by Danielle Garbe, Sherwood Trust & Caroline Miceli, Satterberg Foundation and originally published on the Philanthropy Northwest blog on May 11, 2016.

The greatest assets the social sector has are its people. Human capital is one of the most important — yet often underfunded — investments that foundations can make to ensure the success and vitality of nonprofit organizations and our communities.

To understand how to make smarter investments in organizational leadership, 10 foundations committed to strengthening Washington’s nonprofit sector through a Statewide Capacity Collaborative partnered with CompassPoint to ask nonprofit leaders about what’s needed to further develop the skills required to lead the teams, organizations and movements making positive change in our communities. Our resulting Washington State Leadership Scan is a tool for funders, in any region, to consider the needs and opportunities for investing in leadership capacity.

The Leadership Scan underscored the power of personal connections. Through surveys, interviews and focus groups with more than 400 respondents, we found interest in more mentorships or informal peer networking opportunities rather than the classroom-based sessions that are most often funded. The responses also highlighted the underserved needs in communities of color and rural areas, and an interest from all participants in better understanding “networked leadership” or how to collaborate and build relationships across a community.

Investing in Leaders

Let’s make investing in people capacity part of the grantmaking rule — not the exception.

  • As a funder, how are you ensuring that your grantees — nonprofits aligned with your mission — are thriving through strong leadership, succession planning, talent acquisition and retention?
  • As a board member, how are you encouraging and approving training as a critical line-item in the budget and recognizing it as a core responsibility of senior leadership to implement and support?
  • As a manager, how are you identifying and investing in professional development opportunities for yourself and your team members?

We offer two examples from Satterberg Foundation and Sherwood Trust, both members of the Statewide Capacity Collaborative and Philanthropy Northwest, of applying these strategies towards grantmaking and investments in capacity-building programs:

1. Grantmaking in Support of Core Operations and Internal Development

The Leadership Scan illustrates how difficult it is for a nonprofit to consider expending both energy and money toward leadership development, reporting that “every single interview and focus group respondent indicated a forced choice between investing in core operations or leadership development and indicated that the majority of funders invest in either general operating or leadership development.” In step, the Satterberg Foundation believes it’s unrealistic to ask nonprofits to take on society’s most pressing needs and the environment’s greatest challenges while also struggling with limited organizational resources. Therefore, the foundation funds multi-year general operating grants to encourage nonprofits to take a breath from the constant race for operating funding and free up time to invest in themselves. This relationship-based approach also nurtures opportunities for Satterberg’s grantees to connect with each other, in support of shared learning, through grantee learning circles and listening sessions.

Satterberg recognizes that internal infrastructure needs — including leadership development, new technology, succession planning and staff retreats — are a priority for its nonprofits partners, and encourages grantees to use funding toward these types of activities. Through multi-year grants, unrestricted funding and authentic relationships with partner grantees, Satterberg wants its grantees to invest in training, embrace risk-taking without fear of losing core funding and ultimately make lasting impacts for both themselves and society.

2. Emphasis on Relationship Networks

The Leadership Scan also highlights leaders’ preference for “developmental relationships” or peer learning and mentoring as effective teaching tools. Since 2004, Sherwood Trust has sponsored a Community Leadership Program for a cohort of 20 to 30 leaders who represent a diverse cross-section of the community. Rural Development Initiatives (RDI) provides the curriculum in coordination with local trainers, and courses are skills-based and community-focused for rural areas. Participants learn as much (or more) from each other as they do about critical tools ranging from community development to effective advocacy, communication and consensus-building. The course provides experiential and action learning — also recommended in the scan as a preferred learning method — as participants select and implement a community project as the capstone experience of the six-session program.

The primary outcome Sherwood Trust seeks through this investment is social capital: building stronger relationships and networks across the community. Participants complete the program with greater knowledge of the community and themselves as leaders and strengthened skills for how best to engage in and make a difference in their community.

Join Us in Leading on Leadership

The Statewide Capacity Collaborative, a unique group focused on nonprofit capacity-building across issue areas, formed in response to the recommendations of The Giving Practice’s 2009 Assessment of Capacity Building in Washington State. With this 2015 Leadership Scan, we now seek to to increase the lead on leadership in our sector by making further strides in what’s already working and finding new opportunities with our nonprofit partners.

We invite you to learn more by visiting our website and reading blog posts written by other SCC members: Campion Foundation, Seattle Foundation and Social Venture Partners. To join this conversation, meet us at the Leadership Scan Results session at the Washington Nonprofits Conference in Bellevue, Washington next week and at Philanthropy Northwest’s Under One Sky conference in Missoula, Montana this fall.

Danielle Garbe is the CEO of Sherwood Trust, a private foundation investing in building community capacity across Washington’s Walla Walla Valley. Caroline Miceli is a program officer at the Satterberg Foundation, a family foundation seeking to strengthen communities in Washington and California by promoting a just society and a sustainable environment.