Capacity and resilience are two closely aligned concepts in human development. They both contribute to increasing the ability of societies to cope with and adapt to challenging and adverse perturbations that may affect systems the societies depend upon. A traditional approach to building capacity and resilience at the community scale is to address in a fragmented manner specific issues at play in institutional, socio-economic, environmental, and infrastructure systems that may prevent the delivery of adequate community services and meeting development goals. This compartmentalized approach, driven by a need to reach some form of satisfactory community equilibrium, fails to recognize the interactions and interconnectedness that exist among community systems, which, if addressed, could solve multiple issues more effectively. It also does not account for the complex, adaptive, and dynamic nature of communities. A resilient community is more than just a collection of well-functioning silos. This paper proposes a system dynamics approach to account for the dynamic and adaptive nature of communities when developing capacity-building strategies toward strengthening their ability to deliver services and deal with adverse events. A case study of small-scale community capacity assessment around the service of wastewater and sewage treatment published elsewhere is presented to illustrate the proposed approach.