2026 State of Capacity Building Report · Catalyst Exchange

Closing the Capacity Gap

FINNOVATION Institute is proud to have participated in the national study behind Closing the Capacity Gap, Catalyst Exchange’s inaugural State of Capacity Building report.

The report looks at what nonprofits need to do their work well, how those needs are funded, and what helps capacity-building support work in practice.

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This first edition focuses on education and youth development. Catalyst Exchange surveyed 644 nonprofits, funders, and intermediaries nationwide and held focus groups with nonprofit leaders and funders. The report examines how organizations build the teams, systems, and skills they need to carry out their missions.

What the study found

Lesson Description
Demand is rising.
  • In Catalyst Exchange’s survey, 67% of nonprofits reported growing demand for their services.
Dedicated funding is scarce.
  • Only 19% of surveyed nonprofits received a grant specifically for capacity building in the previous year.
Smaller nonprofits face a steeper climb.
  • Among surveyed nonprofits with budgets under $1 million, 34% said they didn’t know where to start with capacity building, compared with 16% of nonprofits with larger budgets.
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Why this matters to FINNOVATION

In the FINNOVATION Fellowship, we see how much the timing and fit of support matter. A founder who’s still testing an idea needs room to do research and learn from potential customers. A founder who’s ready to move forward may need deeper business guidance, leadership coaching, and time to put what they’re learning into practice. That same question runs through the report. What kind of support can an organization use right now, and what will it take to make that support available?

The full report includes practical recommendations for nonprofits and funders. Visit Catalyst Exchange to explore the findings and request a copy.

EXPLORE THE REPORT AT CATALYST EXCHANGE