Capacity building can be broadly defined as the “set of processes, both external and internal, that help people as individuals and as groups to manage their changing environment and to enhance their capacity to address the challenges related to development in a sustainable manner”.

Capacity building is widely used by non-profit organizations as they deliver resources and technology to underdeveloped environments. It plays a vital role in enabling the organization to develop skills, infrastructure and a socio-political framework for sustainable development.

In the context of capacity building, capacity is defined as the broad ability of a person or a group to take up responsibilities. It does not depend exclusively on the capabilities of the people concerned. It is also related to the overall size of the task.

Capacity building is generally carried out in an environment that is continually changing and it concerns individuals, networks, organizations and societies. It involves continuous learning and adaptation. Capacity building emphasizes that the issues and problems of the present should be dealt with in an efficient manner. At the same time, it should create processes that retain their relevance in the changing situation and requirements of the future.

Apart from being dependent on the capacity of the people, it also depends on the other factors such as the resources available, the magnitude of the task and the circumstances under which the work needs to be done. Capability, on the other hand is defined as the collective sum of the knowledge, attitudes and skill of the individuals both individually and as a group.

According to experts, effective building should follow the following nine principles:- 

- Each institution is able to develop its own potential and capacity 
- The trust between the institution and the provider of the capacity building is crucial 
- The institution should be prepared for capacity building 
- Continual questioning of assumptions and beliefs leads to better solutions 
- Emphasis should be placed on peer and team learning. 
- Every institution has its own unique history and culture 
- All the constituents of an institution are interdependent and interrelated 
- The process of capacity building is a time-consuming process

The process of capacity building should be a process that is oriented towards learning. It should be focused on outcomes. The control and ownership should be with the local organization. The agenda which arise should also be in the context of the institution.