Philosophiae Doctor - PhD / The idea that the development of people's capabilities lies at the heart of all community and social development has gained support internationally over the past decades. This reflects a significant shift in community and society development thinking, addressing the broad spectrum of social upliftment, human rights and poverty alleviation needs that gained ground during the different historic economic phases of the past two centuries. Historically development thinking progressed from a centralised, structured and systemic approach as, for example, espoused by Adam Smith and Karl Marx, to Maynard Keynes’s more people-centred approach, and more specifically the Capability Approach advanced by Amartya Sen and Martha Nussbaum. In the world of liberal democratic capitalism, the mainstream view of development holds that civil society is a key role player in both deepening democracy and enhancing forms of development through various programmes and practices. In turn, the professionalised Non-Governmental Organisations sector, as opposed to more localised community-based organisations or social movements, tends to receive most donor funding to deliver high impact interventions. In sum, the development of society’s capabilities relies significantly on NGOs to deliver capability enhancing services to the needy in society. A key consideration in development debates has been how to efficiently operationalise the development of capability enhancing activities based in the context of the Capability Approach, the focus of my study. This study recognises that NGOs are major delivery agents of development work, both in South Africa and internationally. Their operations focus on delivering quality impact on their beneficiary communities, and on raising funds to sustain their operations. The current methods to assess the impact of NGO operations, both by NGOs and their donors, primarily address past performance of the organisation in delivering external programmes as measured against the objectives stated in NGO concept and roll-out proposal documents. These assessments are customised for every NGO, making it impossible to standardise assessments for comparative and rating purposes and focus on external delivery. When problems are uncovered, this approach results in proposing corrective recommendations during or after completion of a funding round. This study argues that a gap exists in techniques to assess NGO internal performance to improve external delivery before and during NGO operations. Furthermore, it will contribute to assessing the merits of NGOs' internal capacity to deliver on the promises made in funding proposals - before and during NGO operations. In practice the assessment of an NGO for funding purposes currently consists of consideration of a project proposal in the form of a concept and roll-out document of what the organisation intends to achieve, accompanied by historic record data. The assessment of project roll-out focuses on the outputs claimed in the proposal document without paying too much attention to the NGOs internal organisational culture and capacity which is the key to successful external service delivery. In addressing this two part gap of incomplete assessment techniques and overlooked key internal indicators, the study demonstrates, via a series of ten case-studies, that a direct causal relationship exists between the internal organisational capabilities of an NGO, including the motivation, skills and culture of its staff, and its delivery on its external programmes. In essence, an organisation’s internal capabilities will impact directly on the organisation’s ability to deliver externally on its programmes. In spite of this, no standardised organisational capability assessment is used by NGOs or grantmakers, and to date no set of instruments exists to measure the internal capabilities of NGOs. The study sets out to address this gap by offering a methodology for the systemic assessment of internal NGO capabilities, and includes its operationalisation in a toolkit of instruments to measure these capabilities. The instruments presented enable the quantifying of qualitative staff motivational data to develop comparable baseline results between NGOs assessed, thereby presenting qualitative data in a quantitative form that enables a comparison between NGOs’ performances. This capacity addresses a significant shortcoming in the assessment of NGO performance based on purely qualitative assessment that is the current norm, not enabling a measurement against a standardised baseline for NGO performance. In contrast the validity and reliability of the proposed instruments are demonstrated through its application to ten real-world case studies drawn from the SEEDS Consortium. The system proposed in this study is based on Nel and Beudeker's commercial change management and organisational performance improvement model. Nel developed his system over a period of some twenty years whilst working for the then Arthur Andersen Consulting and subsequently as a private change management consultant focusing on the development of high performance organisations, and it has been administered in more than 3000 companies. This model uses key performance indicators, using quantitative methods to develop a standardised internal capability profile for a business based on qualitative data. This study expands on and makes innovative changes in developing new NGO specific metrics to substantially refine Nel's model and thus provides an instrument for measuring the capability profile of NGOs. The modifications were necessitated as Nel's model was designed for commercial change management applications presupposing that all governance considerations are in place and that the business is a running medium or large concern. Nel's proven commercial change management system does not make provision for NGO specific criteria that are critical indicators for both internal NGO performance assessment and for grant-maker capability assessments. The areas added to the instrument relate to internal NGO specific considerations such as internal governance, management, monitoring and evaluation processes that are standard and legislated compliance issues in commercial concerns. This goes beyond the requirements for a substantial commercial concern to include key internal organisation indicators that reflect the opinion of the staff, the people who deliver on the NGO's objectives. As staff are the people who directly impact on the NGO's output, the system does not only rely on the opinion of the CEO of the NGO or the fundraising staff, i.e. the "promise-makers", alone. In order to assess the value of the proposed method, and more specifically the internal capability toolkit, the measuring instruments were administered to the CEOs and staff of ten NGOs/NGO equivalent projects at universities. The responses were quantified and confirmed that in at least ten of these cases, there is a 95% correlation between internal organisational capability and external performance output, both positive and negative. The results also enabled the creation of a baseline internal capability profile for NGOs. Ten international grant-makers from OECD embassies were also interviewed on current methods of assessing funding applications, indicating a 62% confidence level in current systems and an 84% confidence level in the proposed internal organisational capability assessment method. This serves as an indicator of external delivery on promises and to guide internal change interventions to optimise output. This approach reflects the potential value of a shift in assessment thinking beyond a systems approach towards a people-centred approach that focusses on the measurement and development of the organisation and its staff's internal capabilities to meet and exceed its external delivery objectives. My research confirms that a focus on NGO internal organisational capabilities directly reflects the capability levels of staff to deliver externally. The output is a new, standardised, replicable and defendable methodology and toolkit of instruments for assessing an NGO’s current and future operational performance. The toolkit should also provide for the objective comparison of the performance of NGOs and thus be of great use for future grant-maker decision-making. It will also complement existing assessment techniques by focusing on the internal people motivation and capability issues of an NGO. Furthermore, the study provides a method to support organisational self-improvement efforts and grant-making efficiency that can be used in pre-project and during project capability assessment. This goes beyond the more prevalent post-project systemic and summative evaluation methods. In conclusion, the proposed method and toolkit can make a significant contribution to the efficiency of NGOs as the key role-players in enabling the delivery of capability development of communities and societies. All the elements described collectively point to a practical way to operationalise the Capability Approach, an aspect criticised as a weakness in Amartya Sen's work.