Organizational Charts Lead to Sustainable Nonprofit Capacity Building

Organizational charts are a key component of nonprofit capacity building. They ensure an organization can achieve its mission.

Many often think of an organizational chart as a mere formality that is only used in grant proposals and in annual reports. However, they are an essential component in creating a sense of stability and predictability in a nonprofit organization. They do more than just list the members of the board, the executive, senior management, and the organizational staff. They describe what the architecture of cooperation looks like in the organization in order to carry out its work.

An effective organizational chart achieves the following:

• It helps employees understand their role, and how they fit into the big picture;
• It outlines how an organization functions;
• It defines a neutral process for how decisions are made in an organization, thereby diminishing confusion;
• It improves organizational culture by creating a sense of fairness and generating a feeling of professionalism; and 
• It makes it easier to manage natural patterns of organizational conflict by reinforcing the organization’s chain of command, delineating responsibilities, and aligning workloads.

Matching Organizational Needs with the Corresponding Organizational Structure

Nonprofit capacity building necessitates that an organizational chart pairs the nonprofit’s needs and the types of functions that must be accomplished to carry out its work. For example, smaller organizations with smaller teams where staff members must take on multiple roles, benefit from a flatter organizational chart because it allows for faster decision-making with fewer supervisors. Compliance-driven organizations, on the other hand, benefit from a multi-level organizational chart with more layers of command that distribute all of the responsibilities associated with compliance. 

Things to Consider When Creating an Organizational Chart

• An organizational chart should be based on functional criteria for areas such as finance and accounting, service provision, purchasing, and personnel. 
• Although the typical organizational structures are the M-for, U-form, and Matrix form, there are many others that improve the efficacy of an organization. For a list of the pros-and -cons of these three nonprofit organizational charts, please subscribe to Third Sector News. 
• The decision-makers and individuals with authority should be clearly identified. This is particularly helpful for organizations that have multiple team projects or have employees who play multiple roles. 
• The organizational chart re-design process is a great opportunity to assess which skills should be outsourced and which activities must be delegated. 
• When undergoing a strategic planning or restructuring process, an organizational chart should be created to reflect what the organization wants to look like in 5-years. 

Linking the Organizational Chart With Nonprofit Capacity Building

The Third Sector must continuously engage in nonprofit capacity building. As funders demand more for less money, employees find themselves with continuous and excessive workload increases that are over-stretching them. An organizational chart is a tool that helps to educate funders regarding the budgetary capacity to deliver programs. It also helps to build the best possible teams for carrying out the mission so that managers are not forced to relegate best practices to a lower priority.