| Nonprofit organizations in the U.S. account for approximately 10% of the gross national product. The sector is under increased scrutiny from its funders, regulatory bodies, and the general public due to questions of inappropriate conduct and scandals in the nonprofit and for-profit sectors. Nonprofits must demonstrate their effectiveness. This study addresses nonprofit organizational effectiveness through the lens of capacity building---those activities that an organization engages in to better achieve its mission. The literature review describes capacity building and reviews the research on nonprofit organizational effectiveness.;The data were analyzed using ANOVA and linear regression. Analysis included disaggregations of the data by type of nonprofit, revenue size, organizational age, United Way funding, and national affiliate status. The number of capacity building activities was not significantly different for class, size, age, United Way funding, or national affiliate status. The results of the hypothesis testing demonstrated that reputation, board effectiveness, and financial ratios were affected by the amount of capacity building activities that the nonprofit organizations undertook when the nonprofit performed 7 to 11 activities over a two year time span. This finding stresses the importance of capacity building to a nonprofit organization's effectiveness.;Three indicators of organizational effectiveness---board effectiveness, reputation, and financial ratios---are taken from the literature to analyze capacity building as an independent variable leading to increased organizational effectiveness. A survey went to 539 nonprofits in the Milwaukee--Waukesha Metropolitan Statistical Area (MSA). The survey asked for data on capacity building activities and board effectiveness. A separate survey was delivered to ten experts in the nonprofit sector in the MSA for data on the organizations' reputations for effectiveness. Financial data were retrieved from the GuideStar database of IRS Form 990s for each of the organizations. The research hypothesis being tested was that nonprofit organizations engaging more frequently in capacity building activities will score higher on the three indicators standing as proxies for organizational effectiveness. |
