An organization possesses capacity when it has the right skills, the right attributes and sufficient resources to accomplish its mission at each developmental stage. In this view, optimal capacity is defined as the organization's ability to achieve alignment across five dimensions – programs, management, governance, resources, and systems – at each stage of life.

This definition provides a way for a non-profit to look at a change agenda within the terms of its own current scope and scale, rather than those of an externally prescribed checklist. When a board and management start with a perspective on where they are in the cycle of startup, growth, maturity, decline and re-generation, they can far more easily see the gaps that are stalling progress; they can see which resources and capabilities will best address their needs and they can better judge the validity of different responses to a crisis, a critical juncture or an opportunity.

For funders, this approach positively conveys that ongoing investments in organizational development are essential to the vitality of the sector and therefore to the likelihood of increasing the social impact of our organizations in the long run.

from - Susan Kenny Stevens, “Of Lasting Value: Increasing Organizational Capacity to Promote Sustainable Change” Grantmakers in the Arts Reader