If organisations are to carry out effetive M&E around capacity building, a key question to address is "what is the purpose of the M&E?". The usual answer to this is accountability and learning in order to improve performance. However, M&E carried out to learn and improve performance will not necessarily meet the needs of accountability and vice versa. There may be significant differences in the type of information collected, the methods used to collect it and the honesty and integrity with which information and analyses are presented. There is also likely to be competing demands on M&E within and across different organisations. For example a donor might need information on the short-term results of capacity building efforts in order to be accountable. The capacity building provider might want to learn in order to improve services. The recipient of the capacity building may interested in monitoring and evaluating their own capacity for learning purposes. Program officers might need information for basic program management.
It is therefore important to differentiate between M&E of capacity and M&E of capacity building.
Reference: Monitoring and Evaluating Capacity Building: Is it really that difficult? by Nigel Simister with Rachel Smith January 2010