HOW DOES CAPACITY BUILDING FIT IN?
The promise of enterprise capital doesn’t rest solely on matching sources and uses of funds. Realizing the full value of funding also requires that sources and uses of capacity-building services closely match an organization’s needs, ambitions, and business model. The term “capacity-building” doesn’t suggest nonprofit-sector weakness or a lack of the human capital it needs to succeed. Rather, it underscores the importance of access to the right talent to support growth and solve the complex challenges inherent in ambitious visions.
To increase effectiveness, an EC investment should come with an assessment of how an organization’s business and financial models drive impact. The assessment helps the organization see where it can use funding most productively and where it needs to build capacity. The assessment can help direct delivery of technical resources, board leadership, and training to support implementation of the business model; guide evolution of the financial model; and inform which professional development opportunities to provide to staff members.
Creation of an “enterprise capital cabinet,” described more fully in The Blueprint, represents another effective capacity-building strategy closely aligned with EC. An enterprise capital cabinet functions the way equity stakeholders do in private capital markets. It can include people selected by the organization or selected jointly by the funder and organization and can operate as subcommittee of the board or as an external advisory board. Each cabinet member brings competencies that can help the organization execute on its business plan and financial model.