The Capacity Dividend: The Importance and Value of Capacity Development

November 6, 2019

When done effectively, investments in local capacity development at the individual, organizational, and institutional levels lead to outsized returns in advancing democracy, prosperity, and stability. Additionally, as local systems for capacity development emerge and individual organizations become stronger – the social sector can take ownership of local development and countries will become less reliant on international donor assistance.

What is it? Moving beyond the buzzwords, diagnostic tools, and trainings – what is organizational capacity development? Simply stated, it is a diverse and contextualized set of products and services that leads to planned and prioritized improvements within an organization. This process can be externally-guided, internally-driven, or a combination of the two. Effective capacity development is marked by regular evaluation and learning whereby internal process and system improvements compliment performance improvements that lead to planned outcomes and impacts. Improving capacity is not a one-time activity, but it is a continuous process of improvement. This is best supported through domestic systems or markets for capacity and performance improvement services.

Who can benefit? Informal citizen movements benefit from capacity development to better formalize and organize their efforts for maximum impact. Established organizations benefit from efforts to improve their outreach and constituent involvement, funding diversification, and collective action for effective advocacy. Both informal and formal civil society can work together to create a country with a culture and practice of an active and responsible citizenry that works to shape a transparent and responsive government as well as a private sector that strives for a double bottom line of profit and social good. Put another way, entire countries can benefit from capacity development.

What does the research say? In 2016, Counterpart International’s innovation-focused subsidiary the Social Sector Accelerator conducted an organizational capacity development landscape analysis of nearly 60 academic and practitioner evaluations on this topic and interviewed a dozen non-profit organization directors. They found that both anecdotally and qualitatively – organizations that receive capacity development support achieve greater social impact. Five of the studies outlined qualitative cases of organizations reporting improved capacity as corresponding with improved results of their work. One study looking at agriculture non-profit capacity development in Australia found that a $20M investment in capacity building for the sector led to $150M in economic and social benefits. While more quantitative research is needed, the qualitative findings are clear.

How is this relevant to Malawi? Malawi remains one of the world’s least developed countries with nearly 85% of the population living in rural areas. The country is trying to develop its economy, solve public health problems, increase environmental protections, improve education, expand social services, and institute transparency in governance. These challenges cannot be solved by external actors and with declining donor assistance it is essential that Malawian organizations have the experiences, capabilities, and opportunities to lead their own development. Capacity development can be built across existing international development programs in order to (1) have effective stewardship of donor resources, (2) lower the cost and broaden the developmental impact by having more donor funding go directly to capable Malawian organizations, (3) support a citizen-populated sector that can engage government and hold them accountable, and (4) maximize development impacts in the sectors noted above.

Are there success cases from Malawi? Malawi is unique in that many international donors, including the U.S. government, provides funding directly to local organizations. While there are challenges to this approach, this has allowed a high percentage of development assistance to go to the people that need it the most. Moreover, dozens of organizations have emerged as transparent and effective entities that have robust constituencies and a diversified funding base for longer-term self-reliance. The following cases demonstrate the ways in which Malawian CSOs have become more sustainable on their journey to self-reliance:

  • A significant number of partners have initiated social enterprises in an effort to generate more discretionary revenues for work that helps achieve their mission (FUM, CRECCOM, CISER, Chikwawa CADECOM & AHS). Partner CSO GLOHOMO registered a company that produces and sells Bwenzi cooking stoves (pictured above) and plans to sell 600,000 stoves over the next two years. These stoves are eco-friendly and require a fraction of the wood and charcoal that traditional stoves use. Partner CSO CEPA started a vehicle rental service as well as a paid consultancy fee-for-service initiative. Both activities will contribute funds to their ongoing advocacy activities.
  • Many CSO partners have expanded and diversified funding and project portfolios including Lilongwe Catholic Health Commission, which previously had only one project and after Counterpart support in project design now has five projects; and GLOHOMO which grew from three projects to ten over the past year.
  • Multiple partners increased membership dues collection, including CHAM that increased this revenue stream increase by 63% within the past two years.
  • Partners used strategic planning efforts to improve their future prospective. Partner CISANET reviewed and updated its strategic plan to include more advocacy and constituent representation to Parliament. As a result, they mobilized their members to interact with and establish a positive working relationship with the Parliamentary Committee on Agriculture (PAC), which contributed towards the orientation of the PAC to help them understand agricultural sector issues and allowing CISANET to influence the PAC  as they make important decisions on agricultural budget allocations and pass laws on agricultural issues. Partner CEPA’s strategic plan helped the organization stay focused on areas of strategic importance such as customary land governance issues. CEPA has assisted over 3,000 households in the districts of Kasungu, Phalombe, and Rumphi to secure tenure of their customary land, which was previously a mere dream for many poor rural people, especially women.
  • More than half of our partners have deliberately reconstituted the board of directors’ selection criteria to make sure that men, women, and marginalized groups are represented. For instance, the boards of both Tovwirane and Pakachere went from each having one woman board member in 2015 to nearly half of board members being women now.


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