Organizational Capacity Statement: What Funders Want to See

Every funder wants to know the same thing: can this organization actually do what it is proposing? The organizational capacity statement is where you answer that question. It is one of the most requested components in grant applications, and it is one of the most consistently underwritten.

I have reviewed capacity statements for organizations managing $50 million budgets that read like they were dashed off in twenty minutes. I have also read statements from two-person nonprofits that were so well-crafted they made reviewers want to fund the team before even reading the project narrative. The difference is never about organizational size. It is about understanding what funders are actually evaluating and presenting your capacity in a way that builds confidence.

This guide covers how to write organizational capacity statements that work across federal agencies, private foundations, and corporate funders -- because each evaluates capacity differently, and a one-size-fits-all approach leaves points on the table.

What an Organizational Capacity Statement Actually Is

An organizational capacity statement is a narrative section in a grant proposal that demonstrates your organization's ability to successfully implement the proposed project. Depending on the funder, it may appear under different names:

• Organizational capability and capacity
• Management plan
• Institutional resources
• Organizational history and qualifications
• Past performance

Regardless of the label, the core question is the same: does this organization have the people, systems, financial health, experience, and infrastructure to deliver results?

The capacity statement is distinct from the project narrative. The project narrative describes what you will do. The capacity statement describes why you are the right organization to do it.

The Seven Pillars of Organizational Capacity

Every strong capacity statement addresses these seven areas. Not every funder requires all seven, but having clear language prepared for each gives you modular content that you can adapt to any application.

1. Organizational History and Mission

This is not a recitation of your founding date and mission statement. It is a concise narrative that establishes your relevance to the proposed project.

Weak version:

"Founded in 2008, the Community Health Alliance is a 501(c)(3) nonprofit organization dedicated to improving health outcomes in underserved communities. Our mission is to provide accessible, culturally competent healthcare services to all residents regardless of income."

Strong version:

"The Community Health Alliance has operated community health clinics in three rural Mississippi counties since 2008, serving more than 14,000 patients annually. In that time, we have managed $8.2 million in federal grants across HRSA, CDC, and SAMHSA programs, maintained full compliance on every award, and expanded from a single mobile clinic to four permanent sites. Our work focuses specifically on the uninsured and underinsured populations in the Mississippi Delta, where 31% of residents live below the federal poverty line and the nearest hospital is 45 miles away."

The difference is specificity. The strong version establishes geographic focus, scale of operations, funding track record, compliance history, and community context -- all in one paragraph. Every sentence builds confidence.

2. Management Structure and Governance

Funders want to know that your organization is well-managed. This means demonstrating:

• Clear organizational structure with defined roles and reporting lines
• Board governance that provides oversight without micromanaging operations
• Financial controls including segregation of duties, audit procedures, and fiscal policies
• Succession planning or at minimum, documentation that key functions are not dependent on a single individual

For federal grants, include a brief organizational chart (many solicitations explicitly request one). For foundation grants, a paragraph describing your leadership team and board composition is usually sufficient.

Weak version:

"Our organization is led by an experienced executive director and overseen by a board of directors."

Strong version:

"The executive director, Maria Gonzalez, MSW, has led the organization for seven years, overseeing annual budget growth from $1.2 million to $4.8 million. She reports to a 12-member board of directors that includes certified public accountants, licensed social workers, and community leaders representing each of our service counties. The board meets monthly, conducts annual performance reviews of the executive director, and maintains active finance, governance, and program committees. Financial operations are managed by a controller and a staff accountant, with segregation of duties for all disbursements exceeding $500."

3. Key Personnel Qualifications

This is where you demonstrate that the people who will execute the project have the expertise to do so. Name the individuals who will lead the work, describe their relevant qualifications, and connect their experience to the specific requirements of the proposed project.

Weak version:

"Our team includes highly qualified professionals with extensive experience in program management and community outreach."

Strong version:

"The project will be directed by Dr. James Okafor, who has managed three EPA Brownfields assessment grants totaling $1.8 million over the past six years. Dr. Okafor holds a PhD in environmental science from Howard University and is a certified hazardous materials manager. The community engagement coordinator, Lisa Crow Dog, has 12 years of experience conducting outreach in tribal communities and speaks fluent Lakota. She previously coordinated stakeholder engagement for the Pine Ridge Community Health Assessment, which achieved a 74% household response rate -- more than double the regional average."

Notice the pattern: name, credential, specific relevant experience, and a measurable outcome. Generic descriptions of qualifications waste space and erode reviewer confidence.

4. Financial Health Indicators

Funders need assurance that your organization is financially stable enough to manage their money. This does not mean you need a large budget. It means you need to demonstrate fiscal responsibility and sustainability.

Key indicators to reference:

• Annual operating budget (gives funders a sense of your organizational scale relative to the grant amount)
• Revenue diversification (organizations dependent on a single funding source are higher risk)
• Audit status (clean audits, especially Single Audits for organizations spending $750,000+ in federal funds)
• Cash reserves (sufficient working capital to manage reimbursement-based grants without cash flow crises)
• No outstanding audit findings or a clear explanation of how prior findings were resolved

For newer organizations: If you do not have a long financial track record, emphasize the financial qualifications of your leadership and board, your fiscal policies, and any fiscal sponsorship arrangements that provide oversight.

Before (weak):

"Our organization is financially sound and maintains clean audits."

After (strong):

"In FY2025, the organization maintained a $4.8 million operating budget with revenue from 14 distinct sources, including HRSA (32%), state contracts (28%), foundation grants (18%), Medicaid reimbursements (12%), and individual donors (10%). We have received unmodified audit opinions for eight consecutive years, including Single Audits under the Uniform Guidance. Our current cash reserve of $620,000 represents approximately 47 days of operating expenses, ensuring our capacity to manage reimbursement-based federal awards without cash flow disruption."

5. Relevant Past Performance

Past performance is the single most predictive indicator of future success in the eyes of most funders. If you have managed similar projects before and delivered results, say so with numbers.

Structure your past performance narrative around three elements for each relevant project:

1. What you were funded to do (funder, award amount, project scope)
2. What you actually achieved (outputs and outcomes, quantified)
3. What you learned (lessons applied to the current proposal)

Example:

"Under EPA Cooperative Agreement XA-12345 ($300,000, 2022-2024), we conducted Phase II environmental site assessments at 11 brownfield sites in the Calumet industrial corridor, completed cleanup planning for 4 priority sites, and facilitated 23 community engagement meetings attended by over 400 residents. All deliverables were submitted on time, and the final performance report received a satisfactory rating from our EPA project officer. Our experience on that project directly informed the community engagement strategy proposed here, particularly the bilingual outreach approach that increased participation by Spanish-speaking residents by 180% compared to previous efforts."

6. Partnerships and Collaborations

Many grant programs, particularly federal ones, award points for partnerships. Funders want to see that you are not operating in isolation and that you can leverage external expertise and resources.

Effective partnership descriptions include:

• Who the partner is (organization name and type)
• What they will contribute (specific resources, expertise, or services)
• History of collaboration (how long you have worked together, on what)
• Formalization (MOU, letter of support, subcontract)

Weak version:

"We have strong partnerships with local organizations including the county health department, the school district, and several community-based nonprofits."

Strong version:

"We have a formal Memorandum of Understanding with the Jefferson County Health Department (JCHD) under which JCHD provides in-kind epidemiological support for our community health assessments, valued at approximately $45,000 annually. This partnership is entering its fourth year and has produced two joint publications and a shared data dashboard tracking health outcomes across our service area. For this project, JCHD will assign 0.25 FTE of a senior epidemiologist to support our evaluation plan, as detailed in the attached letter of commitment."

7. Infrastructure and Equipment

For projects that require specific facilities, technology, or equipment, the capacity statement should document what you have available and what you will acquire with grant funds.

This section is particularly important for:

• Research projects (lab space, equipment, computational resources)
• Direct service projects (clinic space, vehicles, technology platforms)
• Construction or renovation projects (project management capability, contractor relationships)

Be specific. "We have adequate office space" tells a reviewer nothing. "Our 4,200-square-foot main office in downtown Flagstaff includes a 40-seat community meeting room, a secure records storage area, and a dedicated data analysis workstation with GIS software" tells them everything they need to know.

How Different Funders Evaluate Capacity

Federal Agencies

Federal reviewers score capacity against explicit criteria published in the NOFO (Notice of Funding Opportunity). Points are typically allocated to organizational experience, key personnel qualifications, past performance, and management plan.

Federal funders care deeply about:

• Compliance track record (clean audits, timely reporting, no debarments or suspensions)
• Single Audit results (if applicable)
• Experience managing federal funds at a similar scale
• Staff with specific certifications or credentials required by the program

When writing for federal applications, use the exact language from the NOFO's evaluation criteria. If the NOFO says "demonstrate experience managing cooperative agreements of similar size and scope," your capacity statement should include the phrase "cooperative agreements of similar size and scope" and then prove it.

Private Foundations

Foundation program officers evaluate capacity more holistically. They care about:

• Community trust (are you embedded in the community you serve?)
• Track record of impact (not just outputs, but real change)
• Leadership quality (is the executive director compelling and credible?)
• Financial sustainability (can you continue the work after the grant ends?)

Foundation proposals benefit from a more narrative voice. Where a federal reviewer wants bullet-pointed credentials, a foundation program officer wants to understand your organization's story and why you are uniquely positioned for this work.

Corporate Funders

Corporate funders tend to evaluate capacity through a business lens:

• Scalability (can the project grow if we invest more?)
• Measurability (can you demonstrate ROI on our sponsorship?)
• Brand alignment (does your organization reflect our values?)
• Professionalism (are you organized, responsive, and reliable?)

Corporate capacity statements should emphasize metrics, growth trajectories, and the organizational systems that ensure accountability.

Building an Organizational Capacity Library

Rather than writing a new capacity statement from scratch for every application, build a library of modular paragraphs that you can assemble and adapt.

Create standard paragraphs for:

• Organizational overview (two versions: one paragraph and three paragraphs)
• Each key staff member (name, title, credentials, relevant experience, outcomes)
• Financial health summary (updated annually after your audit)
• Each major past performance project (funder, scope, results, lessons)
• Each active partnership (partner, contribution, history, documentation)
• Infrastructure and equipment inventory

Store these in a shared document that your development team can access. Update them after every completed project, audit, and staff change. When a new proposal comes in, you assemble the relevant modules, tailor the language to the specific funder's criteria, and write connecting tissue -- rather than starting from zero.

Capacity Statements for Newer Organizations

If your organization is fewer than three years old or has not managed a federal grant before, your capacity statement requires a different strategy. You cannot rely on past performance because you do not have much. Instead, emphasize:

Staff expertise brought from prior roles. Your executive director may have managed $2 million in grants at their previous organization. That experience counts, even if the current organization is new.

Fiscal sponsor or fiscal agent arrangements. If a more established organization is serving as your fiscal sponsor, describe their capacity -- audits, systems, compliance history -- alongside your own programmatic expertise.

Advisory board or consultant expertise. If you have assembled an advisory board of experienced professionals who will guide the project, describe their qualifications. Similarly, if you are contracting with an experienced evaluator or project manager, document their credentials.

Pilot projects and community engagement. If you have conducted any pilot activities, even unfunded ones, describe the results. A community needs assessment you conducted with volunteer labor demonstrates capacity to engage stakeholders and collect data.

Institutional partners. If you are partnering with a university, hospital, or government agency that brings administrative infrastructure, describe how that partnership supplements your organizational capacity.

Evaluation and Data Collection Capacity

Many funders specifically ask about your ability to evaluate your own work. A strong capacity statement addresses:

• Staff or consultants with evaluation expertise
• Data systems you use to track outputs and outcomes
• Experience with specific evaluation frameworks (logic models, theory of change, Results-Based Accountability)
• History of meeting reporting requirements on prior grants

If you have an external evaluator in mind, name them and describe their qualifications. If you collect data through a specific platform (Salesforce, Apricot, ETO), mention it. These details signal to reviewers that you take measurement seriously and have the infrastructure to deliver the data they will require.

Common Capacity Statement Mistakes

Describing capacity you do not actually have. If you claim you have a robust data management system but you are actually tracking outcomes in a spreadsheet, a site visit will reveal the gap. Be honest about your current capacity and explain your plan to build what you need.

Focusing on mission instead of capability. Your mission statement is important, but the capacity section is not the place to elaborate on it. Reviewers already read your mission in the organizational background. Here, they want evidence of operational ability.

Listing staff without connecting them to the project. A paragraph about your IT director's qualifications is irrelevant unless IT is integral to the proposed project. Every person you mention should have a clear connection to the work you are proposing.

Ignoring the scoring rubric. If the NOFO assigns 15 points to organizational capability and lists five specific criteria, your capacity statement needs to address all five criteria -- in order, using the funder's language. Reviewers score with the rubric in front of them. Make their job easy.

Burying the strongest evidence. If your most compelling past performance example is a project nearly identical to the one you are proposing, lead with it. Do not make reviewers dig through three paragraphs of organizational history to find the most relevant evidence.

A Complete Capacity Statement Example

Here is a condensed example showing how the components come together for a hypothetical EPA Brownfields grant application:

"Riverfront Restoration Partners (RRP) is a 501(c)(3) environmental services organization established in 2015 to address contaminated properties in the industrial corridor along the Cuyahoga River in northeast Ohio. Over nine years, RRP has managed $4.2 million in EPA Brownfields assessment and cleanup grants, completing Phase I assessments at 38 sites and Phase II investigations at 22 sites, with 7 properties progressing to cleanup and redevelopment.

The proposed project will be managed by Executive Director Sarah Chen, PE, who holds 18 years of experience in environmental remediation and has served as principal investigator on five EPA cooperative agreements. The project coordinator, Michael Torres, holds a master's degree in urban planning and has managed community engagement for four previous Brownfields grants, achieving documented participation from over 1,200 residents across our target communities.

RRP operates on an annual budget of $1.6 million with funding from EPA (38%), Ohio EPA (22%), private foundations (24%), and consulting revenue (16%). We have received unmodified audit opinions for seven consecutive years and have no outstanding compliance findings.

Our partnership with Cleveland State University's Environmental Studies Program provides in-kind GIS mapping and data analysis support valued at $35,000 annually. The City of Cleveland's Department of Community Development has committed staff time for zoning analysis and redevelopment planning, as documented in the attached letter of commitment."

Notice the density of verifiable details: dollar amounts, site counts, staff credentials, audit history, partnership contributions. Every sentence does measurable work.

Using Tools to Strengthen Your Capacity Statement

Grant writing platforms like Granted AI can help you structure capacity statements around a funder's specific evaluation criteria. By analyzing the solicitation document, the platform identifies exactly what the funder is looking for in the organizational capacity section and coaches you through addressing each criterion. This is particularly valuable for complex federal NOFOs where capacity requirements are detailed and the scoring rubric rewards specific, criteria-aligned language.

Whether you use a tool or write manually, the principle is the same: start with the funder's criteria, assemble evidence that matches each criterion, and present it in specific, quantified language that leaves no room for doubt.

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• See how Granted AI structures proposals by funder criteria

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