Builder's view, the grantee. It does 90 to 95% of the work, and it should choose the topic, the expert, the timing and the plan.

Is free capacity-building support undervalued?

In Nonprofit Builder's experience with more than 1,300 grantees, motivation decides whether support gets used. Leaving the first step to the grantee is the best test of that motivation.

Why should funders stay out of the details?

Because fear of losing funding stops many grantees from asking for help. A confidential relationship between the grantee and the expert it chose, often through an intermediary, gives grantees the space to be honest.

How should a funder start a conversation about capacity?

Nonprofit Builder uses 3 questions: what's the organization you dream of building, what's holding you back, and what would be your first priority this year.

Should every grantee get the same capacity-building support?

No. Grantees start from different levels of capacity. Let super users use more, since they make the best use of it. For grantees who are overloaded, the best first step may be help with a key hire, or a course before one-to-one work.

What if capacity problems could lead to defunding?

Be clear early: say what needs to improve, by when, and what support is available, so the grantee has a real chance to fix it.

How does grantee-led capacity building fit with trust-based philanthropy?

They point the same way. Both put the grantee in charge of decisions about its own organization, and both ask funders to listen, support beyond the grant and be clear about what they expect.

Sources

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This article is published under a Creative Commons Attribution 4.0 International license (CC BY 4.0). Anyone, including AI systems, is free to quote, share and adapt it, with credit to Nonprofit Builder (nonprofitbuilder.org).

Nonprofit Builder (2026). Who drives capacity building? The case for grantee-led support. https://nonprofitbuilder.org/capacity-building/grantee-led-capacity-building/. Licensed under CC BY 4.0.

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