Adaptive Capacity: the ability of a nonprofit organization to monitor, assess and respond to internal and external changes.

This definition of adaptive capacity comes from the New York-based TCC Group, the consulting firm that introduced this concept to the nonprofit sector in High Performance Nonprofit Organizations: Managing Upstream for Greater Nonprofit Impact (1999). Others in the nonprofit and philanthropic sectors have built upon this concept, and it is now considered by many in the field to be one of the key components of building nonprofit capacity and promoting long-term organizational effectiveness.

Understanding where adaptive capacity fits into a larger capacity-building framework is important to understanding how an organization can start building its adaptive capacity. According to the TCC Group’s capacity-building model, adaptive capacity is one of the five key components of organizational effectiveness, with the others being:

1. Leadership capacity: the ability of all organizational leaders to create and sustain the vision, inspire, model, prioritize, make decisions, provide direction and innovate—all in an effort to achieve the organizational mission.

2. Management capacity: the ability of a nonprofit organization to ensure the effective and efficient use of organizational resources.

3. Technical capacity: the ability of a nonprofit organization to implement all the key organizational and programmatic functions.

4. Organizational culture: the amalgam of the nonprofit organization’s history, language structure and values that provides the context for defining, assessing and improving effectiveness. 

Of these five components, proponents of this model believe that leadership and adaptive capacity are the most important to long-term organizational effectiveness. With adaptive capacity, the ability to learn as an organization, and to proactively address and react to unpredictable internal and external changes, improves an organization’s ability to produce social change and achieve mission impact. Carl Sussman, author of the article, “Building Adaptive Capacity: The Quest for Improved Organizational Performance,” sees adaptive capacity in the following way: “[Some organizations] experience turbulence as a challenge, a golden opportunity to rethinking what they do and how they do it … This is the evidence of adaptive capacity: the skill to take the initiative in making adjustments for improved performance, relevance, and impact.” 

In my roles as a nonprofit consultant and grantmaker for a foundation, I have found this capacity-building framework to be very useful in both assessing and promoting organizational development and effectiveness, and I often use this thinking to frame my work with clients. Through these experiences, it is often clear that of these five, adaptive capacity seems to be especially elusive and generally misunderstood by many nonprofit leaders. Without the capacity to learn from the organization’s activities over time and adjust both proactively and reactively as necessary, nonprofit organizations are not as effective as they could be in achieving their missions over time. 

What does adaptive capacity look like in an organization?

When thinking about an organization’s level of adaptive capacity, an easy place to start is with decision making about routine activities. In these instances, many nonprofit leaders and managers make decisions and allocate resources based upon past experiences and activities. For example, an organization chooses to send out a direct mail appeal in the spring and fall of each year because that is what the organization has always done. In an organization with an orientation toward adaptive capacity, the decision to send out a direct mail appeal would be regularly revisited and accompanied by an analysis of the effectiveness of that fundraising activity, both as a discrete activity and as part of the organization’s larger strategy. Through the process of assessing this activity, the organization could learn to be more effective with its fundraising.

In looking at the continuum of building adaptive capacity, this example would reside near the left hand of the scale—the organization has started thinking about monitoring and assessing its internal organizational activities, often starting with specific, discrete activities. To move to the right hand of the scale—or to a position that would be defined by a higher level of adaptive capacity—an organization needs to develop the culture where monitoring and assessing organizational activities at all levels—both internally and externally—is encouraged and takes place on a regular basis. The tools and resources necessary to monitor, assess, learn from and make changes as necessary must accompany this shift in organizational culture. 

In an organization on the right hand of the scale, the organization’s goals and expected results are clearly defined. The organization monitors its progress toward achieving the goals and assesses its effectiveness in achieving the expected results. The core of adaptive capacity is then learning from and making changes according to the results of the assessment and monitoring process. This deliberate process is accompanied by the ability to be flexible in responding to unpredictable internal and external changes, which the organization actively monitors over time. If, for example, an organization is confronted with a significant challenge or opportunity that is outside the organization’s plan, the organization is able to consider the situation and adapt quickly if necessary. On the other hand, the organization continually scans its environment and is able to proactively adapt to unpredictable challenges or opportunities. 

This ability to deliberately monitor, assess, learn and proactively change, and adapt to unpredictable internal and external changes, characterizes an organization’s level of adaptive capacity. Organizations with a higher level of adaptive capacity, as demonstrated by numerous cases studies involving this framework, achieve a higher level of organizational effectiveness than peer organizations over time. This improved organizational effectiveness translates into more successfully achieving an organizational mission and improved impact, thus its importance in nonprofit capacity building. 

How to start enhancing your organization’s adaptive capacity

In striving to achieve a greater level of adaptive capacity, organizations needs to carefully balance adaptive capacity with the other four capacity components as mentioned above, with the understanding that developing adaptive capacity is an ongoing process.  

For nonprofit leaders interested in increasing their organization’s level of adaptive capacity, consider the following items:

• Start documenting how decisions are made within the organization, from operational to strategic decisions. Consider whether or not decisions are made: 1) based upon past activities (“We have always done it this way”); 2) in accordance with planning documents like fundraising, program or strategic plans; and/or 3) using data and information comparing expected results with actual results. 

• After understanding the patterns related to decision making, nonprofit leaders can identify places in which additional information or a different approach could promote learning and adaptation. Identify one or two areas that the organization could start monitoring and assessing, and where the organizational culture would support learning and change as a result of the assessment process. 

• Start setting measurable goals for selected organizational activities (being sure to focus on impact and outcome, as opposed to specific activities), and communicate how such information will be used to learn from and possibly change organizational activities in the future. Then monitor and assess progress toward the measurable goals over time and start considering how the activities could be improved based upon the information gathered. Once positive change starts taking place, adaptive capacity is being initiated and built within the organization.

Once an organization starts mastering the role of adaptive capacity in making day-to-day internal decisions, the organization’s leaders can start thinking more proactively about the organization’s future from a more strategic, long-term view and consider the external components of adaptive capacity. By focusing on adaptive capacity as a core component of organizational effectiveness, nonprofit leaders can help enhance their organization’s ability to achieve improved impact over time, thus strengthening the organization’s competitiveness and sustainability.

By Sarah Fischler, director of consulting for the Community Resource Center, a nonprofit organization that provides capacity building and technical assistance services to nonprofit organizations throughout Colorado. Contact her at fischler@crcamerica.org.